Hotel inventory management software: Complete guide

What is hotel inventory management software?

Hotel inventory management software is a specialised tool designed to help hotel operators efficiently manage their inventory, which includes rooms, amenities, and other resources.

Effective inventory management for hotels involves both creating and managing demand, and maximising returns. The investment backing a hotel is tied up in its rooms and the returns can only be gained from selling those rooms optimally. The main considerations for hotel inventory management include pricing, distribution, and market segmentation.

On any given day, you might deal with your hotel’s latest promotions and marketing messages; the analysis of your sales figures and occupancy rates; the management of guest expectations and online reviews; the supervision of maintenance works and renovations; and that’s before we even mention the effective management of your hotel staff.

All of this hinges on how you’re managing your inventory and with increased competition and transparency in today’s booking landscape, the job is becoming one of higher focus and difficulty.

Table of contents

Inventory and distribution in the hotel industry

Inventory management is an umbrella concept that involves understanding, overseeing and controlling your hotel’s room inventory.

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 dynamic pricing, and the benefits include simplified revenue processes, increased speed and agility of a hotel’s responses to customers, as well as greater rate integrity. Inventory management also enables you to set your prices relative to competitors, which is essential given that OTAs are levelling the playing field for hoteliers through increased pricing transparency.

Hotel operators need to create an efficient and effective distribution strategy to thrive in a competitive global industry.

Here’s how to optimise your hotel’s distribution strategy:

1. Collect data and utilise it effectively

No matter how good your distribution strategy is, you need to recognise that there’s always room for improvement. The best way to enhance and improve your distribution strategy is to collect data and initiate a better understanding of your guests and distribution partners.

Through data collection, you will be able to understand which channels drive the most revenue, and when. Be sure to run regular reports so that you can make frequent adjustments based on the most relevant, accurate and recent data available.

2. Consider your target market segment when adding agents to your distribution network

Certain distribution agents will appeal more to different market segments, so it’s important to form partnerships with the right agents for your property. For example, if your hotel appeals to international travellers from China who are searching for luxury experiences, you will want to find OTAs that attract those specific individuals.

3. Increase opportunities for direct bookings

Many travellers use large distribution agents, such as OTAs, as a starting point for their travel-related research. They’re likely to discover your hotel on OTA search results pages, but they may also head to your website or begin following your social pages in order to learn more about your brand. At these key moments, make sure your potential guests know they can book directly with you.

Make online booking simple on your website, and prominently display your booking button. Include booking capability on your social pages, such as Facebook or Instagram.

4. Use OTA marketing strategies to your advantage

The fact of the matter is, OTAs have more money to spend on marketing than you do. Use this to your advantage, and let them promote your property for you. Leverage their marketing spending in order to increase bookings at your brand, without increasing your own marketing budget.

Why is having hotel inventory management software necessary?

Having hotel inventory management software is essential because it helps streamline operations and boost efficiency in a hotel. It automates administrative tasks like tracking room availability, managing bookings, and updating rates across different platforms, reducing the risk of overbookings and errors and giving you (and your staff) time back in their day to create excellent experiences for guests.

Hotel inventory management software also allows hotels to adjust prices dynamically based on demand, ensuring they maximise revenue. The best software integrates with other systems like property management and customer relationship management tools, providing a comprehensive view of operations. This makes decision-making easier and helps deliver a better guest experience.

Maximise the potential of your inventory management with SiteMinder

Inventory management doesn’t have to be hard and complicated when you leverage the right hotel technology. SiteMinder streamlines your operations and helps you achieve unbeatable revenue results.

Learn more

What is the purpose of a hotel inventory management system?

The purpose of a hotel management system is, in essence, to make it easier, faster, and more profitable to – you guessed it – manage your hotel inventory.…

Inventory management is an umbrella concept that involves understanding, overseeing and controlling your hotel’s room inventory.

Hotel operators need to create an efficient and effective distribution strategy to thrive in a competitive global industry.

Here’s how to optimise your hotel’s distribution strategy:

1. Collect data and utilise it effectively

2. Consider your target market segment when adding agents to your distribution network

Certain distribution agents will appeal more to different market segments, so it’s important to form partnerships with the right agents for your property.

