What is a channel manager?
A channel manager is a system that enables your hotel to list room inventory on all connected booking channels at the same time and prevent the risk of double-bookings.
When a reservation is made, including on a direct booking website, the channel manager will automatically update availability in real-time on all sites. This real-time automation also occurs when closing a room to sale or when making bulk changes to hotel inventory.
With more travellers preferring to book their stays online, especially via online booking agents such as Booking.com and Expedia, a channel manager will help you easily manage the busy marketplace, while also boosting occupancy and revenue.
This blog will give you a complete rundown of hotel channel managers including definitions, uses, benefits, providers, and more.
Table of contents
Channel management definition
A simple definition is that channel management is the strategy of managing which channels you choose to list your inventory on, how you analyse the top performing channels, and how you optimise your connections to make more revenue at your business.
It’s the process by which you will sell your inventory via online distribution channels around the world. These channels may include OTAs (Expedia), retail travel agents, metasearch engines (Google), global distribution systems (GDS), or direct channels (your website and social media pages).
What is channel management in the hotel industry?
Channel management in the hotel industry refers to the simple function of using a channel manager system to list and manage your hotel rooms on a variety of booking channels.
This is facilitated by a single dashboard, allowing you instant access to live rates and availability without needing to access several individual extranets. Channel management is a process by which you can simplify and speed up the way you sell your hotel rooms and the ancillary offers you attach to them.
How does a channel manager work at a hotel?
A channel manager works by automating and updating your hotel’s inventory in real-time, sharing reservation data on a two-way basis between booking channels and your property management system.
This means that when a room is booked on Booking.com, for example, the channel manager will send this data to your PMS and also update your inventory across your other connected channels, such as Expedia or Agoda.
Through this process, your hotel’s inventory will always be accurate and up-to-date, dramatically reducing your risk of double-bookings and eliminating human error. You’ll also be able to control any updates and analyse performance from one central dashboard.
How can a hotel channel manager be used to improve your business?
A channel will not only make it quicker and easier to sell your hotel’s rooms and manage your inventory, but it will also deliver key performance reports that you can use to inform your marketing and sales strategies.
Take a look at this comprehensive list of how a channel manager can be used to benefit your hotel business.
1. Increase online bookings
With telephone and walk-in bookings on a sharp decline and online bookings on a steady rise, a channel manager places you in the best position to take advantage of travellers’ online booking habits.
2. Increase hotel revenue
Given a channel manager displays live rates and availability across all your channels at the same time, and updates automatically upon receiving reservations, you can accept bookings faster and almost eliminate the chance of double bookings.
In addition, the data you can analyse from your channel manager can ensure your rates and channel connections are always optimised.
3. Reduce the risk of overbookings
Without a channel manager, you’re forced to split your inventory between channels and risk double-bookings or failing to reach full occupancy. Pooled inventory and automated updates of availability and rates in real time means guests can only ever book a room that is actually available.
4. Improve brand recognition
A powerful channel manager will provide two-way unrestricted access to hundreds of booking channels where travellers who would never hear of you can now make reservations at your property. It also makes OTAs more likely to accept your listing because they can be sure your inventory will always be accurate.
5. Boost direct bookings
Many travellers will discover your property first on an OTA, but they want to learn more about you before they book. Often they will visit your website and then make the decision to book their stay. So you get a direct sale, but it was born on the OTA site – resulting in greater profit for your hotel. This is known as the billboard effect.
6. Remove manual processes
Manual data entry is time-consuming and frustrating, but a channel manager removes this friction and allows you to be more productive. Anything that previously had to be put on hold can now be prioritised to improve your business.
7. Create a seamless, integrated tech stack
Instead of being required to update information in multiple extranets, a channel manager can integrate with your property management system, central reservation system, or revenue management system as well as your booking engine to create a central control system for the entirety of your hotel’s operations.
Some channel managers, like SiteMinder, also have a unique connection to Airbnb.
8. Transform into a powerful business platform
A good channel manager allows complete transparency of data across all systems and channels, meaning you can use the received information to see which channels or rooms are performing the best. This means you can constantly update your business strategy. Look at reports such as channel yield and channel analysis and your reservation trends to see where things are going right – or wrong!
9. Reduce reliance on traditional booking channels
There’s certainly no suggestion that you should leave behind traditional methods such as taking reservations over the phone or via walk-ins. It can be very profitable to save some of your inventory for these methods. However, using a channel manager will ensure you don’t have to worry about filling your rooms in this manner. Connecting to a significant number of online booking sites will ensure your occupancy always remains steady.
10. Keep everyone on the same page
Quality channel managers are very easy to use and hotels will regularly have multiple staff members using the system. If the main user is going away or won’t be available to make updates they can easily mark important dates in the system so everyone is aware if they need to change a rate or close a room etc. For example, they may mark school holiday periods so rates can be increased during these peak times.
