Nowadays, successful hotels promote their rooms and availability across multiple online travel agencies to stay ahead of the competition. This is possible with the help of a hotel Channel Manager.
A Channel Manager is a simple yet powerful technological solution that lets you sell all your rooms on all your connected booking channels at the same time. It will automatically update your availability in real-time when a booking is made, and when you make bulk changes to your listings.
Online travel agents (OTAs) like Booking.com and Expedia have made it easy for people to book their stays, excursions, and flights all from one place.
As a result, more travelers than ever are choosing to book their stays online. It has become increasingly impractical for hotel managers to manually update their listing information, and avoid overbookings.
The answer? Channel managers were created to help hoteliers join the new marketplace in order to increase occupancy, save time, and maximize online sales.
If you are considering a hotel channel manager, you’re in the right place. This blog gives you a rundown of benefits, uses, and features to look at when choosing the best channel manager for your property.
What is Channel Management?
Channel management in the hospitality industry is the effective process of using a Channel Manager system to manage a variety of online distribution channels including OTAs (Booking.com), retail travel agents, metasearch engines (Google), and Global Distribution Systems (GDS), to sell your hotel inventory anywhere in the world.
This is made possible by a single dashboard, allowing you to instantly update live rates and availability without switching to several different extranets. Simply put, channel management simplifies and exhilarates the way you sell your hotel rooms and the add-ons you attach to them, like special package deals, for example.
Implementing a Hotel Channel Management Strategy
With the power to adopt various distribution channels to market and sell your availability, it’s important to assess which channels are really worth it. For instance, one channel may deliver many bookings among your OTA partners, but cancellations through this channel are more common. Another channel may be geared towards solo travelers like Airbnb which results in lower RevPAR.
Collecting and analyzing this data is critical to perfecting your channel management strategy. It enables you to seek out low-performing channels and possibly revise your strategy in order to maximize profit potential. You can then use this data to sort out a more focused sales and marketing plan.
Of course, finding a channel mix that works for your property is not something that will happen overnight. The good news is that a channel manager will aid this strategy by automatically recording and storing all your booking data, freeing you up to focus on upcoming trends in the industry. Monthly reports are generated at your request so you never have to worry about missing out on valuable information!
Deciding On a Channel Manager
This is good news for hoteliers who now have plenty of channel management companies to choose from. The downside? There's no such thing as a universal channel manager. If you’re a small business, you probably need a different solution from a large hotel chain.
To help you decide, here are some factors to take into consideration:
- How many rooms you have
- How many different room types you have
- How many channels you want to connect to
- The audience you want to reach
- Integration with the software and tools you’re already using, like your booking engine or property management system (PMS)
- Your budget
RoomRaccoon is the most complete Hotel Management System (HMS) in the world. This means that hoteliers don’t have to deal with disconnected tools anymore because RoomRaccoon comes complete with a property management system, channel manager, and a booking engine.
The RoomRaccoon channel manager is perfectly suited to independently-owned hotels of 20-100 rooms and automatically updates room rates and availability across multiple channels at a lighting speed of 5 seconds!
For many hoteliers, investing in an HMS solution is more practical than investing in a PMS requiring multiple integrations to do what an HMS already does.
4 Major Types of Online Distribution Channels for Hotels
Hoteliers around the world have unlimited options these days when it comes to distribution channels. While direct bookings are the most profitable bookings, the benefit and scope of indirect bookings or distribution channels can’t be undermined.
An OTA like Booking.com is a popular example of a distribution channel which by definition is a chain of businesses or intermediaries through which your hotel listing passes until it reaches the final booker.
Here are important details on the top four major online distribution channels:
1. Online Travel Agents (OTA)
An OTA is essentially a booking platform that sells travel-related products including airline tickets, car rentals, cruises, experiences, accommodations, and more.
