March 24, 2017

Inventory Management: The achilles heel of hotel distribution


Hotels must understand that there is only one thing they have that OTAs don’t have: hotel rooms. Without your rooms, they cannot do anything, no matter how much money they have.

Many years ago, the hotel industry accepted the “inventory parity” and “rate parity” strategies in the online world. Back then it seemed reasonable and many people think it still is today. Everyone will face the same conditions and may the best man (or channel) make the most sales. What has happened since? Large OTAs and, in holiday destinations, large bed banks (who mostly sell on the Internet) ate almost the whole pie. What happened to profits? Weren’t hotels going to make more money with the arrival of the Internet? Where does that leave direct sales?

The main duty hotels have is to acquire the know-how that will allow them to maximize profits from their most prized asset, the only thing that sets them apart from distributors: their rooms. They must decide where and at what price they are going to sell rooms on each of the channels, burying the mantra of “inventory and rate parity” once and for all.

If hotels are to compete against distributors on a level in which they are far superior, they are destined to fail. The large amounts of money that they assign to SEO, SEM (brand or generic) or meta-search engines confirms that the focus is still wrong. Few hotels understand that inventory management is the better strategy.

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