For example, if your hotel appeals to international travellers from China who are searching for luxury experiences, you will want to find OTAs that attract those specific individuals.

3. Increase opportunities for direct bookings

Make online booking simple on your website, and prominently display your booking button. Include booking capability on your social pages, such as Facebook or Instagram.

4. Use OTA marketing strategies to your advantage

hotel inventory management software

Benefits of using hotel room inventory management as a strategy

By this point, you understand the theory of what hotel room inventory management software can do, but why should hotel room inventory management be a key part of your strategy?

Here are the benefits of having a comprehensive room inventory strategy:

1. It allows you to improve your distribution strategy

Your room inventory strategy should identify the various channels that need to be used to maximise bookings during a specific period of time, and also minimise the costs associated with achieving those bookings.

For example, your room inventory strategy should identify the best times of year to employ OTAs to sell a high number of rooms. While these bookings are more expensive than direct bookings, they may be necessary to book the highest number of rooms possible during a specific time of the year.

With an effective room inventory strategy in place, you will be able to better identify which distribution partners and channels to include in your overall distribution strategy.

2. It allows you to accurately forecast

A comprehensive room inventory strategy will allow you to predict when your rooms will be in higher demand and determine how room rates should fluctuate during those peak times.

Beyond simply forecasting when demand will rise and fall throughout the travel season, the best hotel inventory strategies also explain the reasoning behind those trends using accurate, relevant data. You should prioritise data collection efforts in order to create a refined room inventory strategy that predicts and forecasts future demands with precision.

Ultimately, forecasting has a direct impact on your ability to balance your room inventory levels with their revenue levels, giving them the opportunity to earn as much revenue as possible with each booking.

3. It allows you to segment your target markets

Knowing that not every room is right for every traveller, it’s important for you to use a room inventory strategy to better develop segmentations. For instance, the luxury suite at the highest level of your hotel property is not going to be within reach for every market segment you sell to.

It’s critical your room inventory strategy accommodates the various types of people who book your hotel, including their interests, age groups, demographics and budget levels, and matches them accordingly with the right rooms to meet their needs. By using segmentation strategies, you will be able to sell as many rooms as possible across all of your different price points at any given moment.

Hotel room inventory management tips for hotel owners

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. 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 inventory management strategy.

Create a balanced strategy

It costs time and money to store, track, and promote inventory across multiple booking channels. Because mismanagement of inventory can cause significant financial problems, hotels must be vigilant in tracking their data and implementing findings on a regular basis with an eye to controlling the costs associated with inventory. Technology will help you make the most of your data and create a balanced inventory management strategy, this includes:

Lead Time

In order to maximise sales, you need to understand how long it takes to sell hotel rooms through each of your key channels. With booking lead times shrinking, creating more forecasting uncertainty, hotels must have a better grasp of what consumer behaviours and trends are driving lead times from the search-to-booking window.

Distribution

What is the minimum number of rooms you have to sell through each type of booking channel in order to maintain effective sales levels? By understanding the minimum number of rooms to be sold (across day, week, and month) and across specific channels (direct and indirect), you can both reallocate any cancellations, and more importantly, decide how and where to utilise spare rooms for promotional offers and seasonally adjusted rates. For maximum efficiency, your inventory management strategy needs to work hand-in-hand with your sales and marketing strategy.

Demand Management

Monitoring demand and sales trends via your channel manager or in-house reporting system allows for real-time, effective inventory management, promotion, and reallocation of rooms so that you are aware of your available inventory at any given time. To this end, centralisation of all hotel staff resources is essential so that everyone is on top of your hotel’s current inventory, the prices they should be quoting, and any discounts or promotions they can offer. This centralisation is particularly important for hotels that receive high volumes of phone reservations and walk-in guests, or have call centres or central reservation systems.

Implement a holistic approach

You need to think of inventory management holistically: it doesn’t happen in isolation from your other management, sales, and marketing strategies. With the right technology to help you integrate the different functions, you will be able not only to collect the right data and analyse it in a way that is meaningful, but also use it to drive your marketing campaigns through all your different sales channels and maximise your return on your inventory.

Overcoming distressed inventory through pooled hotel inventory management

Distressed inventory refers to hotel rooms that are not expected to be sold at full price. Inventory can become distressed for a number of reasons, but the most common is cancellations in close proximity to the arrival date.

