Heads in beds: refining room inventory management
By Estefania Escobar, Global PR at Base7booking
Considered one of its most precious assets, a hotel's inventory is what keeps the business running. As part of revenue management strategies, inventory management is a key concept for hoteliers. We have five suggestions to improve it now.
Room inventory is obtained by calculating the number of rooms a hotel has minus the amount sold. The result is then the available rooms for each day. In this 'simple' abstraction, hoteliers must include only the number of rooms available for guest reservations. Rooms undergoing renovations, upgrades, or closed due to technical difficulties should not be included in the equation. Some properties calculate their inventory once a week, but hoteliers know what's best based on size.
With this number, hoteliers can definitely understand and identify patterns related to seasons, activities, events and above all, keep track of their profits and losses. An effective inventory management allows hoteliers to meet and exceed their guest's expectations and maximizes profit. We have spoken to many hoteliers about these issues and have 5 suggestions to understand your own inventory better and take actions after reading this post.
1. Identify, organize and prepare
Understanding performance drivers is a great first step. The first step is to use the inventory formula as it helps to clearly identify your availability. The second step is to revise your calendar to find inventory imbalances and reservation's origin. This way you can identify and organize your channel distribution based on segments, OTAs, timing, and seasonality, among others. This retroactive action is a reflexive and analytic process that will give you valuable insights.
2. Under or overbooked?
Are there any availability issues you spotted in the first step? Common issues are overbookings or under bookings. If so, manually confirm all your rooms are available in your OTAs and through your booking engine. We type, we make mistakes. Another revealing way is to compare the dates when you experienced availability issues. Most hotels have overselling strategies, therefore revising this information will allow you to modify the limits based on your property's dynamic.
3. Best pricing
After analyzing your property, one of the key metrics to observe is occupancy. You are going to need to carefully inspect demand patterns, pricing strategies, and inventory use. This data should be available in your PMS. Dynamic pricing and product offer should match with your market analysis and target segments. Some examples include lead time, the length of stay, cancellation policy, and package elements just to mention some. A good example is seasonality pricing or weekends along with room category.
4. Technology is an ally
Yes, technology is everywhere and nowadays there are solutions for almost every problem, including inventory management. Despite large hotels and chains use robust software to cover their hundreds and hundreds of rooms, the rest of the industry in smaller sizes can benefit from multi-functional PMS that produce these insights. There are specific solutions covering this and revenue management. Some important facts to consider when opting for a technological solution are: how user-friendly it is, if it's customizable, if it requires a big investment up-front or any specific equipment, if it's cloud-based, and how efficient it is, among other.
5. Monitoring the change
After establishing your baseline performance and key drivers, create a strategy and apply the changes. Once deployed, monitoring will ensure success as you can be reactive to trends or make adjustments as perceived. Last but not least, inform your staff about the changes and explain the objectives. Continual monitoring is the path to success, and additionally will lead to business opportunities and improvement.
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