Benefits: OTAs generate enormous exposure for hotels, making your rooms visible to local and international travelers who may not have found you otherwise. 40% of mobile users book their stays through OTAs and typically go to the hotel’s website to look for a better deal or more information. With a booking engine in place, you may be able to convert this bonus traffic to direct bookings.
Popular OTAs: Booking.com, Expedia, and Hotels.com.
Pay structure: OTAs are the most expensive distribution channels with commission fees of 15%-25%.
A wholesaler is a middleman between a travel supplier (hotel) and an OTA/travel agent. It sources the hotel room nights in bulk, packages them, negotiates rates, and then sells them to OTAs and travel agents.
Benefits: Wholesalers take properties/rooms to a wide range of markets that hoteliers are unable to reach directly like international customers. They help the hoteliers maximize their occupancy, along with a certain occupancy rate guaranteed.
Popular Wholesalers: AOTGroup, CN Travel, FollowMe2Africa, Helloworld Travel
Pay structure: Negotiated rates with hotels
A metasearch engine is a search engine that searches other search engines. In other words, a metasearch engine lets travelers compare hotel room rates, from various online travel agencies (OTAs) and other booking sites.
Benefits: Travellers from all over the world can find room prices from multiple booking options all from one place.
Popular metasearch engines: Google Hotel Ads, Tripadvisor, Kayak, and Trivago.
Pay structure: Metasearch engines use click-based advertising, subscription services, commissions (12%-15%), sponsored placements, listing fees, and reservation fees.
4. Global Distribution System (GDS)
A GDS is an online network for companies within the travel industry. It takes information (inventory, price, and availability) from suppliers such as airlines, hotels, cruise lines, and car rentals and makes it available to distributors such as travel agents (both human and online) and tour operators.
Benefits: A GDS is widely used by travel agents to search, and book trips for their clients. Mainly because it allows them to bundle travel deals for the same trip. For example, they can book a hotel room, flight or a rental car from the same system. At the same time, it allows hoteliers to tap into a wide travel network, especially corporate travel.
Popular GDSs: Sabre, Travelport, and Amadeus
Pay structure: A GDS will charge a one-time setup fee and then take either a percentage compensation or a flat fee per booking.
A mix of direct booking, as well as indirect bookings, will help you drive a diverse stream of revenue and reach a variety of customers in a fast-paced hospitality environment. So when choosing your online distribution portfolio it’s important to create an optimal distribution strategy.
Hoteliers use these guidelines to develop a distribution strategy for their property:
- Have a clear business objective
- Target your best guests
- Maintain competitive rates
- Understand your profitability: GOPPAR VS RevPAR
- Decide on promotions you want to run
- Adjust rates based on market conditions
- Offer extras on your direct channels (websites)
Each and every distribution strategy will look different depending on the hotel type, size, and target audience. However, executing the strategy is only possible with the help of a channel manager.
For example, in the past, a hotelier would most likely miss out on opportunities to double their profits during an event hosted in their city. The amount of time and effort it takes to update once-off rates on different extranets just wasn’t a practical option.
Now, hotels can make quick updates and have them cascade across all the channels they work with – saving time, increasing accuracy, and eliminating issues with overbooking and rate parity, all within a few clicks.
6 Ways a Hotel Channel Manager Improves Your Business
We now know that a channel manager does a fantastic job of saving you time and making life easier when updating room rates and availability across multiple platforms. But that’s not all it does.
A channel manager plays a vital role in hotel operations. It can help you increase revenue and profits during slow times, so it’s no surprise that channel managers are gaining popularity as hoteliers realize the benefits.
Here are 6 benefits of using a Hotel Channel Manager:
1. Increase your online bookings
It’s important that your business is there when, and where bookers come looking. These days, that means being online. A channel manager enables you to cast a wide net and catch more online bookings than ever before.
2. Leverage data to increase hotel revenue
A channel manager gives you access to some of the most valuable data to optimize your channel management strategy and increase your revenue. You can use this data to determine which channels are most effective and focus on the areas that yield the best results. What kind of data can benefit your hotel business?
