Inventory

In the travel industry, inventory management is the complex process of managing the availability of products or services to generate maximum revenue. Since the hotel room unsold tonight cannot be sold tomorrow to recover the loss, inventory is managed dynamically.

Suppliers work with sophisticated systems, such as a PMS (Property Management System) or CRS (Central Reservation System), to keep a single source of truth as to what is available. These systems need to be able to deal with complex logic, such as:

• Room types: Difference between a “Standard King” and an “Ocean View Suite.”
• Length of stay (LOS): Limiting inventory availability according to minimum stay requirements.
• Virtual inventory: Creating multiple sellable products from a single physical unit (e.g., selling a physical suite as two separate connecting rooms)

The greatest technical challenge of travel is the distribution of inventory across multiple channels (OTAs, GDSs, bed banks, and the direct website) without discrepancies.

This is based on the ARI (Availability, Rates, and Inventory) messaging. When a room is booked on one channel (Expedia, for example), the Central Reservation System needs to update the inventory count on all other channels immediately to avoid “double booking” of the room.

Common Allocation Models

Travel inventory is distributed often by means of specific allocation models:

• Free sale: The distributors can sell the inventory freely until a “Stop Sell” is received from the supplier or until the cap is achieved.
• Allotment: A specific quantity of inventory (e.g., 10 rooms) is pre-assigned to a specific wholesaler or tour operator. They have the exclusive right to sell these rooms until a certain “release date.”
• On request: The inventory is not confirmed instantaneously. The seller needs to contact the supplier and manually check the availability to confirm the booking.