Hotel inventory management system: How to maximise your hotel’s ROI?

Last updated on June 18, 2024

The modern hotel hospitality industry is complex. Today, hoteliers hand over too much power to third-party companies.

An efficient hotel inventory management system which is integrated with PMS (property management system) is critical to overall financial success.

Poor inventory management affects all areas of a hotel’s operations. For example, many businesses no longer have distribution control over their most profitable product: their hotel rooms. Instead, they allow online travel agencies to manage their property’s business strategy.

Although hoteliers rely on online travel agencies to advertise room occupancies, travel agent commissions can severely cut into hoteliers profits. This issue can negatively impact smaller, independent hotels who can’t negotiate lower rates, unlike the larger chains. These commissions can cause independent hoteliers to lose money. Online travel agencies should only be used along with a web booking engine which allows hotel guests to book directly on the website without high fees from and Airbnb. 

In this guide, you’ll learn how a hotel inventory management system which is integrated with PMS (property management system) can increase your revenues and rate of investment.

What is hotel inventory management? 

Hotel inventory management refers to the process of ordering, storing, and distributing a company’s current assets or finished goods.

These include managing and processing raw materials, finished products and components. This strategy ensures companies keep enough stock on hand to meet their customer’s demands. In the hotel industry, rooms are the primary inventory. Hoteliers ensure they have ample openings at rates that will attract customers to book them.

If these rooms aren’t available at a competitive price, they will remain unoccupied, decreasing revenues for properties. Secondary inventory includes supplies for guest rooms, restaurants, and gift shops. They should have sufficient stock such as toiletries, towels, blankets, and other items.

Additionally, they should have adequate food and popular products for their guests to purchase without going to waste. When inventory management is not handled properly, it can cause property owners to lose money, because they can’t sell their rooms.

Inventory management assists hoteliers in five areas:

1. Use space more efficiently – Most hoteliers need to optimise the limited room they have on their properties. Having an inventory management system and the right project management tool ensures that businesses have the right-priced rooms and products for customers. This process also minimises waste and carrying costs due to spoiled, perishable items.

2. Identify the most profitable items – Inventory management technology helps hoteliers identify their most popular products and services.

3. Develop targeted promotions and packages – This process can help hotel owners develop effective marketing campaigns based on their highest selling items and most popular rooms.

4. Saves time and money – Real-time inventory management can keep track of ordered and in-stock products. Businesses won’t need to recount items or make sure records are accurate. Companies will also know which items turnover faster.

5. Improves accuracy – Property inventory management helps hoteliers to identify how much stock is available. It will prevent companies from having room-inventory or product-related shortages. This process will also reduce overstocking and occupancies.

What are the advantages of an effective hotel inventory management strategy?
Appropriate inventory management strategies differ depending on the industry. Efficient inventory management allows hoteliers to create and manage demand.

There are five reasons that your hotel needs a room inventory strategy:

1. It allows hoteliers to improve distribution strategies

Hoteliers should use room inventory strategies that identify the channels your business should use to maximize bookings during a targeted period. This plan should also reduce all associated costs. For example, your company may determine when it’s the best time to use an OTA versus your website or a booking agent to sell the highest number of rooms.

2. It helps you to accurately forecast your high-demand periods

Your business should collect accurate data that help you build an inventory strategy. This information helps hoteliers learn why demand rises or falls throughout the travel season. You’ll be able to track trends. It also allows companies to develop a comprehensive room inventory strategy to target customer segments during peak periods.

Hoteliers can discount their prices to draw customers to their properties during off-season periods, and raise them during peak periods to maximise their ROI.

Businesses can also provide customers with discounts and incentives during different times of the year. It can help you to balance your inventory with your revenue levels.

3. It allows hotels to segment target markets

Travelers have different tastes and needs. Companies should adjust their room inventory strategy to create customer segments that match the price range and preferences of your customers. For example, one customer may want a lower-priced, budget-friendly suite, while another guest prefers a luxurious penthouse suite.

Using marketing segmentation strategies will allow properties to sell hotel rooms across different price points.4. Improve your hotel’s inventory management with automated software

An automated hotel inventory management system has real-time tracking features that allow hoteliers to efficiently distribute rooms. These platforms are superior to static allocation, where employees manually enter inventory, which increases errors. This software has real-time inventory features that allow hoteliers to manage rooms on multiple booking channels.

During this process, an automated inventory management system gathers all occupancies into a centralised pool, so different channels have access to them. For example, if a property lists openings on three separate OTAs, all three have access to their total inventory. When someone books a room, the automated software will decrease the total inventory on all sites to prevent overbooking errors.

