4 Reasons Why You Need a Channel Management System

By Alex Gaggioli, February 14, 2019

Using a channel management system has become a virtual “must-have” for hospitality and accommodation providers of all sizes over the past decade. Large hotels have been using channel managers, or something similar, for decades, but now specialized technology to manage the online distribution of room inventory is available at an affordable cost for even the smallest of hostels, boutique hotels or vacation rentals.

By definition, a channel manager dynamically connects your inventory to multiple online travel agencies (OTAs), or booking channels. While you could connect to multiple websites and manage your inventory on your own, keeping your property’s rates and availability across all your online marketing channels takes a lot of time and makes you prone to over-bookings and other costly mistakes.

Here we’ll discuss why using a channel management system is the new norm in hospitality.

1. Automatic Update

When properties manually manage their distribution on more than one site, they are required to meticulously update availability calendars and track bookings multiple times a day. When distribution is not updated in real-time, it increases the risk of errors. A few of the most common errors include overbookings, reservation detail errors, and missing out on bookings/revenue (e.g. open availability was mistakenly closed).

Overbookings

Overbookings remain the largest threat to properties who manually manage their inventory and distribution. When a property has more than one distribution channel, and lists the same room across those channels, it becomes likely or inevitable that the same room could be booked by multiple channels.

Overbookings are bad for guests and properties. Nearly 80% of guests will not return to a hotel after being walked and 44% are extremely likely to leave a negative review, according to research from Software Advice. A channel management system will reduce the risk of overbookings, if not remove it completely.

Reservation Detail Errors

Manually managing inventory often means transferring reservation information from an email or extranet to a spreadsheet. When reservation details aren’t automatically transferred from the booking source to a reservation management system or property management system, there is room for error. Errors with names, dates, room type or other details can easily occur. Simple errors like these can impact current room availability and future booking requests. This easily results in confusion for both you and the guest and results in poor customer service.

Missed Opportunity

It is easy for a property to miss booking opportunities if channels aren’t properly updated in real-time. For example, imagine a reservation cancels and another potential guest is searching for travel at the same time. That room won’t become available until you manually update that channel, which may result in a lost sale. Similarly, to manage overbookings, a property may list only part of their inventory on each channel, limiting the overall exposure of property availability. A channel management solution reduces the chance for missed opportunities because distribution is automatically managed.

2. Data-Driven Decisions

Managing inventory manually often means logging into the extranets of several different websites multiple times a day. Even the time spent conducting a quick 15-minute channel check can add up quickly when completed twice a day, seven days a week.

For example, imagine a property distributes its inventory on four channels. The 15 minutes it takes to check each channel becomes one hour. Assuming you check each channel twice a day every day, that quickly turns into 14 hours a week – just checking and updating channels!

While a channel management system won’t completely eliminate the need to manage your distribution channels, a channel manager allows you to do it all from a central place. On average, myallocator saves properties 10 minutes per week per two rooms per connected channel. With that calculation, a 100 room hotel connected to 5 channels saves up to 41 hours a week. Or, a 20 room property connected to 3 channels would save 5 hours a week.

The saved labor hours can move from busy-work to tasks that can more positively impact your business. Instead of worrying about if reservations and availability are simply updated, you can focus on more strategic tasks like pricing strategy and distribution management.

Tambourine put it best in one of their recent posts for revenue managers when they said it’s essential to go from “organized to optimized.” Property managers, revenue managers, and distribution managers are highly organized people, simply because it’s an essential piece of their job. But, once technology automates various processes, they can spend their time optimizing rather than organizing.

channel management system for hotels

 

3. More Distribution Channels

By means of an automated channel management system, properties can join more distribution channels and have more data on which sites perform better based on their property type, guest type, location or booking model. More distribution channels mean reaching more travelers, which is critical in the low season, and reaching those travelers searching for a niche product. By using OTAs, meta searches, B2B wholesale or niche accommodation booking sites, you make sure you’re visible to the right type of guest.

Moreover, depending on a property’s distribution mix, you may want to withhold inventory from lower margin channels or list your rooms at different prices because of price sensitivity. It’s not about distributing your inventory on every channel, but about delivering the right inventory to the right people at the right time.

 

4. More Direct Bookings

While channel managers are used to connect to third-party distribution partners, they can also help fuel direct booking efforts. Online travel agencies (OTAs) are great for helping properties get in front of new potential guests. They offer added reach and sophisticated marketing tactics that can help interested travelers find properties that meet their wants and needs.

Recently, Expedia CEO Dara Khosrowshahi said “OTAs are a cheap source for new customers. But return guests are the most profitable if they come back to you.” according to a blog post from Duetto Research. A channel manager can help get a property into a traveler’s mind and then it’s up to the property to get that guest to come back and book with them directly.

Channel management opens up the opportunity for property awareness in big, small, broad, and niche marketplaces without the worry or hassle of overbookings and other mistakes. And of course, there’s always the hope that a traveler finds a property on a channel but ends up on the brand.com website and decides to book direct (i.e. The Billboard Effect).

Try a Channel Management System for free

Technology continues to change the way hospitality businesses operate for the better. Channel management systems in particular help managers and staff save wasted time and headaches on monotonous and often tedious tasks, while improving operational metrics by reducing errors and overbookings. If you’ve never used a channel manager before or worry about changing software provider, try a solution that offers a free trial, such as myallocator. Properties of all shapes and sizes become more successful by leveraging technology to streamline distribution management. Learn also how to find the channel management solution that fits your property’s needs.

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Interested to see the Cloudbeds Channel Manager in action? Request a free demo with one of our Market Managers.

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