For these rooms, hotels often significantly reduce prices to encourage consumers to book last-minute and to avoid their rooms remaining empty. After all, what is the value of a hotel room if it is empty?

Also, a hotel that is full to capacity is good for business in other ways. It conveys the impression that there is always high demand for rooms, enhancing a hotel’s reputation.

Additionally, when people stay at a hotel, they don’t just pay for the room. Other revenue can be generated from food services, recreational activities and other in-house services. Sometimes, the discounted amount of money on a reduced price room can be made up through the late-coming guests’ extra spending.

Why your hotel needs pooled inventory

A pooled inventory model means you can sell all your rooms on all channels at the same time, as opposed to splitting your inventory and allocating a certain number of rooms to each channel you connect to.

Pooled inventory can be achieved by using a channel manager and will ensure your hotel avoids double bookings and overbookings.

If a hotel is not using a channel manager, then they have to fracture their inventory splitting between all the online booking channels they are using. As an example, if a hotel has 100 rooms and is working with 10 Online Travel Agencies (OTAs), that hotel must then give 10 rooms to each OTA. That’s in theory. What actually happens, however, is that hotel will provide its best suppliers more rooms, meaning the smaller players get way less than the average 10.

The hotel then has to constantly monitor and shuffle its inventory, with the real risk of missing bookings, as they run out of inventory on the smaller – but still valuable – OTAs.

By giving all of the OTAs all of your inventory at once – which is what pooled inventory supports – most of the OTAs will reward you with better visibility in their ranking algorithm.

By using pooled inventory, there is no barrier to the number of online booking channels you can work with; by broadening your distribution, you increase your opportunity and can target individual markets and segments. This will increase your bookings and then by providing loyalty and re-marketing strategies, marketers can turn these booking clients into direct clients.

How to choose hotel inventory management software

If you are struggling to manage the inventory of your hotel, it’s actually not surprising. Being one of the biggest, core, requirements of running a successful hotel, it’s not an easy task.

Looking for a technology system to help is absolutely the right choice, and you are correct to assume it will help you sell inventory quicker and with more profitability at your hotel.

However, given the broad scale of ‘inventory management’ and what’s involved in creating an airtight inventory management strategy, there is no single tool that can cover all the bases.

There are multiple systems that help you manage your hotel’s inventory on an individual level, and they can also often work together to achieve even better results for your business.

Luckily, technology platforms like SiteMinder consists of a number of features that can help in this respect. This is why we think SiteMinder is the best provider to help solve any issues you currently have with inventory management.

To help you make up your mind, we will explain all the options you have and how you can make an informed decision about which inventory management systems to invest in.

Choosing a hotel inventory management system

Using integrated systems to manage inventory means you can eliminate all your manual work in favour of a more simple approach where your technology automates most of what needs to happen.

Of course you may decide that you only need one system. A channel manager stands out as the most important/obvious system to help with inventory management – since it enables you to sell more rooms, reduce double-bookings, save time, and increase revenue. Even so, you need to be clear on what you need and do your research so you know the channel manager you’re considering will deliver what you require.

What software is used for hotel inventory management?

Technology is changing the way people plan, book, and enjoy travel – and it can also be used to combat these changes from a hotel’s perspective.

Just as technology empowers travellers and guests to explore their online options and conveniently book their chosen accommodation, intuitive technology can eliminate the manual processes that dominate your daily routine in your hotel.

One great example of how you can use technology to positively impact your hotel’s operations is last-minute bookings.

We know that mobile devices are changing everything. More than half of the world’s population now has a mobile device. That in turn means that more guests are booking your hotel on smartphones and tablets, and crucially, they’re doing it increasingly at the last minute.

This trend represents a huge opportunity for hotels to sell their very final rooms, right up to the last minute. But only hotels with the right channel management technology in place will be able to take advantage.

Ultimately your hotel needs one single connection that can shield you from the madness; a seamless two-way connection to your hotel’s various booking sites is key to ensuring the constant flow of information is reliable.

This allows you to increase your revenue and reduce waste, by ensuring all your inventory is available across all channels – and you can keep all available rooms listed right up to the last minute. When a room is booked, a channel manager automatically updates it across all channels. You can change the room rates across all channels without logging into multiple sites to make updates, and maintain or increase your rates.

