Hotels that do not have a channel Manager must manually update inventory and availability on each channel, which is a time-consuming and inefficient operation that frequently results in inconsistencies.

A channel manager also provides hotels with more control over their channel mix. A channel manager is a basic but effective hotel technology that improves occupancy, saves time, enhances direct reservations, and maximizes online revenues. It enables a hotel to broaden its reach, accept online bookings, and more conveniently manage rates, availability, and reservations.

Also, this dynamic technique allows revenue managers to control a hotel’s distribution more precisely and prioritize the most profitable hotel distribution channels at any given time. Still not convinced? Let’s find out more about the importance of channel Management and distribution!

Significance Of Effective Channel Management

Large hotels have used channel managers or something similar for decades, but specialized technology – channel management software – is now available to handle the online distribution of room inventory.

And that too at a reasonable cost so that hoteliers and owners of even the smallest hostels, bed and breakfasts, boutique hotels, guest houses, or vacation rentals can afford it. But what is the importance of this channel management software? Let’s find out!

1. Automatic Updates

   When properties manually manage their distribution over numerous sites, they must update availability calendars and track bookings daily. The chance of errors increases when the distribution is not updated in real-time via API automation. Typical mistakes include overbooking, multiple bookings, reservation detail errors, and missing out on online sales.

2. More Direct Reservations

   Channel managers are used to dealing with third-party hotel distribution channel partners but can also support direct booking initiatives. Online travel agencies (OTAs) are excellent at putting properties before new potential guests. They provide increased reach and advanced eCommerce marketing methods that can assist prospective tourists in finding hotels that fit their demands and interests.

   Also, channel management allows for property awareness in large, small, broad, and specialty markets without the worry or inconvenience of overbookings and other errors that could result in a high volume of complaints that your customer care must handle.

3. More Distribution Channels

   Properties can use an automated distribution and channel management system to join more hotel distribution channels and gain more information about channel sales and booking patterns. More hotel distribution channels mean contacting more travelers, which is crucial during the low season, and those looking for a specialty product.

   By utilizing OTAs, metasearch applications, global distribution systems (GDS), B2B wholesale, bed banks, or specialty accommodation booking sites, you ensure that you are visible to the appropriate type of guest.

   Furthermore, depending on a property’s distribution mix, you may wish to withhold inventory from lower margin channels and your booking engine or list your rooms at varying pricing to account for price sensitivity. It’s not about distributing your product across all channels; it’s about getting the right inventory to the right people at the right time.

4. Overbookings

   Overbooking remains the most serious concern to properties that manually manage their inventory and rely on channel partners. When a property has more than one channel of distribution and posts the same room on all of them, it is possible or unavoidable that the same accommodation may be booked through several channels.

   Overbooking is terrible for both guests and properties. After being walked, guests are unlikely to return to a hotel and are likely to submit a negative review online, even on TripAdvisor. A channel management system will significantly decrease, if not eliminate, the danger of overbooking.

How Underperforming Hotels Can Benefit From Channel Management

Channel management is an important part of search engine optimization (SEO), which entails optimizing online hotel distribution channels to increase brand exposure, meet sales targets, and improve customer experience.

Also, effective channel management is maintaining a positive relationship between brands and their marketing channels, which include social media platforms, pay-per-click (PPC) advertising, email marketing campaigns, and search engine results pages (SERPs). When successfully done, channel management assists hotels in the following:

1. Increased Visibility and Brand Awareness

   As a hotelier, you want to attract as many customers as possible to maximize room occupancy and income. A channel manager can help you connect with new guests by listing your rooms on booking platforms worldwide that you would not have had access to otherwise. Distribution channel managers also provide various options to boost your hotel’s online presence, including SEO tools and Google Ads.

2. Integration With Other Software

   A hotel distribution channel manager integrates your Property Management System (PMS) with online reservation channels effortlessly. Once you’ve set up your account and linked it to your PMS, the channel manager will automatically post room availability and rates to various booking websites. It also synchronizes any changes to the PMS, such as new reservations, cancellations, or changes in availability. In this manner, you can be sure that your hotel’s internet representation is always up to date and that you are not unwittingly undercutting your competition.

3. Save Time and Resources

   A channel manager is a must-have software for any hotel looking to enhance its online visibility and reach more guests. Channel managers enable hotels to list their rooms on numerous Internet booking sites, typically all simultaneously. This can save hotel workers time and effort because they would otherwise have to update each platform individually.

4. Provide Data and Analytics

   Channel managers can use sophisticated reporting tools to determine which booking platforms generate the most traffic, what types of guests book rooms, and how much they spend on average. Furthermore, channel managers may monitor a hotel’s online reputation and guest satisfaction levels, making it easier for hotels to discover issues and take steps to enhance their ratings. All of this vital information may guide your marketing and business decisions, allowing you to attract even more guests in the future.

The Impact Of Poor Channel Management

Channel management refers to hotels’ systems and strategies to distribute room inventory and rates across online travel agencies (OTAs), the hotel’s website, and other distribution partners. Effective channel management is critical for hotels to maximize occupancy and revenue. However, poor channel management can lead to various issues that negatively impact a hotel’s bottom line. Here are some main problems caused by deficient channel management processes and technology for hotels:

1. Rate Parity Issues

   Failing to maintain rate parity across hotel distribution channels can severely alienate hotel guests and erode commission revenue from OTA partners. When guests see the same rooms offered at lower rates on some channels, it rightfully upsets them and leads to accusations of unfair practices.

