Inventory management is critical to overall hotel success. Too many hoteliers don’t understand the importance of maintaining distribution control over their coveted product—their hotel rooms. Instead, they willingly cede this control to others.
We see this phenomenon all too often whenever online travel agencies (OTAs) are allowed to control a hotel’s destiny. OTAs are an extremely important component to any hotel’s success strategy. However, scenarios where the hotel’s reservation partners profit at the expense of the hotel owner can be both dangerous and debilitating. These channels should always be used strategically as a component of the hotel’s overall mix of business. Relying on a couple of OTAs to provide most business to a hotel is a recipe for failure, especially for independent hotels that don’t have the clout to negotiate a lower commission structure from larger and more prominent OTAs.
Hotels must recapture their financial destiny and control over the pricing and sale of their rooms. Implementing a strong, focused local sales effort is one smart strategy for lowering the dependence on OTAs. Spreading product distribution across a wide swath of OTAs is also a great way to benefit hotels. Those OTAs that are less popular with the consumer will be more apt to negotiating their commission rates in favor of the hotel owner. These strategies are made even more powerful when combined with a cloud based property management system to give hoteliers tighter distribution controls.
In a cloud based property management system, every time a room is sold at a lower commission rate, it is removed from the inventories of OTAs with higher commissions, delivering more profitable reservations to the hotel’s bottom line. This increases reach to many OTA sites so that properties of any size are positioned to optimize online exposure. A pooled inventory model that displays all available rooms on every selected site would also help to drive operational efficiency and revenue. Once a booking is completed from any site, the room is removed from all channels.
When it comes to setting rates, hoteliers should also consider automatic rate setting functionality, which can help a hotel achieve maximum occupancy at the most effective room rate. Automated revenue management allows users to set rules in assisting with managing inventory value. A hotelier would define rate alert triggers with minimum and maximum dates from date of stay. Then, the property management system would automatically adapt BAR levels based upon changes in actual occupancy, or number of rooms sold. Alternatively, hoteliers could choose to implement one-click pricing control to maintain rate parity across all sites.
Increasing a hotel’s income is much more achievable with the right tools. By leveraging the power of a cloud-based property management system and other strategies, hoteliers can set the stage to make smarter and potentially more profitable operating decisions.
About the Author
Joshua Molina is a marketing communications executive at SkyTouch Technology.