Advantages of Implementing Channel Management Systems in Hotels

Maximizing revenue and occupancy while delivering exceptional guest experiences has become quite challenging today. Hotels are constantly struggling to manage their distribution channels in the cut-throat hospitality sector. As a result, many hotels have switched to channel management systems to address these problems.

Over the past ten years, using a channel management system has practically become a must-have for lodging and hospitality providers. Similar to other sizable businesses, hotel management necessitates a sophisticated strategy in addition to advanced tools and technologies. Irrespective of the nature and size of your property, it never hurts to use business task automation and related technologies.

This article explores the advantages of implementing channel management systems in hotels, addresses the common challenges faced during implementation, and lists the best practices for effective channel management. But first, let’s begin with the basics of a hotel channel manager.

What is a Channel Management System in Hotels?

A Channel Management System is a robust tool that allows hotels to effectively handle their inventory, pricing, and availability across a range of distribution channels, including direct booking channels, online travel agencies (OTAs), and Global Distribution Systems (GDS).

Channel manager software links your inventory dynamically to a number of online booking channels or travel agents. Although you can manage your inventory on your own by connecting to several websites, maintaining your property’s prices and availability across all the online channels can be time-consuming and can lead to costly errors like overbooking. This is when a hotel channel manager enters.

Simply put, channel management refers to the process of listing and managing your hotel rooms across many booking channels with the use of a channel manager system.

Advantages of Implementing Channel Management Systems

Channels not only sell hotel rooms faster and manage your inventory with ease, but they also provide you with significant performance reports that you can utilize to guide your marketing and sales tactics.

Besides offering the benefit of hotel management, CMS comes with plenty of other merits. Below are five advantages of implementing channel management systems in your hotel. Take a look!

1. Increased Visibility

   With the help of channel management systems (CMS), you can increase the visibility of your hotels across a plethora of distribution channels and countries. By distributing your inventory to several channels simultaneously, you expand your customer base and draw in visitors from a diverse demographic and geographical aspect.

   Moreover, the relationship between your PMS and channel manager is excellent. The real-time feature of the channel management system makes a room instantly available for purchase as soon as you make it available in your property management system, considering any last-minute cancellations.

2. Improved Rate and Inventory Management

   A CMS helps hotels to handle their rates and inventory efficiently in real time. This guarantees providing optimal pricing and availability of your hotel via all channels.

   Additionally, when it comes to managing inventory manually, there is always room for error. This is because the reservation details are not transferred directly from the booking source (AirBnB, Vrbo, etc.) to your PMS or reservation management system. However, with CMS, you can manage your inventory efficiently, thereby leaving no sign of error.

3. Time and Cost Efficiency

   One of the most important benefits of implementing a channel manager booking system involves time and cost efficiency. The reservation data gets automatically updated, thereby saving time. If you connect your channel manager to your property management system, the booking details will be sent straight to the system, saving you the hassle of copying it.

   CMS platforms help hotels save time and money by automating routine tasks and optimizing distribution management. Implementing this, employees can concentrate on strategic duties like guest service and revenue management instead of updating availability and rates on every platform.

4. Enhanced Guest Experience

   OTAs, metasearch applications, bed banks, B2B wholesale, global distribution systems (GDS), and specialized lodging booking websites help you ensure that your target audience is seeing your listing.

   By giving visitors up-to-date information and real-time availability through a hotel CMS, you can streamline the reservation process and minimize inconsistencies. This will improve your guest experience, thereby creating room for positive responses, reviews, and better client retention.

5. Data-Driven Decision Making

   Manual inventory management means daily logins into the extranets of various websites numerous times a day.

   Let’s say a short-term rental company uses four channels to distribute its inventory. Checking every channel takes 15 minutes, which turns into an hour. If you check each channel twice a day, seven days a week, merely checking and updating channels adds up to 14 hours.

   However, hotel CMS platforms provide robust reporting and analytics tools that offer hotels valuable data on booking patterns, channel performance, and guest behavior.

   Using this data, hotels become better equipped to decide on pricing policies, marketing initiatives, and distribution channels. As a result, this contributes to efficient revenue management.

6. Competitive Edge

   By using a hotel CMS, hotels can obtain a competitive advantage in the industry. They can maintain better relationships with online travel agencies (OTAs) and other distribution partners, respond to market trends quickly, and modify pricing plans in real-time. Because of their flexibility and agility, you can maximize your revenue and stay ahead of your competitors.

Common Challenges Faced in Implementing CMS

Handling reservations, sales, upkeeping, and managing other duties in a hotel can be challenging. Hence, you should consider implementing a channel management system.

However, there are a few challenges that come with the implementation process. Let’s have a look at five potential challenges!

