Here Are Some Steps To Optimize Hotel Room Inventory Management For Full Occupancy!
Hotel Room Inventory Management is considered to be a major challenge in the hospitality industry. One has to distribute rooms without compromising on revenue. Room inventory management and revenue management go hand in hand since, without the former, the latter will fall flat. Giving the right room to the right person, at the right price and place is considered to be one of the most important tenets of revenue management.
Here we will be talking about how one can optimize hotel room inventory management to generate more revenue and better occupancy.
Hotel Room Inventory Management - What Is It Exactly? One May Ask.
Room inventory management involves allocating your room inventory to different guests and agents without compromising on your revenue. If done efficiently, it can increase the hotel revenue and minimize unsold rooms. It is one of those important tasks where the sales and front office departments have to work hand in hand since both manage various sources of bookings.
However, many hotels don’t take room inventory management seriously and give vague numbers to the distributors. Room nights are perishable inventory and they need to channelise it to various platforms such as OTAs, social media platforms and offline sales.
The rooms need to be allocated strategically to achieve 100%, 90%, or even 70% room night occupancy. If you under allocate your rooms, you will lose out on valuable last-minute bookings. If you over-allocate your rooms, you will have many sold out cases, ultimately ruining the customer experience. Like everything else in the hospitality industry, balance is the key.
How To Distribute Hotel Room Inventory Amongst Different Channels
There are many steps you need to take before you distribute your room inventory amongst many channels. They are as follows:
1. Analyse The Sources Of Hotel Bookings
Hoteliers need to analyze the performance of their properties on various distribution channels. It includes OTAs, hotel websites, social media handles, offline agents, partners etc. First, you need to make a list of all these channels. Then note the amount of business these properties have given.
It is better if the data regarding the business is given on day-to-day, MTD and YTD business. By doing this, you can compare the amount of business each source gives. This way you can distribute it among different channels more effectively, giving maximum room inventory allocation to those giving the highest resorts.
However, one shouldn’t ignore the lesser lucrative channels. For example, if that channel has immense potential, you should analyse why it's underperforming and then rework the strategy.
2. Undertake Guest Segmentation
Since you are selling to different types of guests, you need to undertake guest segmentation to sell your hotel room inventory to the right guests. For example, if you are a business hotel then it is better to distribute more of your inventory to corporate partners. If your clients are family and large groups, then you should distribute it to Offline agents, group tours, and trip planners. For smaller groups and individual/couple travellers - OTAs and hotel websites are needed. Segment the guests accordingly and you will be able to generate maximum revenue.
3. Check The Performance On Various OTAs
You will need to check the performance of your property or properties on the various OTA platforms. Most customers check hotels on OTA Platforms because it's convenient. In case the performance on the OTA platform is low, you need to contact the account manager and understand how to improve the performance. You should identify which OTAs are generating the most business and give more of your room inventory to them. This is where hotel revenue management comes into play.
4. Don’t Neglect Your Offline Sources
OTAs have grown over the years and subsequently, offline sources have declined in popularity. The agents who deal with B2B business are also shifting online.
However, those who are going with families, large groups and those who don't have much experience in booking properties independently on OTAs make use of travel agents. Even though OTAs offer bigger discounts, families and large groups prefer to avail packages from trip planners.
So it's always better to give some rooms to the travel agents and during peak season, allocate them even more.
5. Make Use Of Technology
Room Inventory Management is a tedious job. You need to update your room Inventory regularly for all the booking channels. You also need to remember the passwords for all the channels.
However, technology has now made the task much easier. With a Property Management System (PMS) and the right channel manager, you can do it quickly.
Another reason is that with automation, updating room Inventory as closed during a sold-out situation becomes a breeze.
6. Promote Last Minute Bookings
One of the ways hotels can achieve nearly 100% occupancy is by promoting last-minute bookings. However, you need to do it properly to prevent it from backfiring.
Some hotels promote last-minute bookings for hotels. However, they fail to put an end date at times and it goes on, leading to losses for the hotels. Hence, you need to keep a check on the start and end dates for the last-minute promotions.
How To Do Hotel Room Inventory Management On OTAs?
Since OTAs constitute a major share of the hotel business, you need to manage it efficiently. Here are a few ways to manage hotel room Inventory on OTA.
1. Ensure Rate Parity
Many hotels face the issue of price parity. The reason is that many OTAs charge different commissions and hence hotels would update higher tariffs on platforms where they give higher commissions. However, displaying different rates can lead to uneven business flow. The business will flow to those OTAs charging lesser rates while neglecting those who charge higher rates. That’s why it’s important to maintain rate parity.
2. Allow Guests To Book For Longer Duration
There are guests who book hotel rooms months in advance. It includes those who want to visit music events, food fests, special events and so forth. People book for long holidays in advance as well.
That’s why it's better to update your inventory for a long duration. OTA platforms allow you to update your room inventory for 1 year. You need to update your hotel room rates too for that period.
3. Make Use Of Revenue Managers
Revenue management and hotel room inventory management go hand in hand. One of the main jobs of revenue managers is to analyze the room inventory, forecast the revenue based on current rates and update the room rates accordingly. They also monitor the performance of the room inventory and adjust it accordingly.
Many hoteliers are making use of Revenue Management Software (RMS) and also making use of Revenue managers. Revenue managers can also guide you on:
Which booking platforms to choose from.
Which rooms to promote to which guests.
What offers to give.
Improvements are needed to maximise revenue.
The expertise of hotel revenue managers will help you manage your hotel revenue management effectively.
4. Keep An Eye On Cut off Periods.
Cut Off Period is the time up to which the guests can book their room night before their check-in time. For example, if your cut off period is 3 days, you can book your hotel three days prior to checking in. If you try to book a room after the cut off period, then the room inventory will be shown as sold out. It is useful for upselling your inventory or encouraging direct bookings.
If you have unsold inventory left, then you can change the cut off period to 24 hours. This will help you gain last-minute bookings.
Hotel room inventory management can make or break your hotel. To gain maximum revenue, you need to undertake revenue management in an efficient way. This is where hotel revenue management also comes into play.
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