Inventory Management in the Hospitality Industry

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The hospitality sector can sometimes be overlooked when we think of inventory management. After all, what is their product on offer? For hoteliers, their inventory are hotel rooms rented each night; for restaurateurs, it is food and beverages that are purchased or prepared and that do not end up being consumed and paid for by patrons.

Inventory management can be difficult for the hospitality industry because of the somewhat intangible nature of their product or difficulty associated with tracking it and stocktaking. However, do not fall into the trap of thinking that it can simply be forgotten about as this will cost you thousands per year in revenue. Here we consider some ways in which better inventory control can be achieved in hospitality environments.

Hotel inventory management

Effective inventory management for hotels involves both revenue management (creating and managing demand) and yield management (maximising returns). The investment backing a hotel is tied up in its real estate and the returns can only be gained from renting out that real estate optimally.


By driving prices up during high peak periods and knowing how much to discount prices by to ensure rooms are rented during low peak periods, hotels can maximise their return. Through dynamic pricing, businesses can provide discounts and incentives in a controlled way during different seasons.


Hotels generally advertise their rooms through multiple channels, such as online travel agencies, to optimise reach and promote sales. Distribution management is essential and this involves calculating the minimum numbers of rooms needing to be sold for any given period by each channel. In doing so, you then have the ability to make informed choices regarding reallocation from cancellations or where to list spare rooms to maximise sales.

Market segmentation

Being aware of your market and the variable preferences, demands and affordability of different demographics are paramount to understanding how to price and distribute your room sales across the various channels. Not only does this help in managing your existing rooms, but it can also allow you to capture more of the market and increase sales and revenue. Flexibility is an important virtue required of hoteliers and being able to understand your clientele and adapt to their needs is vital to building loyalty and guaranteeing profitability.

Restaurant inventory management

Inventory management in a restaurant or bar is exceedingly difficult as stock items might not be single entities of uniform shape and size that can be easily counted. However, this is even more the reason for special attention to be paid to inventory when managing a bar or restaurant. Let us consider some areas of uncontrolled inventory and how to overcome them.

Snacking on the go

For restaurateurs, food can be a significant area of uncontrolled inventory. This applies particularly to staff meals where fruit or other food items are quickly grabbed for consumption on the job. This is indeed generous and will likely go a long way with staff, however over time, this equates to thousands of dollars not accounted for. Simply account for it in inventory otherwise there will always be issues and irreconcilable areas when it comes to stocktaking.

Stagnant ordering systems

A big area for constant improvement is the ordering system which comprises the software and the ordering practices. Keeping orders stagnant over time without basing them on real data of consumer trends is a sure way to increase wastage and decrease the bottom line. A useful rule of thumb is to look at the previous six weeks of sales and use that as a gauge for future orders, making sure that it is consistently adapted for fluctuations.

In this article, we have briefly looked at some key components of inventory management for those in hospitality. Of course, as with any industry and the management of inventory, there is invaluable software available to make the task that much easier. Seek out tools that can help as managing inventory is the cornerstone of business success.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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