1. Integration: Integrating the hotel CMS with the booking engine is challenging. Ideal coordination between several stakeholders and IT teams becomes necessary to integrate the CMS with the existing property management systems (PMS), central reservation systems (CRS), and other technological platforms. This process can be complicated and time-consuming.
2. Consistency and Data Accuracy: At times, it can be difficult to determine if the rates, availability, and inventory are synced precisely across all channels. This happens when the CMS is not managed and implemented properly. As a result, this incompetency can lead to discrepancies, overbookings, and underpricing.
3. Cost Factor: In addition to the subscription fees and the integration costs, the cost of implementing a CMS includes upfront expenses for software licenses, setup, and customization. Hence, it is important for hotels to evaluate the ROI (return on investment) carefully, besides considering the budget.
4. Channel Management Complexity: It can be challenging to manage several distribution channels and optimize the channel mix in addition to increasing revenue and decreasing distribution costs. It calls for a strong expertise in distribution strategy and revenue management.
5. Vendor Selection: It is important to conduct thorough research and consider the features, scalability, support options, and other factors while selecting a CMS vendor. Ensure that you select a vendor that aligns with and fits the long-term objectives, demands, and budget of your hotel.

Best Practices for Channel Management

Understanding how to collaborate with OTAs and other online channels is important to maximize success and build a solid channel management strategy.

It takes a lot of management and planning to implement a hotel channel manager and reap its benefits. Below listed are five best practices for implementing solid channel management.

1. Organize Your Hotel Inventory Centrally

   Centralizing your hotel inventory is one of the most crucial elements in effective channel management. By centralizing your inventory, you ensure that all your channels secure access to the same availability, rates, and types of accommodations. This reduces the likelihood of duplicate reservations/double bookings by guaranteeing that your hotel’s details are the same across all platforms.

2. Create a Thorough Channel Management Plan

   Developing a thorough channel management plan is essential to the success of your hotel’s digital presence. Apart from the benefits of hotel management, CMS can do wonders for your business. The channel management plan should include a description of your goals, target markets, pricing plan, and reporting and monitoring systems.

3. Monitor and Optimize Your Channel Management Strategy Consistency

   You must continue to evaluate, maintain, and optimize your channel management strategy to keep it effective. Keep track of how your hotel is performing on each channel and adjust your plan as required to maximize income and achieve your business objectives. Ensure you review your KPIs and make the necessary modifications to your plan based on the outcomes.

4. Build Strong Relationships with Your Channel Partners
   

   Your relationship with your channel partners will determine how well your channel management plan is performing. To elevate your hotel’s online presence, you should collaborate with your channel partners and maintain transparent communication. Furthermore, make sure you interact with your account managers at each OTA. You can use their expertise as leverage to improve your hotel’s performance on their platform.

5. Review and Update Your Channel Management Strategy Frequently
   

   The success of your channel management strategy depends on how often you review and update it. Ensure that you review your KPIs and modify your plan of action as per your discoveries. Additionally, stay current on the latest developments and industry best practices in hotel channel management so that you can modify your strategy as required.

Conclusion

Hotels can gain a competitive edge in the market, establish better visibility, introduce better rate and inventory management, save time and costs, improve guest experience, and make data-driven decisions by putting a Channel Management System (CMS) into place. Despite the complexities involved in the implementation process, the long-term benefits surpass the challenges that come with it.

Frequently Asked Questions

Can you name some popular Channel Management Systems used in the hospitality industry?

There are a number of channel management systems that are used in the hospitality industry. However, some of the top channel managers and booking engines include Rategain, Cubilis, Hotelogix, Hostaway, STAAH MAX, RateTiger, Cloudbeds, SiteMinder, RoomRaccoon, and InnRoad.

How does a CMS reduce instances of overbooking and underbooking for hotels?

CMS reduces the chances of overbooking and underbooking significantly by updating occupancy in real-time and increasing visibility, respectively.

For example, when the last available room gets booked on one channel, all the other linked sales channels close the hotel’s availability immediately. Later, when somebody cancels their booking, the room becomes available again on each channel. As for underbooking, CMS helps in increasing the hotel’s visibility across different online channels and nations.

Why is adaptability to market trends important for hotels using CMS?

Adaptability to market trends is important for hotels using CMS because it allows them to stay competitive and maximize revenue. When hotels are responsive to market shifts, they showcase flexibility. This flexibility ensures that they can manage inventory, optimize occupancy rates, and maintain profitability in the competitive market.

Is it possible to customize and tailor a CMS to fit the specific needs of a hotel?

Yes. It is possible to customize and tailor a CMS to fit the specific needs of a hotel. Several CMS platforms offer flexibility and configurability. This, in turn, allows hotels to customize settings, features, and integrations according to their unique requirements.

Hotels can adjust several parameters like room types, pricing rules, distribution channels, and reporting functionalities that align with their business objectives and operational workflows.

How quickly can a hotel respond to market changes with the help of a CMS?

Channel Management System (CMS) helps hotels respond to market changes quite quickly. Depending on the CMS’s capabilities and integration with other technology systems, hotels can often make adjustments in real time/within minutes.

This rapid response time enables hotels to update their details across several distribution channels simultaneously. Furthermore, this ensures they remain competitive and capitalize on emerging opportunities in the market.

How can hotels leverage a CMS to manage relationships with online travel agencies (OTAs)?

Hotels can leverage a CMS to manage relationships with OTAs in several ways. CMS helps hotels with centralized distribution, rate parity management, performance tracking and Reporting, and OTA channel management.