The Role Of Channel Management In Hotel Success

In the ever-changing hospitality business landscape, effective hotel channel management has emerged as a game changer for hotels looking to maximize their web presence, increase bookings, and boost overall income. The correct channel manager not only simplifies room inventory distribution across various web platforms but also plays an important role in building a hotel’s success narrative. In this blog, we will look at how channel management has transformed hotels, showcasing success stories demonstrating the industry’s best practices.

In this article, we talk more about the role of channel management in a hotel’s success. Read along!

What Does A Channel Manager Do?

A channel manager’s primary objective is to optimize an organization’s distribution network. A ‘partner manager’ or ‘distribution manager’ navigates the intricate maze of distribution and marketing channels of partners and resellers to maximize sales and market share for the company’s products and services.

Here is a list of common roles for a channel manager:

• Formulate a sales plan: Channel managers are essential in formulating and carrying out sales plans for distribution channels. You must analyze market trends, identify growth possibilities, and devise strategies to increase product or service sales through the channels.
• Manage partner relationships: Channel managers establish and maintain partnerships with distributors, resellers, and third-party vendors. You will collaborate to build a strong network of partners by encouraging communication, offering support, and addressing any issues or concerns.
• Analyze performance: The channel manager’s tasks include analyzing channel performance and making required changes to improve results. You’ll use key performance indicators (KPIs) to evaluate sales metrics, market share, and distribution strategy efficacy.
• Expand market reach: Channel managers frequently attempt to expand the company’s market reach by identifying and onboarding new partners. Your responsibilities here will involve assessing market potential, finding coverage gaps, and strategically recruiting partners to expand into new geographic areas or target certain client categories.

Importance Of A Channel Manager In The Hotel Sector

Let us go over the reasons why your hotel requires a channel manager:

1. Easily Add More Booking Channels

   Having a multi-channel booking strategy is critical for hotel income creation. Multiple channels might assist in diversifying your distribution network and make your company more secure. With the assistance of a channel manager, you may expand your booking channels and have access to additional revenue streams. A hotel channel manager can help boost the hotel’s revenue, provide more distribution options, generate demand for your hotels, generate revenue, and ultimately make the hotel business profitable.

2. Quick Stop Sale

   Hotel bookings, despite their seasonality, are rather unpredictable at times. For example, a group may suddenly demand ten rooms. You only have eight rooms available for that group because the rest of the inventory is dispersed to an OTA. So, what should you do in these situations? A Channel manager will handle these circumstances effortlessly. All you have to do is press the “stop sale” option on the platform, and all goods will be frozen. You will have sufficient inventory to sell to other visitors.

3. A Single Platform for Inventory and Rate Management
   

   Handling various channels manually is a difficult undertaking. For revenue managers, modifying the inventory and rate of each room on each platform is not only time-consuming but also tiresome and prone to mismanagement.

   A channel manager provides a single dashboard from which you can alter the availability and pricing of numerous properties and room kinds. You can switch rates with little effort. This also ensures rate parity, as you may intervene as soon as rates diverge on separate OTAs. You may quickly alter limits and inclusions while processing new, modified, and canceled reservations. You can also manage many properties from a single platform.

4. Easy Rate Parity Maintenance

   Maintaining rate parity is a critical component of hotel revenue management. Any rate differential will jeopardize your business relationship with the OTAs and diminish income. A Channel Manager will automatically manage your pricing. In this manner, you may avoid rate disparities between booking channels. With so many advantages, adopting a channel manager is a no-brainer. The hospitality sector is competitive, and you must run your business properly to stay several steps ahead of your competitors.

5. Time-saving And Automated Processes

   Distributing inventory and rates across several platforms takes time. Even minor errors and slips might result in multiple bookings, inaccurate and delayed updates, and potentially inefficient business for the hotel. The rectification attempts are a completely separate task. This is where the Channel Manager helps you save time and effort by automating most of these tasks. You may also change the calendar for the entire year with the assistance of a channel manager, allowing you to adjust pricing and room inventories throughout the year.

6. Minimizes Under Bookings and Over Bookings

   Overbooking occurs when more room nights are booked than your room inventory capacity. Overbookings can negatively influence your business because you will be unable to accommodate all guests if you are low on hotel inventory. They would be dissatisfied with the hotel for failing to keep them informed of the non-availability of rooms and for wasting their time and effort. Hence, channel managers are required.

   The primary cause of overbooking is a failure to update inventory over time and to maintain track of goods sold. At the same time, uneven or inefficient room inventory distribution can result in – bookings. Without a hotel revenue strategy, there is always the possibility of under-booking. Investing in a channel manager is the most effective approach to avoid overbooking and underbooking. When all of the inventory on the platform has been booked, you will receive a notification from the channel manager.

