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Are you a bit confused when you see the word "Room Type" in one of your Extranets or in your PMS or Channel Manager? Some people think: "Oh, yea - a Room Type is a Room.", but the thing is, it's not. And understanding the differences between them can help you sell more. In this post, we'll break down the differences and explain why it's important to set up your Room Types correctly in your Extranets. So, next time you see "Room Type" somewhere in an Extranet or an email, you'll know exactly what they're talking about.

Most of the time, when property owners set up their Room Types (in an Extranet), they create their Rooms as Room Types. I've had this conversation hundreds of times. Most of the time those Room Types look like this:

Look familiar? These Room Types are all identical, and they are duplicates!

What is a Room and a Room Type?

So, let's define what a Room is: A Room is the physical place where your guests stay. "Room 1" or "Purple Room" may be good names for one of your rooms at your hostel or hotel. Generally, these names are for internal use, and for guests once they arrive.

So, what's a Room Type? Well, a Room Type is a category, or a collection of Rooms that are identical. They have the same type of bed, same quality, same type of bathroom, and they sell for the same rate. They are interchangeable. If "Room 1" and "Room 2" both have "Deluxe" Queen beds with ensuite bathrooms, and both sell for the same Rate - then they should be part of the same Room Type. Probably a "Deluxe Queen Ensuite".

Continuing the example from the last screenshot (the one with duplicate Room Types in the Booking.com Admin), this is what that same Room setup should look like:

Now it's one Room Type with '3' of this type. Bingo.

In the case of Rooms, the names you assign can be anything. In the case of Room Types, the names you assign are descriptive.

So you may be asking: "But why? Why do we have to make that distinction? Why can't I sell my rooms as they are? I've got 'Room 1', 'Room 2', etc.? Why should I care about this Room Type thing?"

And the answer is: For many reasons:

Room Types = Inventory

Room Types are inventory. And Booking Channels, like Booking.com, Hostelworld or Expedia care only about inventory. So, even if those sites talk about "Rooms", they are actually referring to Room Types, not Rooms.

But what exactly does "inventory" mean? It means that from a guest's perspective, Room Types are what you sell - for example a "Double Queen Ensuite", not a "Room 1". So, that's why your channel wants to know how many "Double Queen Ensuite" Rooms you have. And this is the exact reason why booking channels care about Room Types, and not (physical) Rooms.

Think about it this way: If you saw "Room 1" available on a website, what kind of room are you booking? Most probably, you would have no clue (at least I wouldn't). Now, if you saw a "Double Queen Ensuite" available on a website, would you be able to tell what you were booking? And that's why booking channels focus on Room Types, and not Rooms.

Another point here is that grouping the Rooms together allows a booker to see how many are available:

How many would you like?

Maximizing Occupancy

This one is a hidden benefit. Categorizing Rooms together in Room Types also helps you maximize your Occupancy. When you separate each Room into its own Room Type, you miss out on opportunities to fill up your hostel or hotel. It's easiest to understand this with a simple example:

Let's say you have 2 Rooms that are identical ("Room 1" and "Room 2"). Let's also assume that both are identical triple rooms. But, since you haven't yet read this article, you created them as separate Room Types. Now let's say that someone books Room 1 from Jan 1 - 3. Then another person books Room 2 from Jan 3 - 6. Your Reservations Calendar should now look something like this:

Now, when someone searches for available Rooms at your property from Jan 1 - 6, it will show no availability. Why? Because there is no Room Type with more than 1 unit available for those dates!

That means those spaces are being left unsold, and you are missing out on potential revenue. If you've got Rooms setup in this way, it is likely happening to you too.

If both Rooms were part of a "Triple" Room Type, then you would have 1 room available on each of those 6 nights. And you'd' be able to fill up every night. Bam. Not losing revenue. Making more revenue. Good things happening.

Now, you may be thinking "But wait. I don't want guests to be switching from one room to another in the middle of their stay!?" and that's understandable. In this case, you could play some Calendar tetris to re-accommodate the first two bookings into Room 1. The third booking (for the 6 nights) would go in Room 2. Obviously, there are some cases where it will be hard (or even impossible) to prevent bookings from switching Rooms. It's not the best scenario, but it's better than leaving Rooms unfilled.

Simplified Rates and Management

Everywhere you look, rates are set per Room Type. So, when you create Room Types correctly, setting Rates is a million times easier. When you use Room Types incorrectly, you end up creating too many of them (generally one Room Type per Room). And when you have too many Room Types, you end up having more rates to set. Let's go through an example:

Let's say you have 5 Rooms that are identical, but you created them as 5 different Room Types on Booking.com. When you go to set your Rates, you will have to set rates for each of those 5 Room Types (even though they are the same rate). If you had created them as 1 Room Type, you would only have to update Rates for 1 Room Type. That means 5X less work.

And the same thing applies to managing those Rooms everywhere (photos, descriptions, etc.). Every time you need to make a change, you'll need to do it 5 more times. That's alot of wasted time...

Which brings me to my next point: Repetition begets mistakes. When you have to do something over and over again (like setting the same Rate 5 times), you're going to make a mistake. You'll miss a zero, or add an extra one. And that could be very costly. That could mean you sell your room for a given date for 10 times less than you wanted to. Or that it didn't sell at all because the rate was too high. Not good at all.

Analysis and Reporting

The last point here is that your reporting will be much better. When you create Room Types correctly, you'll be able to analyze your business in a sensible way. Why? Let's check out an example:

Let's say I have two "Double Ensuite" Rooms and two "10 Bed Dorm" Rooms. Let's say I create each one as its own Room Type (wrong way, remember?). When I go review my occupancy report, I'll see something separated out into each Room Type like this:

The problem is that I'm going to be analyzing my data on the wrong dimensions. The fact that Room 3 had higher occupancy than Room 4 is completely irrelevant. Why? Because they are exactly the same type of Room! The reason that one Room had more people than the other, is probably because the property decided to fill up Room 3 before Room 4 as guests arrived. Why is this important for an Occupancy report? The answer: It's not.

The reality is that when you look at your reporting you want to be looking at your Room Types. Let's take a look again at that Occupancy report, but this time with those same Rooms, regrouped as two Room Types:

This makes a lot more sense. Now, I can tell how my 10 Bed Dorm sold compared to my Double Ensuite's. I may even consider converting some Double Ensuite's into 10 Bed Dorms? Or into a smaller Dorm room? All of my reports will start making more sense too.

So, you've now got a good idea why it's so important to create your Room Types in your Extranets the right way. Questions?

Header Photo by Arwan Sutanto