Key Concepts Every Hotelier Should Know About Channel Management

Suppose you’re a hotel owner who receives reservations from several online travel agencies (OTAs) and booking websites. In that case, you’re having problems keeping track of your rooms’ rates, availability, and inventory in real-time.

Manually mishandling reservations from many channels leads to concerns such as overbooking, poor inventory management, and missed opportunities. Then, you need to use a hotel channel manager to handle your bookings.

A channel manager is a software or platform that enables you to handle the distribution of your hotel rooms over different internet channels, including OTAs, travel agents, and your website. It helps you optimize your channel strategy by delivering real-time information on room availability, pricing, and reservations. Keep reading as we discuss channel management in detail, including its types, challenges, and strategies to manage it.

Foundational Concepts in Channel Management

Channel management refers to hotels’ systems, software, and strategies to distribute room inventory effectively and optimize bookings across various direct and indirect sales channels. These include a hotel’s website, online travel agencies (OTAs), metasearch sites, global distribution systems (GDS), and walk-in reservations. Here are a few more foundational features of hotel channel management software:

• Integration capabilities: A channel manager must interface directly with the Property Management System (PMS). This allows reservations to be routed directly to the PMS and the Revenue Management System (RMS) to communicate real-time pricing and availability, which is an obvious must-have feature.
• Analytics and reporting: Every channel manager delivers analytics and reporting. The software collects and organizes booking data from all channels, presenting it in charts, graphs, and other graphic formats. Property owners can view occupancy, reservation, and income data for a period. This allows them to identify high and low-performing channels and change their distribution strategy.
• Real-time dashboard: A channel manager’s portal view should be constantly updated, displaying data as it appears on OTAs rather than just how data is sent to the portal. This eliminates errors because users can see what’s happening in real time and immediately detect problems.
• Pooled inventory: Pooled inventory enables you to share all available rooms across many channels, including your website, without the danger of double reservations or overbooking. For example, a reserved room or property is automatically deleted from the list of available inventory across all channels.
• Monitor rates: Centralized rate and inventory management technologies enable hotels to control price and availability across sales channels via automatic, real-time updates, allowing for rate parity monitoring and the prevention of overbooking or outdated rates.

Types of Distribution Channels

A hotel distribution channel is any location where a hotel or hotel chain can sell rooms to potential consumers, whether online or offline. This can include your booking engine and travel catalogs, OTAs, GDS, metasearch sites, and other resources. Let’s look at these channels in more detail:

1. Travel Agents

   These agents are seasoned experts who create exceptional experiences for travelers. Collaborating with travel agents allows your hotel to utilize their broad networks and skills in building tailored vacation plans. This collaboration welcomes a diverse variety of travelers wanting customized service and professional recommendations.

2. GDS

   These platforms function as centralized networks, linking hotels with travel brokers and corporate clients globally. When you interface with a GDS, your hotel receives access to a broad network of travel specialists, allowing you to tap into profitable corporate travel markets and boost your business customers.

3. Online Travel Agents

   OTAs are digital travel superheroes. They promote your hotel to a large audience, manage reservations, and generate additional bookings for your resort. Partnering with OTAs provides access to a worldwide audience, increasing occupancy rates and enhancing your online profile.

4. MetaSearch Engines

   Think of metasearch engines as your trustworthy travel companions, gathering information from many sources, comparing costs, and checking availability across multiple channels to help travelers find the greatest deals. Being present on metasearch platforms increases visibility and the likelihood of attracting budget-conscious guests who value convenience and transparency.

Rate Parity and Pricing Strategies

Rate parity is an agreement between hotels and OTAs that ensures accommodation pricing is uniform across all distribution channels, including the hotel’s website. Maintaining rate parity is vital because it gives consumers transparency: they know they’ll pay the same amount no matter which online booking site they use.

However, if a hotel’s pricing methods do not account for rate parity, it might influence its revenue management strategy. A hotel room pricing strategy is a critical component of hotel revenue management. It is essentially the cost you charge per hotel room to sell as many rooms as possible and maximize your revenue. Here are some ideas that you might use at your hotel:

1. Forecast-Based Pricing

   Forecasting is an important component to consider when determining the pricing of rooms available for future dates. To develop an accurate projection, one must have a previous month’s booking history based on season, events, demand, and promotions. As a result, you can adjust the room rates based on future demand or anticipated occupancy.

2. Cancellation Policy-Based Pricing

   Though it may surprise you, a well-planned non-refundable cancellation policy can help you raise income because it is one of the most effective hotel room pricing tactics. It is one of the most important aspects to consider when developing your pricing strategy. Furthermore, this method aids in lowering losses and selling rooms at a profit.