   This way, you’ll have an easier time keeping track. You will also discover the performance of each channel. The hotelier can then disperse the inventory appropriately.

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Further Read: How to Avoid Overbooking: Channel Manager Best Practices

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Primary Duties Of A Channel Manager

As the bridge between indirect sales partners and internal business units, channel managers are pivotal in leading successful partner programs and maximizing revenues. Typical duties and objectives include:

• Developing Channel Strategy: Channel managers are responsible for designing comprehensive channel plans and sales strategies across various partner types, including value-added resellers, distributors, independent agents, and marketplace partners. This involves modeling partner contribution forecasts and revenue goal scenarios to set performance expectations. It also entails defining optimal sales coverage and balancing direct and indirect sales channels.
• Recruiting and Onboarding Channel Partners: Channel managers identify, target, and contract high-potential channel partners with suitable capabilities and resources to meet business needs. They conduct negotiations to sign mutually beneficial partnership agreements and compensation models. Additionally, channel managers oversee new partner orientation and provide training on relevant sales and marketing programs.
• Driving Enablement and Sales Collaboration: To bolster sales, channel managers provide assets and support to arm partners with required skills, product knowledge, and sales tools. They also plan joint marketing campaigns and promotional initiatives to boost pipeline generation and drive demand. Channel managers establish streamlined processes and systems to facilitate seamless lead and opportunity management between partners and internal sales teams.
• Managing Partnership Relations: Channel managers implement structured partner relationship management frameworks spanning different partnership levels based on business maturity and sophistication. They develop customized partner loyalty initiatives and performance-based incentive programs to nurture continued commitment. Additionally, channel managers enforce company policies, brand standards, and agreement compliance through partners.
• Monitoring Channel Performance: Channel managers track partner sales results and pipeline trends using analytics dashboards to monitor program progress. They identify areas needing improved channel efficiencies and higher revenue contribution. With data-driven insights, they deliver executive recommendations and plans for optimizing the overall partner ecosystem.

How Does A Hotel Channel Management System Contribute To Operational Efficiency?

A hotel channel management system is critical for streamlining distribution and increasing operational efficiency in several key ways:

• Automates Rate and Inventory Updates: Channel managers push rate and inventory changes across OTAs, booking sites, and GDS networks in real-time rather than manually. This saves a huge amount of time and resources.
• Provides Centralized Distribution: Hotels gain a centralized distribution platform to manage room allotments and availability spanning different sales channels from a unified dashboard. Removes reliance on manual spreadsheets.
• Maximizes Distribution Reach: By expanding connectivity to hundreds of global OTAs and booking sites, channel managers enable hotels to boost their sales exposure and reach new markets seamlessly.
• Enables Dynamic Pricing: Channel managers allow hotels to monitor demand trends and adjust pricing frequently across channels to capitalize on market needs. This kind of revenue management is impossible manually.
• Generating Actionable Insights: With a consolidated view of reservation performance across OTAs and booking engines, channel managers provide rich analytics into top-performing channels, best price points, etc, enabling data-driven decisions.

The Evolving Role Of A Channel Manager

The role of channel managers in hotels has rapidly evolved in recent times with the explosion of digital channels and the rising complexities of managing integrated hotel distribution.

Traditionally, channel managers were responsible for basic connectivity and content updates to Online Travel Agencies (OTAs) and Global Distribution Systems (GDS). The job was transactional as long as inventory and pricing were synchronized periodically. However, channel management has become vital for a hotel’s commercial success, with increasing reliance on OTAs driving a majority share of room night reservations and the emergence of metasearch players.

Increasingly, heads of distribution and e-commerce are getting elevated to revenue strategy roles while channel managers take greater ownership of formulating and executing distribution plans. Their KPIs now also include contribution margins, not just volumes.

The analytics capabilities required by modern channel managers have heightened dramatically, given the vast data flowing in from online channels and the critical need for intelligence to optimize pricing and partnerships. Mastering revenue management systems, dynamic pricing tools, and bid management technologies is now imperative.

Common Challenges Faced By Channel Managers

The most common challenges faced by channel managers in the hospitality industry are:

1. Managing Complex Hotel Distribution Landscapes

   Hotel channel managers manage intricate webs of Online Travel Agencies (OTAs), Global Distribution Systems (GDS), metasearch engines, tour operators, and local destination marketing companies – each with bespoke commercial terms, technical connections, and content requirements. Compounding complexity, various region-specific platforms crop up, frequently needing evaluation and onboarding. Channel managers devote extensive effort to assessing new opportunities and expanding network reach.

2. Balancing Direct Bookings with OTA Reliance

   An over-dependence on OTAs for bookings despite high commissions vs trying to drive more direct bookings/loyalty creates tension for hotels. Channel managers play mediator – allocating inventory and rate parities across cores vs. non-cores OTAs to limit guest leakage while respecting contractual obligations. Strategic promotions may temporarily restrict OTA allotments to stimulate direct channels. It requires savvy balancing and transparency with all stakeholders.

