Distribution Strategy for Leisure Hotels and Serviced Apartments in the Context of Dynamic Inventory

Preamble

In Leisure hotels, inventory (rooms, holiday apartments, or houses) is generally set up and offered in a much more granular way than in city hotels.

On the one hand, guests with longer stays often have very specific ideas and expectations regarding their accommodation. On the other hand, due to the differences within a property, inventory can often hardly be reduced to the lowest common denominator without creating disadvantages in sales. Different operational costs (such as cleaning or varying service levels) also prevent inventory from being grouped together easily.

In Europe, many guests book directly with the operator due to their specific expectations, often by email or phone rather than online—and returning guests expect to be able to book the same unit as in the past or specific accommodations they have seen on site. 

This is one of the reasons why the share of offline business (i.e., bookings via email or phone) in vacation rental has remained very stable for decades.

The granularity of inventory means that, in today’s technological environment, a leisure hotel or provider may have almost as many categories as rooms. This complicates pricing, revenue management, and optimized sales via OTAs—especially on platforms whose algorithms and sales logic are primarily designed for city hotels.

The sales strategy of OTAs such as Booking and Expedia is based on grouping inventory into simplified categories—the more inventory per category, the better for the algorithms—and the easier it is to compare different hotel providers. The more categories and the less inventory behind each category, the worse the positioning in OTA sales.

Airbnb follows the exact opposite approach, as it targets a customer segment that wants to book individual products - namely specific accommodation with all its details.

However, under the current static technology approach, accommodation providers cannot decide to offer their inventory in different formats across different portals.

The Dilemma

For leisure hotels, the necessary granularity of inventory represents a structural distribution challenge. Once more than six categories are displayed, clarity in online sales—especially in direct sales via the hotel’s own website—declines significantly. Differentiation turns into overload. Comparability between units is hardly possible, potential guests experience real decision paralysis, and information-heavy websites fail to present details in a digestible, decision-supporting manner.

On the one hand, leisure hotels must satisfy their demanding clientele, some of whom even want to know in which direction the balcony faces. On the other hand, operators cannot serve other target groups for whom detailed information is not important and who prefer a simple offer based on their stay conditions.

If leisure hotels simplify their inventory and group these into generic categories, they risk receiving an increased number of calls or email inquiries, worsening guest feedback, or even losing guests to competitors.

The flexibility gained from being able to shift reservations, optimize room plans, simplify pricing and offers, or apply revenue management tactics often does not offset the negative effects resulting from such simplification.

Conversely, this situation applies to city hotels in reverse, as their highly simplified offerings fail to meet the diverse needs of other target groups, meaning they are not the first choice for these guest segments.

Example Category setup of a leisure hotel: Granular or simplified

Dynamic Inventory

With dynamic inventory, the sales strategy can be optimized in a highly targeted manner while solving operational challenges. A decision between granular or simplified inventory presentation is no longer necessary.

Dynamic inventory also enables the offering of additional target-group-oriented products that can be adjusted depending on demand.

Example: During high-occupancy periods, the sale of granular inventory can be tied to a minimum stay, while shorter stays are only offered for bookings of more generic products. At the same time, inventory can be sold differently across distribution channels. For example, a specific apartment can continue to be offered on Airbnb, while a simplified category is offered on Booking.com.

Furthermore, guest-relevant features can be captured as additional products that are not necessarily tied to traditional groupings such as size.

Example based on granular inventory, which is now able to also offer simplified and other products.

In the context of an expanded product offer, it is essential to ensure that only relevant products are displayed to the guest. This requires intelligent booking engines—so-called Internet Sales Engines (ISEs) - that operate with algorithms and dynamically display suitable offers based on the number of guests, travel dates, length of stay, available products, and price points.

Technically, booked products are automatically fed back into the backend system and directly assigned within the room plan.

The Advantages of Dynamic Inventory

Individual features of each unit can be priced and displayed separately.

Guests can search specifically according to their personal preferences and book directly. Alternatively, they receive curated suggestions based on their individual travel profile.

Example: Other guests who traveled with two children for five days frequently selected exactly this type of equipment or location.

Importantly, never have more than six products displayed at the same time. This avoids decision overload, reduces cognitive strain, and ensures clear, decision-supporting presentation. The result: less complexity, more orientation—and a significantly higher conversion probability.

Room assignments are automated, making the work of reservation staff easier.

Generic products can be displayed both on third-party channels and strategically in direct sales to reach different guest segments.

Pricing of simplified categories is based on the average price of the individual units assigned to that category. This ensures that the value of features such as a south-facing balcony, rooftop terrace, or specific view is reflected in the average price.

In addition to reflecting the property’s value, different pricing offers can be set up and presented more quickly and clearly.

Early bird offers combined with longer minimum stays can ensure solid base occupancy, while last-minute offers based on simplified product offerings can fill remaining gaps.

Even services that vary per unit (such as final cleaning) do not require separate rate plans under a dynamic inventory system. Different services can be priced per product or unit, and additional extras can be offered as add-ons—all within a single rate plan.

Anyone who would like to learn more about distribution and dynamic inventory can find our educational webinars directly on our YouTube channel here.