3. Occupancy-Based Pricing

   The occupancy-based pricing technique involves determining hotel room rates depending on demand and supply. For example, during peak season, if your 7 to 8 rooms are empty, you might raise the hotel prices to improve business profits. Similarly, when it is off-season, and you want to fill your rooms, you might charge a lower rate to attract guests to stay at your hotel.

Further Read: Hotel Pricing Strategies To Maximize Revenue

Inventory Management

Hotel inventory management is the process of ordering, storing, and distributing your hotel’s assets and products. In the hotel industry, rooms are the primary inventory. However, hotel inventory management encompasses raw materials, finished products, and onsite services such as restaurants.

Hotel inventory management aims to guarantee that rooms, hotel products, and other items are accurately priced, distributed, and sold. It also entails replenishing various products without resorting to overstocking. Let’s delve a little deeper and look at how to maximize the value and sales of your hotel inventory:

1. Maintain a Diversified Distribution Strategy

   The more channels your inventory is listed on, the more likely tourists will find you online and make a reservation. Maintaining a broad distribution strategy entails making inventory available through channels, including OTAs, metasearch marketing platforms such as Google, Trivago, and Tripadvisor, wholesalers, and direct channels such as your hotel’s website.

2. Maintain Thorough Room Inventory Details

   Good inventory management begins with categorizing the quantity and types of rooms on your property. Based on your room information, consider how you might bundle your inventory in novel ways to reach new consumer segments and increase revenue. Ensure the information is submitted to the property management system and delivered regularly and accurately on your website and other booking channels.

3. Refine the Forecasting Process

   Forecasting is creating a report outlining predicted occupancy, average rate by day, and market category for the following months. This allows hotels to estimate their busy schedules and make informed judgments. Sales and marketing can take action to increase slower dates while leveraging demand on busy dates. Operations will know how many hotel employees to schedule and how much food, drinks, and supplies to order at any given time.

Channel Management Software

Channel management software is a solution that enables your hotel to arrange and oversee the online distribution of room availability and rates via distribution channels such as OTAs, booking engines, GDSs, and wholesalers.

To minimize overbooking, your hotel’s inventory must be regularly updated across all distribution channels, including direct web reservations, travel wholesalers, and OTAs. As a result, channel management software is the only method to efficiently contact and convert guests worldwide while avoiding overbooking and spending more time than you can afford.

Channel management software automatically updates your hotel’s inventory in real-time. It communicates reservation data bidirectionally with your PMS and linked channels, including your online booking engine. For example, when booking a room through Booking.com, the channel manager sends this information to your PMS. At the same time, it will update your inventory on any other associated channels, such as Expedia or Agoda.

Direct Booking Strategies

These are reservations made directly with the hotel, typically through their website, without using a third-party middleman, such as an OTA. This direct channel will remain a hotel’s marketing priority since it offers the highest margins.

Direct booking is far more profitable for hotels than reservations made through OTAs because no commissions are paid to third parties, lowering the hotel’s acquisition cost per guest. Direct booking also enables upselling opportunities, resulting in increased revenue for your hotel.

Now that we’ve highlighted their importance let’s look at some essential strategies for increasing direct sales at your property:

1. Use a Commission-Free Booking Engine

   Look for a booking engine that is free of commissions and optimized for mobile use. You could also reduce the booking process to only 2-3 steps and include a rate checker on your website to let customers compare prices directly. Doing so discourages visitors from going to OTAs to compare rates and gives them a reason to book directly by displaying your best prices.

2. Create a User-Friendly Website

   Ensure your hotel website is mobile-friendly and responsive on all platforms, including laptops and tablets. Accessibility is essential for capturing direct hotel bookings. Furthermore, make the most of your homepage, which is the initial stop for visitors. Provide comprehensive information here to increase conversions. To persuade tourists to reserve your hotel, highlight its unique offerings or gorgeous surroundings.

3. Embrace Remarketing

   No matter how amazing your website is or how simple your online bookings are, some website users will always leave the booking process halfway through. Remarketing is one strategy for bringing them back. If you’ve never explored remarketing before, it’s worth considering; it allows you to re-engage clients on the verge of converting – after all, you almost had them!

   You may monitor visitors who abandon bookings by adding a special code to your website and then offer targeted adverts online or on social media after they leave to entice them to return. It may sound complicated, but it is not. Google AdWords and Facebook Custom Audiences are both smart places to start.

