Planning for the future: hotel inventory management and distribution

We are all aware of the health and economic crisis that we are experiencing around the world, and we have already assimilated that the tourism industry has been forced to stop its activity either by government mandate or by the lack of demand.

However we tend to get bogged down in the immediate future rather than think about what we’ll find when recovery begins. What actions can we take now to prepare for when the situation improves? Let’s go back to basics and look at different tips and approaches to rethink strategies and processes for the coming months.

First focus on Inventory Management. Here are some activities to review how you classify your rooms and configure your product so when things stablise, you will be ready with an optimized inventory.

Review your room types and attributes

Since the last time you set up the distribution of room types, some things may have changed in your property. Are they currently defined in the most efficient way? Can you create new room types or join room types that are not so different?

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Review the results of past sales and the production provided by each room type, as well as guest reviews, and consider if you could make changes to improve results. For example, if your double rooms have different sizes, perhaps you can differentiate a XL Double room type that will bring you additional income.

In the same way, you should review which attributes you can use that can be added through price supplements. In recent times we have seen how the tendency of the user is to customize their own product, adding certain features that they are willing to pay a little more for: sea view, double bed, bathtub, etc. If you work in a hotel group, do your best to create a basic structure that is homogeneous and applicable to all properties, as this will make operations, team training and distribution easier.

Reconfigure your product

With this new revision of room types and attributes, you can already consider a global reconfiguration of your product before putting it back on sale:

Meal plans – What meal plans do you want to work with? What are the ones that have given you better results in the past? Are there any that you should stop using because it doesn’t produce much revenue? Find ways to innovate in this area.

Cancellation policies and restrictions -Think about the booking conditions you have used so far and keep in mind the current market situation: we are facing a time of low demand, where people need to regain confidence and seek flexibility. Temporarily remove strict restrictions and prepayments. You must reassure your customers.

Added value – Find a way to add value for your client, beyond offering a bed and a shower. Think in terms of experience: How does staying at your hotel change the life of a guest? Can you improve their experience in the destination? Can you offer an environment that meets their needs? Can you personalise their stay? This approach will also allow you to keep a certain level of rates and avoid the dreaded price drop.

Review your rate structure

You should consider the role of room type, occupancy, attributes, meal plan, cancellation policy and retrictions when restructuring your rate plans. We advise you to take time to see if your rate plans and rate codes are correctly configured and in the most efficient way.

● Remove or deactivate all those rate codes that have not produced anything or almost nothing in the last year.

● Decide if you need new rate plans, but try to keep a simplified and efficient structure.

● Review the basic plans and indexed rates and make the changes you think are appropriate to optimize results. Try to keep a clear difference of prices and conditions between one rate and another.

● If you work in a hotel group, try to make a standard of the basic structure to simplify operations and facilitate distribution.

● Is your rate structure understandable to the customer or does it hinder the purchase process? Does it build trust?

Manage your inventory on the sale channels

Sometimes we tend to think about closing hotel + flight rates (packages) or opaque rates because they have very strong discounts. However, with demand far below your hotel room supply, it is important to consider activating all rates at least temporarily to reach all segments.

In times of low demand we must use open door strategies, so that we improve occupancy with less restrictive policies. We recommend you read our ebook about Forecasting, where decision-making is explained for periods without excess demand versus periods with over-demand.

Boost your direct sales channel

Currently we have a great opportunity to rethink our distribution, launch actions that generate greater loyalty, and satisfy the needs of our current or future guest.

It is very likely that some of them have had a tedious experience of cancelling or postponing their trip with an OTA, while we have the option of giving direct treatment and immediate solutions. The added value that we can provide from personalized and direct treatment, our knowledge of the product and the greater ability to adapt to customer needs plays in our favor.

Collaboration with the marketing and e-commerce teams in this area is crucial, to optimize SEO and SEM strategies, ensure that the hotel website and booking engine are working properly, keep presence on social media and metasearch engines, and define Ads strategies.

Pay attention to dollar exchange rates

We do not want to end this article without referring to the differences that each market presents. We think it is important to highlight the situation of those properties that are affected by the fluctuation of the exchange rate. This is more uncertain today than ever, especially in countries in Latin America and the Caribbean. For example, data from experts in the field expect the dollar to rise to 30 MXN per USD (in recent years it has fluctuated between 18 and 20). This is why it is very important to ensure that a correct adjustment of individual and group rates is carried out for this kind of hotel. The best way to do this is by shopping your competitive set in the OTA’s, but searching in local currency.

Revenue management never stops

It is important to not let your guard down in these moments of low activity, but on the contrary, take advantage of this pause to focus on your strategies. Going back to basics  may seem simple, but it can give us the opportunity to discover areas for improvement and better prepare ourselves for what is to come. The objective should be to go on sale with a very well configured and stronger product for a good competitive positioning in the market.

About the author

Neville Isaac is the Chief Customer Officer at Beonprice, a company specialising in cloud revenue strategy solutions based on Artificial Intelligence that help hoteliers increase the profitability of their hotels.

Tags: Distribution, inventory management, pricing, rate structures, rates, Revenue Management


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