Hotel inventory management guide for small hotels

What is hotel inventory management?

Hotel inventory management is the practice of ensuring your room inventory is sold efficiently and effectively for the best possible results.

This means managing supply and demand to hit your desired occupancy rate while also maximising the revenue returns for your business. It involves a number of processes and is also influenced by a wide range of factors, so it’s important to make it one of your biggest focuses.

This blog will give you a rundown on everything you need to know, so your property can thrive and inventory management won’t be a headache anymore.

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What is pooled inventory?

Pooled inventory is a method that allows you to sell your hotel’s full inventory on all your  chosen channels at the same time. This is opposed to split inventory, which requires you to sell some of your rooms on one channel, and some on another. Pooled inventory greatly improves inventory management, since you don’t have to worry about when and where to sell your rooms.

It may seem like pooled inventory raises the risk of troublesome double bookings, but when implemented with a hotel channel manager this isn’t an issue.

A channel manager can automatically share data on a two-way basis. This means whenever a booking is made on one of your channels, the channel manager will share this with your property management system and your inventory will be automatically updated everywhere in real-time.

Why is it important to manage hotel inventory?

It’s important to manage your hotel’s inventory strategically because it gives you the opportunity to maximise the amount of bookings and revenue you can win. Essentially, your inventory is your product and your business relies on this product being sold everyday. 

When you actively manage where, how, and at what price you sell your inventory you’ll get valuable insights on your performance and how you can make improvements.

Good inventory management:

• Improves your overall distribution
• Let’s you forecast and predict performance better
• Helps you understand your customer segments
• Creates consistent performance all year round
• Boosts your hotel’s revenue success

Hotel inventory list for beginners

So what should you be focusing on to start improving your inventory management and selling the maximum number of rooms at the best price possible?

Here’s a list of key considerations:

• Understand the best ways to distribute your inventory – What channels will you use to sell your rooms? How will you balance direct bookings with OTA bookings?
• Be aware of your pricing options – Don’t set and forget your room prices. It’s much better to be dynamic.
• Think about segmentation – Who are your most common guests? When do they travel most and what are their preferences?
• Don’t ignore seasonality – Your rooms won’t sell for the same price throughout the entire year. Seasonal pricing plays a huge part in your success.
• Use data effectively – Gaining access to key market and competitor insights will give you a much clearer idea of how to approach your inventory management.

An important addition to the above list is to also consider what technology you are using to manage your business. Without the help of automated software you’ll be doing too much manual work, you’ll encounter errors, and you won’t have enough information to make the smartest decisions.

All-in-one software like Little Hotelier is the best way to improve inventory management, since it allows you to control all of your property’s operations from one easy platform.

An effective hotel inventory management method

The most effective way to manage hotel inventory is to be balanced. This means you have to take all the other aspects of your business into account.

For example, you need to know how much it costs just to have your hotel open and running before you can decide what price your rooms should be and how many you need to sell each day. Starting from this baseline will allow you to set the right price and also find ways to control your costs. From there, you can optimise and continue to improve your performance.

Here are some tactics to succeed with inventory management.

Set objectives and goals

You can’t plan and execute any strategies if you don’t know what you’re aiming for. Think about what a healthy occupancy rate will look like for you, and also how much revenue and profit you want to aim for. Of course, you need to balance this with the market you’re in and what your competitors are doing.

Identify your target market

It’s imperative that you know who your property and your rooms appeal to. Is it luxury guests? Families? Honeymooners? Once you know roughly who your most common guest type is, you’ll understand much better how to sell your inventory and how much to charge.

Decide where to sell your inventory

Generally you’re going to need to partner with at least a few online travel agents to maximise your visibility. But you might also consider niche channels that work particularly well for your property or guest types. To start with, channels like Booking.com, Airbnb, and Expedia are a good bet.

Prioritise direct bookings

Selling your rooms directly via your website, social media, or metasearch will help you gain extra profit and balance the cost of partnering with OTAs. An optimised website and a hotel booking engine will make this much easier so look into whether your technology provider can help with this. Little Hotelier, for example, has a website builder and booking engine included so you don’t have to stress.

Ensure your inventory has resale value

Making sure the guests who book your rooms enjoy their stay and leave satisfied is perhaps the most important thing of all. Customer reviews and feedback play a huge role in being able to keep selling your rooms and building a pool of repeat guests. The more you can encourage a positive world of mouth, the more your brand reputation will grow. This will allow you to sell your inventory at a higher price and increase your margin of profit.

The main priority was to eliminate overbooking. Things are much better. We have about 90% less double-bookings.

Boonchai Prombunjong,

Hotel Operator

U Residence Krabi Hotel

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How to succeed with pooled inventory management

Pooled inventory management can only be done successfully with a hotel channel manager, as we mentioned earlier. A channel manager is one of the most crucial pieces of software that a hotelier can use to run their property.

Once you have invested in a channel manager, you can send your inventory to any and all online channels you want to sell on, including your online booking engine.

The channel manager creates a two-way line of communication between your hotel and your booking sites. This means that if you sell a room on Airbnb for example, your inventory will be updated within your front desk system and on every other channel you are connected to, such as Booking.com. 

On this basis, you don’t have to limit yourself on where you sell your rooms and you won’t have to worry about double bookings occurring.

By Shine Colcol

Shine is the SEO and Content Manager of Little Hotelier, the all-in-one software solution purpose-built to make the lives of small accommodation providers easier. With more than five years of experience and expertise in content strategy, creation, and management, Shine has produced informational content across various topics, mostly around improving daily operations and increasing business metrics. She aims to share well-researched articles in hopes of helping bed and breakfast owner-operators win more bookings and gain more control of their small property.