There are a lot of systems that help support inventory management:

A channel management system
An online booking engine
A pricing intelligence system
A global distribution system
A payments system
A property management system

As you can see, it’s a lot to consider – but your inventory management will benefit from all of these. You must decide how essential each or all of them is for your individual property.

Key factors to consider in a hotel inventory management system

In essence, making ONE choice to go with a leading platform like SiteMinder, it saves you the hassle of assessing many options for multiple products. Get them all in one place, with the added benefit that they will all seamlessly integrate and share data with each other.

Using integrated systems to manage inventory means you can eliminate all your manual work in favour of a more simple approach where your technology automates most of what needs to happen.

Hotel inventory management software: Channel manager

Given a channel manager is the most powerful asset, it’s important to make the right choice since not all of them include the same features.

Choosing the right channel manager will also enable you to:

Get your hotel booked faster
Remove manual entry with complete real-time automation
Have all your rooms online at once to increase revenue
Understand deep reporting to help analyse trends such as last-minute bookings

Here are some questions to ask potential channel manager providers no matter what size your property is:

Do they offer full integration with your property management system?
Do they support global channel connections, integrated with reliable XML connections?
Is the user interface user friendly?
Is adequate support and training offered, especially in your native language?
Do they use a pooled inventory model?
Is comprehensive reporting part of the system?
Will they integrate with your online booking engine?
Do they automate and update in real-time?
How long does it take to implement the technology?
Is the software PCI DSS compliant?
Are there product feedback avenues?
Can the product support multiple users
Is there a free trial period?
Is the pricing model per channel, per reservation, or flat fee?

Take a look at SiteMinder’s channel management here.

Hotel inventory management software: Online booking engine

Channel managers are excellent tools, but they need something to manage! That’s where an online booking engine comes in, making it easier to generate direct bookings, avoiding OTA fees, and creating a streamlined guest experience from start to finish.

Choosing the right online booking engine will also enable you to:

Increase direct bookings: encourage guests to book directly through your website, reducing reliance on third-party booking platforms and saving on commission fees
Enhance user experience: provide a seamless and intuitive booking process, making it easier for guests to find and reserve rooms
Optimise revenue management: implement dynamic pricing and special offers easily, maximising occupancy and revenue
Access valuable insights: gain access to detailed analytics and reports on booking trends, customer preferences, and revenue performance, aiding in strategic decision-making

Here are some questions to ask potential online booking engine providers no matter what size your property is:

Is it customisable to your hotel’s brand?
Is the booking process a simple two-step model?
Are there multi-language and multi-currency capabilities?
Is it mobile-friendly and Facebook-compatible?
Can it handle customised emails for pre-arrival and post-departure?
Does it include a visible, eye-catching, ‘Book Now’ button?

Take a look at SiteMinder’s online booking engine here.

Hotel inventory management software: Pricing Intelligence

Pricing intelligence in hotel inventory management software helps you stay competitive by monitoring market trends, competitor rates, and demand fluctuations. It allows you to adjust your prices dynamically, ensuring you always offer the best rates to attract more bookings and maximise revenue.

Choosing the right pricing intelligence will also enable you to:

React quickly to market changes: adjust your rates in real-time based on demand and competition
Increase profitability: optimise your pricing strategy to ensure maximum revenue without sacrificing occupancy
Gain a competitive edge: stay ahead of competitors by offering the most attractive rates
Make data-driven decisions: use detailed analytics and reports to inform your pricing strategy and improve overall performance

Here are some questions to ask potential pricing intelligence providers no matter what size your property is:

Will it allow you to compare market prices and trends?
Can it show you the demand for your rooms?
Will it give you insight into how you measure up to your competitors?
Will it notify you of rate changes in the market?
Does it enable long-term forecasting?

Take a look at SiteMinder’s pricing intelligence tool here.

Hotel inventory management software: Property management system

A property management system (PMS) within hotel inventory management software centralises and streamlines all your property operations, from reservations and check-ins to housekeeping and billing. It ensures efficient management of daily tasks, enhances guest experiences, and improves overall operational efficiency.

