Hotel Revenue Management hotel room inventory strategy importance of inventory management

How hotel inventory distribution impacts revenue management

Prabhash Bhatnagar
Prabhash Bhatnagar

revenue management strategy for hotels

Effective and efficient inventory distribution plays a major role in the overall revenue management strategy for hotels. A well-thought-out inventory management strategy helps revenue managers to sell the right room via the right channel to the right customer at the right time to maximize revenue.

Here are some of the ways that show how hotel revenue management and hotel room inventory strategy are interconnected –

Reduce overbooking, double booking and under booking

In overbooking, you will have to say ‘no’ to guests who already had a booking at your hotel. Turned away guests will never like it, and they will talk about it on review sites and on social media platforms, for sure. This would damage your reputation and in turn, it will affect your room sales, online.

Double booking is also a threat to your hotel, from a revenue management point of view. This, again, results in guest dissatisfaction, plus in loss of business for you. Under booking happens when all the rooms that you’ve allocated to a particular OTA/channel get sold, while some other rooms remain unsold given to some other channels. This leads to loss of opportunity for you.

To address all three problems, you must adopt a cloud-based PMS that comes with a channel manager connect. This helps you to distribute your inventory and rates on multiple OTAs/channels. This mechanism will ensure that all the channels are updated in real time whenever a booking is done on an OTA, on hotel website or even in case of walk-ins. This works the same way when a room gets released or is made available for booking.

This way, you can efficiently address overbooking, double booking and under booking. And once you are in a position to avoid such issues, it helps in selling more rooms to witness increased RevPAR.

Leverage the power of a Central Reservation Office

Inventory management at a group property can be a stressful task. When not done properly, this can derail your entire revenue management plan. This problem, however, can be handled with a smart Central Reservation Office (CRO) application in place. You can manage and sell inventory of all your properties centrally, from your group website and from the CRO.

This would also assist you in managing rates and availabilities between the CRO and your group properties in real-time. Adoption of CRO also helps you to manage booking for itineraries and to accept booking for multiple hotels/room types across different check-in dates. Moreover, you can customize your booking engine, connecting all your properties using open API, which would help you to sell more directly to earn commission- .
free booking.

Don’t ignore data; they are crucial for your revenue management effort

Yes, data related your hotel’s inventory and their distribution plays a major role in your hotel revenue management strategy. Your hotel’s revenue managers should carefully consider data on –

  1. Booking coming via OTA
  2. Booking coming from offline travel agents
  3. Walk-ins
  4. Direct booking via your hotel website
  5. OTAs that are giving you good business
  6. OTAs that are giving less business
  7. Seasons that gives you more direct booking/walk-insr
  8. Overall occupancy percentage

Additionally, your revenue managers should also analyze the aggregated data on local market demand and competitors’ pricing to come up with the right forecasting and pricing strategy to optimize room sales.

Did this article help you to understand how inventory management in hotel has a direct impact on hotel revenue management? Do let us know your thoughts on this.

This article was originally published in HotelSpeak

revenue management strategy for hotels