What is a Sell Limit?
To understand how to use sell limits to their best advantage, it’s important to first fully understand what they are and why we use them. The concept of a sell limit is common in the hospitality industry and revolves around the selling of a limited number of rooms in a combination of room/date at a certain rate. It can be a single rate or a rate group.
In a rate group, every rate that is contained within that rate group will contribute to reaching that sell limit. For example, you might say “I will only sell 10 rooms at this rate,” or “I will only sell 10 rooms in this rate group.” Whatever way you choose, whenever you reach the limit on that rate or rate group, then inventory is no longer sent out through your distribution channels. That rate and/or rate group has been exhausted and will stop selling automatically. Because they allow a great amount of control for ADR, sell limits are a crucial part of every hotel’s demand strategy.
In a rate group, every rate that is contained within that rate group will contribute to reaching that sell limit. For example, you might say “I will only sell 10 rooms at this rate,” or “I will only sell 10 rooms in this rate group.” Whatever way you choose, whenever you reach the limit on that rate or rate group, then inventory is no longer sent out through your distribution channels. That rate and/or rate group has been exhausted and will stop selling automatically. Because they allow a great amount of control for ADR, sell limits are a crucial part of every hotel’s demand strategy.
A Common Situation
However, though most distribution channels accept inventory on the normal room/date/rate combination as a single rate, many do not accept that combination for a rate group. And the opposite may happen in other channels. Some OTAs might take inventory messages only per room type, so setting a sell limit might restrict other rates that you might still want sellable.If your distribution technology does not support both rate and rate group sell limits, you must set individual sell limits for every rate, or close a room too early. Unfortunately, doing sell limits this way can often shut out opportunities that you originally didn’t intend to shut out. Though not ideal, there is another solution—but only if your technology supports it.
Working Within Your Tech
To work around the lack of rate group recognition, check that your technology is able to at least translate this situation in a way that does not lead to lost booking opportunities. In other words, instead of it sending a typical inventory message of “zero inventory,” it will instead translate that information into a less problematic “availability restriction” message, which will lead to chances for alternate bookings.
The bottom line? The best way to go would be to have your technology support rate groups in your sell limits. If that cannot be done, at the very least, make sure that it delivers a restriction message instead of a zero-inventory message. But whichever way you go, just make sure that your technology supports and fits into your best demand strategy for your particular hotel.
Related Resources
The Making of a Revolution: 4 Actions You Can Take Now Toward Total RM
Contributed by Sarah Jones, Director of Revenue Management & Special Projects, SHR In the recent Skift article, Hotel Revenue Managers Say They Want a Revolution, author Sean O’Neill explores the question of why, if this is true, ... Read More
Curated Rates: Using Relevant Content to Boost Bookings
Contributed by Estella Hale, V.P. of Product, SHR What Are Curated Rates? To understand curated rates, we first need to understand what curating means. To curate, means to organize and display content in a meaningful way for a particular ... Read More
Live Oak Lodging
Client Information Based out of Marble Falls, Texas, Live Oak Lodging looks for more than just beautiful properties to invest in, manage, and develop. They look for that unique guest experience—one that will have visitors coming back ... Read More