Managing Relationships with Online Travel Agencies (OTAs)

Hotels can enhance their reputation with OTAs by planning, researching, and working with channel management specialists to reduce expenses and increase profits. Here are five suggestions for making the most of your connections with OTAs:

1. Optimize Your Listings

   Once you’ve decided which OTAs to deal with, you must optimize your listings for each platform. This includes showcasing your property’s features and amenities with high-quality images and videos and creating clear and appealing titles and descriptions that highlight its benefits and unique selling factors. This will help you gain more attention, reservations, and favorable comments from new and existing visitors.

2. Manage Your Inventory

   One of the primary points of contention between OTAs and hotels is room inventory control. Most hoteliers do not want to allow OTAs to fill their rooms at a 20% commission rate. Once again, channel managers may provide useful services that allow hotels to better analyze the market and assign the appropriate number of rooms across their travel distributors.

3. Provide Accurate Information

   Make sure the information on your OTA profile is up-to-date and accurate. This includes your experience, rates, inclusions, and availability. If the product changes, make sure you update it on time. If you have a discount, offer it to them as well. Remember, in these cases, you can use a different percentage level to protect profitability.

Importance of Data and Analytics

The role of data analytics in the hotel business is critical because it serves millions of people daily. Each of them has their tastes, expectations, and requirements for the trip. But how does this affect your hotel’s business?

By closely tracking key performance indicators around channel-specific bookings, conversion rates, average daily rates, commission costs, and revenue returns, hotels can accurately measure profitability by source. Granular data illustrates historical and emerging trends to inform the ideal channel mix, highlighting that brand.com, social media promotions, and loyalty member emails drive conversions at a higher return rate than particular OTAs.

Moreover, advanced analytics provide actionable insights to adjust channel priorities and dynamic rate-setting tools to maximize revenues. Centralized dashboards allow channel managers to regulate availability pressures and calibrate rates about fluctuating demand and competitor pricing. As analytics grow more predictive, hotels can stay ahead of trends. The foundation of strategic distribution management is understanding each channel’s contribution to the bottom line, which data transparency powerfully enables.

Challenges in Channel Management

Overbooking and inventory problems might occur due to a delay or lack of synchronization between the channel manager and the PMS. To address these issues, ensure your channel management and PMS integration are reliable and real-time. To avoid overbooking, monitor inventory levels regularly, especially during peak booking periods, and update availability as soon as possible. Here are a few more typical hotel channel management challenges:

1. Dealing with Rate Parity and Integrity Issues

   Rate parity is the practice of keeping rates consistent across all distribution channels. However, maintaining rate parity can be difficult, particularly when dealing with various OTAs with varying commission structures and rate display criteria. To handle rate parity issues, use rate shopping tools and make sure your channel manager has the required controls to manage rates across channels.

2. Addressing Technical Glitch and Connectivity Issues

   Technical difficulties or connectivity issues can impede the seamless operation of your channel manager. Establish a good relationship with your channel manager provider’s support team so that any technical concerns may be resolved quickly. Maintain backups of inventory and reservation data to reduce the effect of system failures or downtime.

3. Handling Cancellations and Modifications on Multiple Channels

   Managing cancellations and revisions across numerous channels can be time-consuming and error-prone. Using your channel manager’s reservation synchronization capabilities will help to streamline the process. When you get a cancellation or alteration, immediately update the information across all connected channels, reducing the danger of double reservations or obsolete availability.

Conclusion

A channel manager establishes two-way communication between your PMS and your online sales partners. This allows them to share real-time reservation data. This implies that when a guest rents a room through an OTA, the channel manager sends the reservation information to your PMS. The PMS registers reservations, adjusts inventory, and alerts the channel manager to update availability on other channels. This allows you to sell your rooms everywhere at the same time without having to worry about double- or overbooking.

Frequently Asked Questions

Why is understanding distribution channels crucial for hoteliers?

Knowing channel costs and projected revenues allows hoteliers to optimize distribution strategy and marketing budget allocation to maximize yields.

What are direct and indirect bookings in hospitality?

Direct bookings come through a hotel’s owned channels, like their website, without intermediaries, while indirect bookings involve online travel agencies or wholesalers taking commissions.

What is the significance of real-time inventory updates?

Real-time availability and rate updates across all connected platforms ensure pricing consistency and prevent issues like overbooking due to outdated inventory at the time of reservation.

What are the popular features of channel management software?

Channel managers offer centralized control of rates and inventory with automated distribution to OTA and metasearch partners, booking reconciliation, and channel performance analytics.

Why is data crucial in hotel channel management?

Granular data aids optimization of the channel mix to align with profitability targets by providing transparency into guest sourcing costs, conversion rates, and booking revenues by source.

How can hotels overcome challenges like overbooking?

Channel management automation ensures real-time rate and inventory updates across channels while reconciliation tools detect duplicate bookings, allowing hotels to regulate availability to prevent overbooking issues.