The Role of Technology in Hotel Channel Management

Traditionally, both travelers and hoteliers depended heavily on Retail Travel Agents (RTA). However, the digital revolution has opened a plethora of online distribution channels for hotels to reach out and engage with potential guests to drive bookings and revenues.

Hotel channel management is crucial for hotels seeking to increase visibility on various online travel portals and boost direct booking volumes.  Seamlessly integrating the distribution pipelines to provide a consistent experience across channels remains a key focus area.

But, with the complex interplay of hotel reservation systems and technology, optimizing this distribution mix can be quite challenging. So, in this article, we discuss the role of technology in hotel channel management and how you can embrace it to drive the maximum results. Read along!

Foundations of Hotel Channel Management

A hotel channel manager system is a solution that enables lodging operators to handle numerous online travel agents (OTAs), global distribution systems (GDS), and metasearch sites from a single platform. A channel manager helps hotels increase their online presence and reach by managing several channels in an automated method.

Moreover, a channel manager is now required not only for large hotel chains and organizations with multiple properties but also for medium and small hotel chains, casino properties, independent hotels, vacation rentals, and bed and breakfasts.

Here are the key foundations of an effective hotel channel management strategy:

1. Centralized Inventory Distribution: A centralized cloud-based Channel Manager system forms the core for managing real-time inventory and rates distribution to online channels like OTAs, metasearch sites as well as the direct hotel booking website. Ensuring rate parity across channels is vital.
2. Competitive Pricing: Leveraging historical demand data and competitive pricing intelligence to develop customized dynamic pricing strategies across channels to maximize both occupancy levels and ADR through demand-based pricing is crucial.
3. Analyzing Channel Economics: Detailed analysis of demand patterns, price elasticity, channel costs, profitability, cancellation, and booking timing trends through analytics and business intelligence provides vital inputs for channel strategy planning.
4. Monitoring Online Reputation: Tracking a hotel’s online reputation and traveler sentiment across channels via reviews and ratings forms an important element as perception impacts conversion rates on the channels.

Benefits of Implementing Technology in Channel Management

The hotel channel management system allows integration into popular OTAs such as booking.com, expedia.com, etc. By onboarding these popular channels, hotels can maximize their reach to potential customers and eventually lead to increased online bookings.

Here are a few more benefits of implementing the right technology and the right Hotel Channel Management system in your hotel:

1. Greater Distribution Reach

   Technology enables the connectivity of hotel inventory to a vast and expanding network of online distribution channels like OTAs, meta-search engines, travel booking sites, and even social media platforms. For example, cloud-based hotel channel managers offer connectivity to leading OTAs like Booking.com and Expedia, regional platforms like MakeMyTrip and Traveloka, and Google Hotel Ads.

   This significantly widens the distribution pipeline for hotels to showcase their property to potential guests across geographies. Small independent hotels can also leverage the global pipeline cost-effectively created by technology platforms. Ultimately, this increased online distribution reach translates into higher website traffic and bookings for hotels.

2. Real-Time and Accurate Information

   `Traditional manual methods take a longer time to update multiple channels and can lead to providing inaccurate or mismatched information to customers. Whereas, the Hotel Channel Management System automatically updates room bookings and cancellations on a real-time basis. All the connected channels are synchronized at the same time, and the dashboard displays information about room availability accurately at any given time.

3. Enhanced Operational Efficiency

   By automating rate and inventory updates across third-party channels, hotel technology solutions save significant manual effort while minimizing rate parity issues that can negatively impact revenues. For example, any last-minute pricing change or availability update for a room type does not have to be individually communicated to each OTA website.

   Instead, the channel manager tech automatically pushes it across connected channels in real-time after changes are made in the property management system (PMS). This ensures all channels have the latest information without relying on manual efforts. This greatly enhances operational efficiency.

4. Unified View of Inventory

   Centralized hotel property management systems and channel managers aggregate inventory and provide a unified dashboard displaying real-time information on room types, pricing, availability, and bookings across connected online sales channels.

   For instance, a hotel using RateGain’s channel manager can quickly view several rooms available to sell across distribution channels like the hotel website, Booking.com, and TripAdvisor for a given date. This eliminates blind spots and enables efficient decision-making on current and future allotments to different channels.

   As rates and allotments change, the technology automatically pushes the updates across channels, ensuring rate parity as per the hotel’s centralized allotment policies.

Key Technologies Shaping Hotel Channel Management

The hospitality industry is tremendously competitive, making it critical to stay current on the latest hospitality technology advances. Hotels can use technology to streamline their processes, cut expenses, reduce employee workloads, raise income generation possibilities, and improve customer experience delivery. But what are the types of technologies that you should invest in? Here are a few key ones:

1. Artificial Intelligence and Machine Learning

   AI and ML are allowing hotel channel management systems to crunch vast amounts of data to optimize distribution strategies. These include predictive analytics for pricing and allotments, personalized guest promotions via preferred channels, automated rate shopping, and optimized channel mix based on performance. Chatbots are enhancing customer engagement across channels.