Benefits of a hotel channel management system
Just a slight increase in occupancy and revenue resulting from the use of a channel manager far outweighs the cost, even when you get a lot of bookings from OTAs.
Even if you are a small hotel operating only a few rooms, a channel manager will still significantly help your business by way of simplifying your day-to-day inventory management.
When it comes to deciding whether your hotel needs a channel management system, ask yourself if these outcomes are valuable to your business:
- No longer spending time in multiple extranets
- Significantly less time updating inventory data
- No human error when entering or adjusting rates and availability
- Increased global visibility and brand recognition
- A boost in occupancy and revenue
- Transparency around booking data and channel performance
- Real-time, automatic, channel updates
- Powerful two-way integration with existing hotel systems
- Establish a single, reliable, stable distribution platform that enables your business to scale
Of course, there are some tips and tricks to get the most out of your channel manager…
How to use a channel manager effectively
To see the best results from your channel manager, make sure you:
- Connect to more than five channels
- Generate and analyse performance reports such as channel mix
- Boost your channel manager data with a business intelligence tool so you can produce pace reports
- Integrate with an online booking engine to seamlessly manage your direct bookings alongside third-party bookings
- Integrate with your property management system to help you centralise your and automate many of your daily operations
Channel manager integration
Channel manager integration is the act of seamlessly combining your channel manager with other systems to improve efficiency and effectiveness.
Some systems you already use can benefit from a channel manager connection or even magnify the effectiveness of the channel manager. Integration between systems is very important for maintaining accuracy and the smooth operation of your property’s back end.
Here’s more detail on the systems that can be used in conjunction with a channel manager to improve business results:
Property management system
Your property management system covers all the administration of your hotel, including reservation management, check-in/out, guest profiles, housekeeping, maintenance, availability/occupancy, etc.
When your property management system is integrated with a channel manager, it will enable two-way communication that means any information you change only has to be recognised by the channel manager and it will alert all the third-party booking sites and your direct channels.
The same applies if information is being sent the other way. Without this integration you’d need to input the same information more than once on different systems.
Hotel booking engine
An online booking engine makes it simple to accept online bookings straight from your website or social media pages, including the all important ‘book now’ button so guests know exactly where to make their reservation.
When you use a channel manager, your booking engine can be treated in the same way as any of the third-party sites you partner with, so you can track performance, easily update rates, and maintain accurate availability.
Business intelligence tool
You can use hotel business intelligence software to make sure your rates are optimised and revenue is maximised. It’s used to track competitors and changes in the market based on supply and demand.
You can also set alerts so you never miss the opportunity to boost prices for more revenue or drop them to ensure you secure bookings. The reason this is very useful to use in conjunction with a channel manager is that the rates you set will be more or less on par with your competitors.
Underselling will mean a drop in your revenue, while overselling will see a reduction in bookings. Long-range forecasting is also vital to ensure what level to set your rates at, and importantly, when. Without real-time market data, this is impossible.
Channel management examples and solutions
If you’re looking to invest in a channel management solution, there are countless examples on the market, for all types of hotel businesses.
Whether you are a small accommodation business, medium to large independent hotel, or a group, the perfect channel manager is available for you.
However, there are some factors you need to be aware of that will influence your decision.
Common hotel channel management companies
Examples of how the size and configuration of your hotel makes a difference when it comes to deciding what channel manager would be best suited include:
- 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
- The other applications you’re already using, such as your booking engine or property management system
- Your budget
SiteMinder is a world leading channel management company, perfectly suited to servicing independent hotels of 20 rooms or more as well as large hotel groups and chains.
The company connects to over 450 booking sites and integrates with more than 250 property management systems, making it the most well connected channel manager in the industry.
If you’re a smaller property, with a smaller budget, there are also companies that specialise in servicing B&Bs, small boutique hotels, motels and guesthouses, and other small accommodations. Many of these channel managers come as part of an all-in-one system, like what is provided by Little Hotelier.
Generally, the biggest companies you come across in your research are the most reliable and are more likely to meet your needs if you do decide to look at making an investment. They’ve been in the game longer and operate the most sophisticated and secure technology, with global support.
Channel management strategy: Best practices for your hotel
Developing a strong channel management strategy relies on understanding online distribution – how to work with OTAs and other online channels to maximise success.
OTAs are an example of an online distribution channel for hotels – which refers to a chain of intermediaries a hotel room passes through before it reaches the guest. Your hotel website is also a channel, albeit a short one because it involves a direct sale to the traveller. Longer channels may involve passing your rooms through wholesalers, metasearch, or retail travel agents who may use the global distribution system (GDS).
