Channel Manager without secrets

Channel Manager without secrets

02 August 2019Olga Gajewska

Are you still new to the hospitality business and still not sure what is wat when it comes to technology? You don’t know if channel manager is a tool for you and what you can gain from it, let alone choose the right product for you? If so, then this article is a must read for you.

 

For sure you remember the times when hotel reception desks were equipped with notebooks with tables in which the reservations were saved. Perhaps you still use the same notebook at work? Such system is simple and works reliably, but only if you have one booking source. But what if the guests call you and at the same time send you e-mails, create bookings via the website and what’s more you get a lot of bookings from OTA (Online Travel Agencies, e.g. Booking.com, Expedia or HRS)? How to get your head around it all? How to choose the availability for each of these sales channels? How to avoid overbooking? 

What is channel manager

Each booking source is your sales channel. The channels can be direct, e.g. a phone call to a hotel or a contact via the website of your facility. You can also use options such as OTA (Booking.com, Expedia, etc.), GDS (Global Distribution Systems) or wholesalers. You can learn more about them from the section below.

Channel manager is used to determine prices and availability of rooms / apartments on each channel and to automatically reduce the number of rooms available on all of them after each booking.

Each incoming booking automatically reduces the number of rooms on all other channels, saving you the time you would have to spend to log into each channel and to manually modify the data.

Without it, each time a guest creates a booking via your website, you would have to log in to all your OTA channels and apply the changes to them. Channel manager can do it for you automatically. Thanks to this, you can also be sure that guests will not book the same room twice and that you will not have more bookings than your availability.

In addition, channel manager allows you to fully manage the rates of your rooms. You can set price lists for different options. For example:

  • room rates per sales channel,
  • room rates with breakfast and without,
  • room rates with and without an extra bed.

A good channel manager will also allow you to automatically modify rates depending on the season.

Thanks to the fact that the channel manager will integrate with the booking engine on your website, the engine will be treated as one of the sales channels. In this case, all reservations coming from your website will automatically reduce the availability on other channels. The same will happen when integrating with any other channel – a booking created on one of them will reduce the availability for others.

OTA, GDS or wholesalers?

This is the question which should be answered by your sales strategy. Direct booking strategy is not a solution for everyone and not every object benefits from counting only on direct sales. Sales through multiple OTAs maximizes your visibility and significantly increases the likelihood of a booking.

It’s a good solution when you don’t want to advertise your facility yourself, and marketing activities are not your strong point (unless you want to outsource it to an agency). This approach may work if you only have a few apartments or a small number of hotel rooms, and when you only offer B&B options or a self-catering option. In other words, it works when you don’t sell stay packages and additional services.

What you need to remember is the fact that the commission per booking via OTA can reach 20% of the booking value. OTA also give you less options to differentiate types of stay, i.e. selling options other than standard accommodation and B&B. You must also recognize which OTAs will be suitable for your facility. Not necessarily the biggest players are the most popular search engines for your hotel. It depends on its type and your target group. It may happen that small local OTAs will give you more bookings than a big brand. 

GDS or Global Distribution Systems such as Saber, will work if you want to acquire a corporate guest and when you want to sell rooms to guests from abroad. You can learn more about GDS here. Nevertheless, if you are considering working with GDS, a channel manager will be an indispensable tool for you.

Wholesalers on the other hand buy a larger number of rooms from your property and resell them further, also to OTA and GDS. The purchase takes place at the wholesale price, but regardless of whether the room will be sold further or not, you will receive your remuneration.

Wholesalers have the advantage of being able to reach areas that you would not be able to reach on your own. They also allow you to predict occupancy and revenue month to month. Of course, such cooperation has a price, which is reduced profit per room and (again) the lack of opportunity to sell additional services.

However, if you would like to cooperate with wholesalers and at the same time keep the possibility of offering your rooms directly, or through OTA than a channel manager is indispensable for it.

Channel manager vs PMS

PMS (Property Management Systems) is probably the first system each hotel manager thinks about when he starts his business. PMS also collects information about reservations and you may be wondering what is the difference between them.

PMS will not cooperate with sales channels. This is the function of a channel manager. However, both of these systems can be integrated and exchange information. Channel manager can be a source of information about bookings for the PMS system and be a link between it and OTA. 

However, for channel manager to work correctly you do not need a PMS system. Thanks to the fact that you define availability and room rates directly in the channel manager, you don’t need to have anything more to conveniently manage availability and rates, and therefore your revenue. Such a configuration (standalone channel manager) can work well for owners of several apartments, for whom an investment in an expensive PMS system may turn out to be too high a burden, and who don’t need a separate housekeeping management system or a system for invoicing. 

How to choose a channel manager

If you already decided that channel manager is a tool that will help you at your work, what is left is to choose the right tool. What is worth taking into account when choosing CM?

  • Support for those OTA / GDS / wholesalers that you want to collaborate with. Don’t focus at the number of all connections on its own, because you may find that those you need are not there. Check carefully if what you need will be provided.
  • Certified connections. Do you want all data to reach OTA flawlessly, and the information about the bookings come back to you undisturbed? Make sure that the channel manager you are considering has the certification for its XML connections.
  • The possibility of integration with your PMS. If you have PMS, it is worth you to combine these two systems with each other – it will facilitate your work thanks to the automatic transfer of data from one system to another.
  • Flexible configuration of room rates and availability. Not every channel manager is suitable for every type of facility. Choose one that will support your pricing policy and accessibility plan.
  • With your future plans in mind. You probably won’t stop at a few rooms or a few facilities. If you’re already planning your growth, make sure your channel manager is also prepared for it. Create a plan and ask about how the tool will be able to support you in implementing it.
  • Relevant reporting. You need to have an insight into what and how is sold if you want to modify your pricing policy. Unfortunately, hospitality is not an industry where you can create a configuration once and for all and forget about it. It is important that you have the appropriate basics for these modifications.
  • Support in creating and changing price lists. The company that offers you the system should also support you in working with it. Especially at the beginning of your journey you cannot be left alone.

At Profitroom, we know that although direct booking is a great strategy, not every facility may want to rely on it solely. This is why Profitroom Suite also includes Profitroom Channel Manager. If you want to know if Profitroom Channel Manager meets your requirements, fill out the form below and our sales department will address all your doubts.

 


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Author: Olga Gajewska