2. Cloud Computing

   Cloud-based SaaS channel managers are enabling easier integration of distribution channels. The cloud offers scalability to handle growth in direct and OTA channels while facilitating quick rollout of upgrades. Small hotels can also leverage enterprise-grade channel management capabilities.

3. Mobile Channels

   Mobile hotel bookings are witnessing rapid growth. Mobile optimization of booking engines, integrated apps across channels, and mobile push notifications for personalized promotions are crucial for guest engagement. Contactless features like digital keys using mobiles are also gaining prominence.

4. Advanced Reporting and Data Analytics

   Channel managers provide comprehensive reporting on booking performance metrics across integrated channels. Customizable data models offer actionable insights for revenue management roles to optimize pricing and allotments.

The Impact of Data Analytics on Channel Management

Big data technology is large, voluminous, and complex data sets gathered from multiple internet sources. When integrated with channel management, this data can play a vital role in planning business strategy, personalized marketing campaigns, and providing improved customer service.

Also, the hotel channel management system has data access from multiple integrated systems and is capable of generating valuable analytical reports. The reports provide insights into past and current data, which in turn help to make strategic business decisions for the future.

Here are some of the examples that show that data analytics is a powerful solution for driving business growth:

• Sales reports provide analytical information like seasonal demand and help to decide on optimized pricing. This ultimately leads to higher revenue.
• The best-performing channels report can help to decide on inventory distribution across various channels and generate increased bookings.
• Survey reports on customer feedback and satisfaction ratings can bring attention to common customer grievances and help to improve overall customer service.

Integration of Artificial Intelligence (AI) and Machine Learning (ML)

Hotel channel management systems are beginning to embrace Artificial Intelligence (AI) by deploying machine learning algorithms to forecast demand and determine the best prices. But how exactly do these technologies help a hotel? Let’s find out!

1. Optimized Channel Revenue Generation

   AI-powered business intelligence modules can analyze historical demand trends, pricing data, and channel performance metrics across myriad data sets to create optimization models that help hotels in better decision-making on room rates and inventory allocation across channels.

   For example, the models may suggest the optimal room rate on OTA platforms during a high-demand event to maximize the total booking revenues from these channels. Similarly, the models may analyze that dropping rates on certain slower booking dates can help generate demand and recommend the best pricing for those dates.

2. Personalized Channel Offers & Experiences

   By leveraging guest data like demographics, browsing behavior, purchase history, and more, hotels can use ML algorithms and create promotional offers tailored to individual guests. These personalized offers can then be promoted through specific high-affinity sales & marketing channels for the targeted customer segment, resulting in enhanced engagement and conversion of bookings. Also, this creates more relevant guest experiences throughout the booking journey across channels.

3. Automated Distribution Channel Mix Optimization

   AI algorithms can analyze the performance metrics of each distribution channel used by hotels on several parameters – distribution costs, commissions, type of guests attracted and their lifetime value to the hotel, average booking value, cancellation rate, and more. This analysis can determine the optimal channel mix for any hotel based on its location, room pricing, capabilities, and guest demographic profile.

   The models can also tweak the channel mix to achieve other objectives like improving direct bookings rather than OTAs or lowering high commission costs. They provide data-driven, customized recommendations to optimize the distribution channel mix for revenue generation.

4. Enhanced Connectivity to Emerging Niche Channels

   With a fragmented global accommodation market and increasing use of hyperlocal apps by guests, hotels need to be discoverable on emerging location/purpose-specific niche channels to attract high-intent travelers and generate bookings.

   AI tools can analyze various niche channel platforms for each hotel and determine the most relevant emerging channels they should connect to based on metrics, including:

   • Guest personas in the location.
   • The popularity of the channel among the target audience.
   • Room night bookings potential.

   The insights obtained using these metrics help hotels join and integrate the best-matching emerging channels in their distribution pipeline to gain share-of-voice and new-age guest mindshare.

Mobile Technology and its Role in Channel Optimization

A well-designed cross-channel mobile strategy tightly integrated with the rest of the hotel tech stack, including PMS and central reservation system (CRS), is pivotal to crafting personalized guest experiences while opening targeted promotional channels to influence booking decisions and drive conversions across channels. Here are a few more points that highlight the role of mobile technology in hotel channel optimization:

1. Enhanced Guest Experience

   Mobile tech allows guests a seamless booking experience from discovery to payments and post-booking engagement. Hotels can enable mobile bookings with user-friendly mobile sites and apps having linkage to PMS and channel manager systems on the backend to capture bookings across channels. Features like mobile check-in, digital keys, and chatbots handle pre & post-stay conversations, driving personalized guest experience. The mobile platform serves as an engagement layer with guests.

2. Targeted Mobile Promotions

   Hotels can drive direct bookings by sending customized promotions via mobile push notifications and in-app messages to consenting guest app users and loyalty members. Tools like geofencing and beacons even allow proximity-based contextual offers to nearby potential guests’ mobile devices. Integrated mobile wallet payments also incentivize the conversion of these targeted mobile-first offers. Data analytics on past guest behavior allows more relevant offers.