Segments of travelers that visit most often (business, leisure, families)
Visit dates (weekends, summer, festival season)
How far in advance they’re booking
Where they come from (both regions and channels)
Length of stay
Preferred services and priorities (parking lot, swimming pool, meals that are included in the cost of accommodation)
3. Drive direct bookings
The great billboard effect! OTAs get a lot of attention because they're easy to use and offer travelers lots of choices. But in many cases, travelers end up booking through the hotel site when they’re looking for a better deal or want to learn more about the place they've chosen to stay at.
4. Create a seamless flow of information
An all-in-one hotel management system, like RoomRaccoon, allows for seamless flow of information between the channel manager, property management system, and the booking engine. Any additional integrations like a revenue management system can easily form part of this information flow. This allows you to manage your hotel's operations from a single control panel.
5. Automate your rate updates
Like RoomRaccoon’s HMS, some channel managers, with yield management functionality, can automatically lower and increase your rates based on predefined rules. Slow Sundays? Simply set a rule that lower rates on Sundays to incentivize more bookings. This functionality can be a simple, yet powerful tool for increasing revenue and comes in handy when multiple staff members use the channel manager.
6. Improve brand awareness
A powerful channel manager will provide two-way unrestricted access to major booking channels like Booking.com, Airbnb, and Hotels.com among plenty others! This means that travelers from all corners of the world who would never have heard of your property are more likely to discover you and potentially become repeat bookers.
Other Powerful Systems to Use With a Channel Manager
Some things just go well together like bread and butter. In the world of hotel management software, the ideal trifecta that forms part of a complete centralized control center for your hotel is a booking engine, property management system, and channel manager.
Whether you’re already using some of these systems or not, integration is incredibly important. Systems like a channel manager should be able to integrate with other systems that your hotel uses daily, like the property management or reservation system to ensure the accuracy and smooth-running operation of your property’s backend.
By keeping all of your customer information in a centralized database, you’ll be able to provide a better customer experience across all of your customer touch-points and ensure that your staff is able to input information quickly and accurately.
All of the following systems are effective when used with a channel manager:
1. Property Management Software (PMS)
Hotel property management systems (PMS) manage all aspects of hotel business operations, including managing front-office capabilities, such as booking reservations, guest check-in/check-out, room assignment, managing room rates, and billing. A hotel PMS replaced time-consuming, paper-intensive processes.
2. Booking Engine
A booking engine is a reservation processing system used by hotels and other properties to capture bookings and credit card information via their website, social media, or other marketing channels. A booking engine replaced the tedious, and dull hotel website ‘contact us’ cards.
3. Revenue Management Tool
Revenue management software makes sure your rates are optimized by looking at what your competitors are doing, as well as supply and demand. A revenue management tool works well with a channel manager to ensure the rates you set are more or less on par with your competitors.
Underselling will mean you lose money, overpricing will mean you get fewer bookings, and pricing it right will mean you make a profit. With real-market data, it’s possible to predict and act accordingly.
Installments and Pricing
If you're a small independent hotelier in a budget-conscious world where all things can be purchased and separately installed, then an all-in-one hotel management system is the way to go.
This is because hotel software is only compatible with one another in certain instances and paying multiple contracts and calling multiple support lines when something goes wrong can become a headache.
Reasons to invest in a cloud-based all-in-one HMS:
- Affordable; cost based on how many rooms you have
- One contract, one single support line
- Centralized solution
- Easy staff adaption
- Multiple partner integrations like POS systems
- Easy cloud-based setup; “plug-and-play”
Take a look at what RoomRaccoon clients are saying.
See it for yourself. Schedule a free demo to learn more about how RoomRaccoon’s HMS can help transform your property into a smart and profitable business!
Written by Genya Ever heard of a hotel Channel Manager or wonder why you need one? Let's have a look at what...