Your hotel’s inventory is its greatest asset and represents a major part of your investment. That investment is tied up until rooms are sold, making the effective management of inventory a key task for today’s hotelier. No longer just an idea, hotels that have mastered the art of inventory management are seeing big benefits to their bottom line. It is estimated that Marriott Hotels increased their annual revenue by as much as $200 million when they first introduced their inventorymanagement strategy.
An umbrella concept
Inventory management is an umbrella concept that involves understanding, overseeing and controlling your hotel’s room inventory. It incorporates not only revenue management (managing and generating demand) but also yield management (maximising return). By analysing your inventory and rates on a regular basis, you can make adjustments in anticipation of peaks and troughs in demand, allowing you to cherry-pick the highest value bookings during peak times, as well as deploy discounts and other customer incentives to drive up demand and increase occupancy during quieter periods.
This strategy is what is referred to as time-based pricing, or dynamic pricing, and the benefits include simplified yielding processes, increased speed and agility of a hotel’s responses to customers, as well as greater rate integrity and rate parity. Inventory management also enables you to set your prices relative to competitors, which is essential given that OTAs (which in 2013 accounted for $278 billion of bookings), are levelling the playing field for hoteliers through increased pricing transparency.