3. Unified Cross-Channel Guest Profiles

   A guest-centric mobile app tightly integrated with the PMS allows hotels to build unified guest profiles comprising booking, stay, service interactions, and even post-stay preference data across channels. Guests use the same app for booking hotels directly or even via OTAs. The in-app activity, when clubbed with back-end channel analytics, provides a 360-degree view of each guest. Hotels can then deliver personalized experiences and targeted promotions tailored to guest interests on the mobile app itself.

4. Optimizing Channel Costs

   Mobile apps provide a cost-efficient promotional channel for hotels once the initial app development cost is absorbed. Push notifications with deals, contests, loyalty benefits, etc. allow cheaper alternatives compared to OTA distribution commissions and Google Ads costs to acquire the same guest. Direct in-app bookings also optimize channel costs for hotels.

   Further, guests acquired via mobile apps provide higher lifetime value. Advanced mobile app analytics also provide granular visibility into vital metrics like cost per booking and channel profitability for optimal decision-making.

Challenges and Solutions in Implementing Technology

While technology is no less than a boon for the hotel industry, employing it doesn’t come without challenges. So, let’s discuss some of those challenges along with how you can solve them.

1. Integration Complexities

   Hotels often have disparate systems like PMS, CRS, Channel Managers, and Payment Gateways, among others, from different vendors. Integrating them into a unified stack is hugely complex, requiring significant customization efforts and costs.

   Solution: Hotel tech vendors now offer SaaS solutions built on open API architecture, allowing better third-party integrations. Prebuilt connectors minimize custom coding needs.

2. Legacy Systems Limitations

   Many hotels have legacy on-premise systems that have limited scalability and flexibility to adapt to newly adopted hotel tech solutions. Integrating new cloud-based or on-demand systems with traditional on-premise PMS and other backbone systems causes significant complexities due to API compatibility issues and a lack of interfacing capabilities. Hotels struggle with inadequate technical skills to handle intricate systems integration.

   Solutions: The solutions lie in selecting open architecture-based systems that provide out-of-the-box compatibility with existing core platforms. Hotels also need specialized IT skills and managed service providers’ expertise.

3. Data Security Concerns

   Cloud adoption also raises data privacy and security apprehensions as hotels deal with sensitive guest data. Also, the risk of losing guest data to hackers can have a long-term impact.

   Solution: Vendors combat security concerns by investing in the latest encryption, data access controls, and cybersecurity to assure data protection and prevent unauthorized access.

4. Talent Shortage

   There is a severe talent shortage when it comes to mid and senior-level technology professionals along with data scientists in the hospitality sector to support the adoption of complex solutions.

   Solution: Leading hotel chains have created internal training academies to reskill existing staff on technology competencies. Educational institutes also now offer hospitality technology management courses. Strategic hiring initiatives are also undertaken targeting technology talent.

Conclusion

Technology has completely changed how hotels handle their distribution channels. Now, hotels can use actionable data-driven insights, better systems, and more ways to engage guests throughout the booking and stay journey. Although integrating legacy systems and handling channel partnerships are still hard, the way forward is paved by new ways of using AI, the cloud, mobility, and analytics.

When hotels update their technology, they should focus on making a connected, optimized, and intelligent channel delivery ecosystem. This will give them a long-term competitive edge. Essentially, as long as hotels keep adopting new technologies, visitors will enjoy a better, more seamless, and more personalized stay.

Frequently Asked Questions

How does technology affect hotel management?

Technology helps hotels provide fast and accurate information, enable data-driven business decisions, reduce manual work, provide personalized customer service, and boost brand recognition. This leads to increased sales, enhanced customer satisfaction level, and overall profitability of the hotel business.

What technology is used in hotels?

Some key technologies used in hotels include property management systems, customer relationship management tools, revenue management software, online booking platforms, virtual assistants, in-room tablets/devices, digital keys, smart sensors and thermostats, and AI chatbots, among others.

How is smart technology changing the hotel industry?

Smart technology adoption is making hotels more efficient operationally while also elevating guest experiences. Some examples include automated check-ins, smart rooms with connected devices, AI concierges for information and recommendations, and predictive analytics for better decision-making.

What is the impact of automation on hotels?

Hotel automation powered by AI and IoT is helping streamline operations in different areas like housekeeping, kitchens, inventory management, and more. This improves staff productivity and frees them to focus more on guest services.

How does digital transformation affect the hotel industry

Digital transformation through innovative technologies is crucial for hotels to meet evolving guest expectations around personalized, smart, and contactless services along with seamless omnichannel experiences.

How to use AI in the hotel industry?

Hotels can leverage AI applications in various key areas, such as predicting guest demands, powering virtual assistants, automating processes, revenue management, loyalty programs, and enhancing security and safety. It also brings greater efficiency operationally.