3. Incentivizing OTAs & Local Partners

   Channel managers design customized campaigns and incentives, engaging OTA sales teams and external partners to help amplify seasonal demand generation. For example, a 10% bonus commission payout for OTAs delivering over 20% MoM revenue growth during off-peak seasons. Or additional exposure and geo-targeted promotions for destination management companies driving group travel business. Inventive ways to reward performance help mutually.

4. Enhancing Visibility into Booking Performance

   Disjointed systems and the usage of spreadsheets hamper channel managers from capturing unified visibility into group/channel-wise booking volumes, cancellation patterns, feed failures, etc. Manual collation of reports is frustrating. Channel managers advocate for enterprise-grade systems with robust analytics capabilities, providing rich, real-time insights into reservation data from all connected platforms. This allows optimal decision-making.

5. Staying Updated on Market Shifts

   Given the hospitality sector’s dynamism, channel managers must continually monitor trends across geographies, given unique regional developments in the OTA and travel marketplace. Sudden macro events or mergers also compel channel managers to work closely with revenue and commercial teams to adapt pricing models and channel partnerships and revisit contracting terms suited to meet evolving customer needs or competitors.

Solutions And Best Practices

Some solutions that you can follow to tackle the above channel management challenges are:

• Consider the various channel options: Channel management is effective due to its flexibility and scalability. Each direct, indirect, in-person, or digital channel has unique features and can serve quite different client segments. Which methods you choose will be determined by your business, and it is more than just knowing the various channels; it is about identifying each channel’s particular benefits and limitations and carefully selecting those that align with your overall business goals.
• Foster a partner-first culture: Your partners are more than just salespeople; they are key stakeholders in your company’s success. By creating an atmosphere in which your channel partners’ requirements are heard and planned for, you provide the groundwork for collaborative growth. By creating an atmosphere that supports regular input from partners, you can gain vital insights and suggestions for future innovation.
• Create a thorough channel management strategy: Your channel strategy must be inextricably linked to your overall business objectives, ensuring that each channel contributes to your success. It is about building a cohesive, well-oiled machine in which one channel works with the others while remaining flexible enough to adjust to evolving market conditions and growing client preferences.
• Monitor and manage your channel data: Setting clear performance indicators allows you to evaluate the operation of your channels and partners more effectively. Some of the most popular channel partner analytics and metrics to measure our – revenue by channel and partner, partner program ROI, and deal conversion rate, among others. A data-driven approach provides insights that can influence strategic changes and encourage better partner relationships.
• Be prepared to respond to market changes and trends: Your channel management techniques must be as dynamic and adaptive as the market. The market is more interconnected and fast-paced than ever, with new trends and technology emerging at an unprecedented rate. Being proactive and responsive to these changes allows you to anticipate obstacles, capitalize on new possibilities, and match your strategies with current market realities.

Conclusion

Success stories in the ever-changing hospitality market are written by hotels that see effective channel management as a strategic priority. A top-tier channel manager significantly impacts everything from visibility and efficiency to revenue optimization and comprehensive integration with PMS. As hotels navigate the difficulties of the digital age, the work of a channel manager becomes increasingly important in creating success stories that encourage the industry.

Frequently Asked Questions

Why is a channel management system crucial for hotels?

A channel management program oversees the internet distribution of your hotel’s rooms in a safe, secure, and timely manner. It lets you update room availability and the newest rates across numerous channels instantaneously and concurrently.

How do channel managers adapt to evolving technology in the industry?

Channel managers adapt to evolving technology in the industry by staying updated on emerging trends, attending relevant training, fostering partnerships with tech providers, and continuously optimizing strategies to leverage new tools and platforms for effective channel management.

How can hotels optimize their channel management strategies?

Here are some ways in which hotels optimize their channel management strategies:

• Consider the provider’s degree of assistance and training and the ease with which it integrates with your property management system when choosing your channel manager.
• Use rate plans and restrictions to help you increase income while avoiding overbooking.
• Ensure your OTA listings have high-quality photographs, accurate descriptions, and current information about your hotel’s facilities, services, and local attractions.
• Monitor your channel manager’s performance to determine which channels produce good results and which want improvement.

How does effective channel management impact guest experience and satisfaction?

Effective channel management helps the property and improves the overall guest experience. Accommodations may give consistent and reliable information about their rooms, amenities, and services by keeping correct and up-to-date information across many channels.

What are the five steps of the channel management process?

The five steps of the channel management process are:

• Analyze the Consumer
• Establish the Channel Objectives
• Specify Distribution Tasks
• Evaluate and Select Among Channel Alternatives
• Evaluating Channel Member Performance