A little more on some of these:
Online travel agents
Examples include Booking.com, Expedia, or Hotels.com. They are commonly the most expensive channels for hotels to use but one of the most effective. They generate enormous exposure for your hotel, making you visible to travellers who may not have found you otherwise.
They’re also very popular with mobile users and can in fact drive traffic to your hotel website where you may be able to convert travellers to a direct booking. If a booking is made on the OTA, you can generally expect to pay a commission fee of somewhere between 15%-25%.
Wholesalers will enter into contracts with hotels to buy rooms, which they in turn will sell to travel agencies. Essentially this makes them a middle man.
A metasearch engine or website lets travellers compare hotel room rates, from various online travel agencies (OTAs) and other booking sites all in one place. Popular examples of metasearch include Google Hotel Ads, Tripadvisor, Kayak, and Trivago. A potential guest can use these sites to find room prices, and purchase rooms, from multiple booking options at the same time.
Global distribution system
A GDS is a worldwide conduit between travel bookers and suppliers, such as hotels and other accommodation providers. It communicates live product, price and availability data to travel agents and online booking engines, and allows for automated transactions.
The GDS is often used to tap into the corporate travel market because it has the ability to present hotels, flights, and car rentals in one simple interface which is convenient. Many companies organising trips for their staff will use the GDS as their preferred booking method.
When you start using these various channels to help reach new markets and increase your bookings, it requires a lot of management and strategy.
You must decide:
- What your ideal channel mix is
- How many channels you want to use
- How you optimise your profile
- How often you want to adjust your rates
- What promotions you want to run
- The extras you offer on your direct channels
- How you combat your competition
Determining what’s right will be unique to each hotel and working through all this can be a headache by itself.
This is why channel managers are an essential part of online hotel distribution strategies. For example, when you decide on a new rate plan, it might take hours for you to put this in place on the various extranets of your connected channels. A channel manager makes this process achievable within a few clicks.
It’s important that you regularly track and analyse performance, check market behaviour, and keep an eye on your competitors to make the most of your channel management strategy.
How to choose your hotel’s online channel manager
Choosing a channel manager for your hotel is all about making sure your hotel’s individual needs and requirements are met.
For the most part you want to ensure that your channel manager has access to the channels you want to connect to, can integrate with your property management system and booking engine, operates in real-time, can produce performance reports, and is fully supported so you never have to experience downtime.
Here are some questions to ask potential channel manager providers no matter what size your property is:
- Do they offer full integration with your property management system?
- Do they support global channel connections, integrated with a reliable XML connection?
- Is the interface user friendly?
- Is adequate support and training offered, especially in your native language?
- Do they use a pooled inventory model?
- Is comprehensive reporting part of the system?
- Will they integrate with your online booking engine?
- Do they automate and update in real-time?
- How long does it take to implement the technology?
- Is the software PCI DSS compliant?
- Are there product feedback avenues?
- Can the product support multiple users?
- Is there a free trial available?
- Is the pricing model per channel, per reservation, or flat fee?
This is by no means an exhaustive list but it’s a good place to start! Why not watch a demo of SiteMinder’s channel manager to see if it’s right for you?
Investing in channel management technology for hotels
It’s a good idea to know what you should expect when investing in channel management technology. By being prepared, you’ll be able to recognise a good experience from a bad one, and understand when to seek help.
Here are some things you need to know about price, setup, training, and support:
Pricing and setup for your hotel channel management plan
In most cases the technology will pay for itself by way of results but it’s still important to know what you’re getting into with your new software. Pricing models can vary. Some may be based on a fee per commission basis, similar to OTAs, while some may charge you for each channel you connect to.
Another, preferable, model is to pay a flat monthly fee for use of the system. This means you know exactly how to budget each month since your software price won’t change. It also means you can connect as many channels, and take as many bookings as you want, without paying any additional fees.
A monthly fee will ideally be free of a contract, so you can discontinue your use of a channel manager at any stage, and thus cease billing. If you don’t mind signing a contract, you should at least expect a discount to do so.
To be satisfied you’ll also want an experience that’s as close to ‘plug and play’ as you can get. Since most good channel managers will offer a free trial period, setup will be a part of this process, so by the time it actually comes to paying for the product no setup is required.
Channel management training
You can expect a couple of dedicated staff members to take you through your setup and training. This way you know exactly who to contact to address any concerns. Training can be conducted in groups or individually depending on your specific situation. It shouldn’t take more than a few days to be up and running.
Support for channel management procedures
As with setup and training, time waits for no one. If something needs to be resolved at your property it has to happen quickly. Twenty-four hour support is vital, so is the need to have support staff who speak your language and understand your property’s circumstances. Being able to contact a real human being at any time that you need assistance is vital.
You don’t want to have to log a ticket or lodge a request, and then wait hours or days for a response to an issue that is actually urgent for your property. Your property is always on, so your tech provider needs to fully support this.