Choosing the right property management system will also enable you to:

Manage bookings seamlessly: handle reservations, cancellations, and modifications with ease
Improve communication: streamline communication between different departments like front desk, housekeeping, and maintenance
Track performance: monitor key metrics such as occupancy rates, revenue per available room, and guest satisfaction
Ensure compliance: maintain accurate records and reports to comply with regulatory requirements and standards

Here are some questions to ask potential property management system no matter what size your property is:

Is there an easy calendar overview of reservations?
Can you add additional rooms and items to a booking?
Are you able to close out specific rooms or add new rate plans to existing rooms?
Does it enable check-in and check-out to happen in seconds?
Will you be able to manage your housekeeping and staff?
Is support helpful and accessible?
Does it include a free trial?

Take a look at SiteMinder’s PMS integrations here.

Hotel inventory management software: Revenue management system

A revenue management system is another vital piece of technology that can significantly aid your inventory management strategy.

We live in an era of big data. In order to create accurate demand forecasts and update room prices in real-time, you are going to be reliant on technological solutions. What can an RMS do? At the most basic level, an RMS can mine your reservation, booking and data, producing demand generation forecasts for every type of room for every day of the year. You will be able to see historic booking channels, lengths of stays, prices paid and the yield generated on each room, as well as any patterns in cancellations.

These forecasts work alongside optimisation programs in order to set inventory controls, enabling you to automatically set different rates for room types and lengths of stay up to specified overbooking levels. This approach allows you to cherry pick the highest value bookings (which given differences in underlying costs are not necessarily those with the highest room rate), thereby optimising the yield on your inventory.

Pricing precision and pricing optimisation are the two most important parts of your inventory management strategy and are key drivers of your revenue per available room and profitability. Even a $1 reduction in the ADR (average daily rate) for a 500-room hotel with 70% occupancy would cost that hotel over more than $100,000 in lost revenue per year.

In order to take advantage of dynamic pricing, you need a system that can respond to information in real-time, allowing you to stay on top of any emerging trends or shifts in customer behaviour.

To superpower your inventory management it boils down to identifying the leading systems and discovering how much benefit you can gain from each of them – and how advantageous it is to use multiple systems in conjunction with each other.

Integrating hotel inventory management software with other existing systems

By integrating your Revenue Management System with your Channel Manager, you can quickly distribute real-time rate recommendations from your RMS, making sure your rooms are selling for the right price. An important piece of the inventory management puzzle, your channel manager ensures that rates and availability are automatically adjusted in real-time across all booking channels in order to reduce the time it takes to update room prices and increase revenue. By monitoring demand and sales trends via your RMS, channel manager, and in-house reporting you can effectively manage, promote, and reallocate your rooms.

Technology can not only help inform human decision making, but also show the impact of those decisions in real-time, enabling you to streamline your marketing strategies and capitalise on emerging trends. And by bringing your technological and human resources together, you can help maximise your inventory yield through more targeted marketing opportunities.

If you need help comparing providers, the best resource to use is Hotel Tech Report. Here you’ll find a wealth of content detailing the reviews for products and ratings on features such as ROI, ease of use, integration, implementation, functionality, quality of support, and more. Your peers in the hotel industry have also written reviews detailing their specific feedback on inventory management systems. This will give you clarity and prompt you to ask other important questions you may not have already considered.

Hotel inventory management software: Cost, setup, and training considerations

No matter what system you are researching, the weight you give to considering costs, setup processes, and training resources is likely to be pretty high.

Look for systems that will offer an initial setup as part of a free trial. The setup fee should be very minimal and then you get to use the product free for a period of time, likely making back that money very quickly. The added benefit is that when you do decide to become a billed customer there’s no more work to be done and you already know how to use the system.

Setup should take only a few days once you’ve had your initial call. At SiteMinder, you’ll be treated to a dedicated onboarding specialist who will guide you through the setup process and offer hands-on training for your systems. Other resources such as video tutorials will also be available.

The best providers will only charge a flat, risk-free, monthly fee for their service, rather than locking you into a contract or charging you per transaction. Usually, the price of your system will depend on how big your property is, i.e how many rooms will need to be managed.

To see how this works with your property and the various systems you might use, visit SiteMinder’s pricing scale here.