Additionally, other inventory management systems use electronic methods to track stock in hotel gift shops, stores, and rooms. Hotel employees scan barcodes using machines or tablets, which deducts these amounts from your total inventory.  It also notifies staff when supplies have run low.Unlike spreadsheet programs, this hotel inventory management software doesn’t require workers to manual entries into a spreadsheet program like Excel, nor will employees need to use complicated formulas to keep track of data.

These platforms also improve efficiency since they eliminate manual entries into a spreadsheet. It frees staff to focus on more valuable tasks that can improve customer satisfaction.

5. How can hotels improve their hotel inventory strategy? 

There are several steps that hoteliers can use to improve their hotel inventory strategy:

5.1. Leverage your hotel’s PMS technology to track and distribute inventory

In the tourism industry, hotels must provide their guests with customized guest experiences.

Property management systems, like Protel’s PMS, allow small, independent hotels to run their businesses like larger chains. It works with automated inventory systems to provide real-time inventory tracking.

This process results in higher revenues for your property because your hotel’s PMS handles the hard work. Using an integrated automated inventory tracking system with a PMS helps hoteliers to accurately track purchases and sales at their establishments. Additionally, these machines allow hoteliers to accurately track inventory in multiple channels simultaneously. They’ll have an accurate count of how many rooms are available (occupancy inventory) as well as other inventory one has in stock.

These systems have additional advantages over spreadsheet software, like Microsoft Excel, because it centralises data so that you can track long-term trends. Unlike these spreadsheets, it will also alert you when you’re running low on certain inventory. Analytics and reports can help your business see which packages and rooms are most popular with your guests.

5.2. Use data to support buying decisions

Even if you have a great inventory management strategy, your company can still identify ways to improve it and reach more customers. You can aggregate data using your inventory management system and PMS. It will also tell them which channels are the most profitable for them. This data will enable them to make adjustments to their advertising strategy.

Data collection will help businesses identify weaknesses in their marketing plans.5.3. Consider your target market when adding agents to your distribution network

Hoteliers should market their properties using agents that can target different population segments. For example, if a hotel provides all-inclusive packages to travelers from Europe or Asia, it may need an OTA that can market to them.

5.4. Increase your direct booking opportunities

Although many travelers use OTAs, they are primarily used to supplementing their travel research with their own. In doing so they could discover your hotel, then head over to your site. So it is imperative to make sure that your company has profile information on your primary website and social media pages about your hotel’s brand. Use multiple sites to market your direct booking channels.

Tell potential guests that they can book directly through your business site. Prominently display this booking button on your website.

How to select the right automated inventory management system?

There are a few questions your business should ask when choosing a good hotel inventory management system for your company:

Six essential channel manager selection questions

  1. Does this system integrate with my PMS and online booking engine?
  2. Does it support comprehensive reporting to help my business analyse trends?
  3. Does it have a pooled inventory model that allows me to see all online rooms at once?
  4. Will it support global, two-way connections?
  5. Will it update automatically and in real-time?
  6. Is their adequate support and training offered?
  7. Does it remove manual entries with complete-real time automation?

Five pricing intelligence questions

  1. Does it provide insight into how your hotel’s pricing model measures against competitors?
  2. Will it allow your hotel to compare market prices and trends?
  3. Can it track the demand for your rooms?
  4. Does it provide long-term forecasting?
  5. Does it notify you of any market-related rate changes?

Six critical online booking agent options

  1. Can your hotel use its branding to customise this software?
  2. Is it mobile-friendly and Facebook compatible?
  3. Can it handle customised emails for pre-arrival and departure?
  4. Does your software support different languages and currency?
  5. Does it have a visible “Book Now” button?
  6. Does it use a simple two-step model for the booking process?


What is Hotel Inventory Management System?
Hotel inventory management system refers to the process of ordering, storing, and distributing a company’s current assets or finished goods. These include managing and processing raw materials, finished products and components. Find out more about PMS System.

What is Property Management System?
A property management system (PMS) is a set of software solutions that give hotel managers the ability to enhance their operating efficiency and deliver the best possible experiences for their guests. At its core, a ​property management system​ handles booking, check-in/check-out, room rates, billing, and performance analytics.

Which are the best PMS vendors?
Delivering on the daily trust of over 14,000 customers worldwide, Protel's PMS is one of the best hotel solutions providers in the hospitality industry. Click here to speak to one of our experts. 

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