   Likewise, OTAs monitor hotel pricing across channels and expect contractually guaranteed rate parity in return for including the hotel in their marketplace. Undermining rate parity risks, OTA delisting, or reduction in commission levels. Effective channel management technology automates rate monitoring and updates to ensure channel consistency.

2. Reputation Damage

   Guests dissatisfied with encountering overbooking situations, inconsistent rates, or other channel mismanagement issues often vent their frustration through negative online reviews. With these reviews heavily influencing brand reputation and prospective guests’ booking decisions, even a few negative reviews can significantly damage occupancy rates.

   Since experiential factors like room availability and price parity link directly to channel management effectiveness, deficient processes inevitably erode guest satisfaction. Poor reviews from channel management problems drastically slow future booking momentum and require disproportionate recovery marketing expenses to compensate and rebuild reputation.

3. Increased Distribution Costs

   Inefficient channel management practices directly raise distribution costs through higher OTA commissions, expanded use of channel managers, and increased guest acquisition spending. OTAs charge hotels commission percentages as high as 25-35% for bookings—with these elevated commissions meant to be offset by driving high-value bookings that may not occur otherwise. However, inefficient channel processes fail to offset OTA commissions with sufficient value bookings, creating an unproductive financial burden.

   Similarly, expanding distribution channel management complexity frequently necessitates reliance on costly channel manager services and their various monthly or transaction fees. Complicating matters further, fixing reputation damage from negative reviews requires amplified advertising and guest incentive investments just to attract lower-margin bookings.

Identifying Signs Of Underperformance

An ineffective contract management system, or worse, no solution strains high-value partner relationships, exposes both parties to risk, and can bring the contracting process to a standstill. Companies that do not have an effective channel management strategy risk losing a large source of revenue. So, if your system exhibits any of the signs listed below, it may be time to seek a different strategy.

1. Absence of Automation

   Validating large numbers of channel bills and incentive claims against contract terms is difficult, especially when organizations use human memory or spreadsheets for handling complex terms and conditions. Automation addresses this issue by prompting, tracking, and managing contracts, capturing all potential opportunities while maximizing income streams.

   Organizations may remove manual processes, minimize human errors, and streamline the contracting cycle by implementing a system that automates all process components, from front-end generation to back-end execution.

2. Sluggish Contract Cycles

   How frequently does information go missing in action inside your business, whether it’s in someone’s inbox, misfiled, or simply overlooked? If this is a frequent occurrence, you are not alone. Many businesses suffer from inefficient workflows, which can drastically delay contract cycles, delaying agreements to the following reporting cycle or, worse, losing out on a contract to more responsive competitors. No firm can afford that. Organizations that implement efficient contract cycle practices can simplify the production of meaningful contracts and accelerate revenue generation.

3. Shrinking Market Share

   Not all channel partners are identical. Some will surely underperform. However, if most channel partnerships fail to meet expectations, the problem could be ineffective and insignificant incentive agreements. If competitors offer a better deal, corporations may lose market share, which can be difficult to recover.

   Instead, businesses must respond fast and strategically by assessing current channel sales connections and implementing high-value initiatives that drive sales and revenue up and down the channel. Dashboards and reports in contract management software provide enterprises with immediate visibility into the performance of all partners, allowing for timely remedial actions.

4. Unfavorable Contract Terms

   Contract development is critical to establishing effective agreements. However, when people assemble documents quickly and use old templates or simply copy and paste, they endanger the organization. Without a single, authoritative source for contract terms and conditions, aberrant legal language can creep into agreements. This makes companies liable for adverse contract provisions, putting them at serious legal and financial risk. Contract lifecycle management solutions feature a single, approved repository of legal terminology, allowing enterprises to eliminate the chance of using improper terms entirely.

The Role Of A Channel Manager

As a hotelier, you’ve registered your property with several online travel agencies (OTAs), including Expedia, Airbnb, and TripAdvisor. That’s because you know where the majority of your guests are. And how do you know this? Yes, because of a channel manager!

A channel manager facilitates managing online travel agents (OTAs) and other online distribution channels that sell rooms online. The software oversees the online distribution of your hotel’s rooms in a safe, secure, and real-time manner. It allows you to adjust room availability and rates across several channels in real-time.

When a guest orders a room at your hotel through an online booking site, the channel manager automatically adjusts your inventory, affecting all associated channels and your PMS. Simply, a channel manager improves and streamlines your hotel’s booking process.

Strategies For Effective Channel Management

There are various types of channel management, each focusing on a particular aspect of channel growth and maintenance. Here are some commonly used channel management strategies:

1. Sales Management

   Sales management is the strategy you use to manage your sales and partners. Revenue management, for example, can incorporate incentives to increase client involvement and revenue. It may also include performance management, which entails determining how well the outputs of a process achieve your desired outcomes. For example, if you aim to boost online sales by 25% by the quarter’s end, performance management is the technique you’ll use to monitor your success. Monitoring your performance allows you to change your plan to progress toward your goals.

2. Relationship Management

   Relationship management relates to how you intend to establish, develop, and sustain relationships with third-party partners over time. Managing connections with vendors, agents, retailers, distributors, and manufacturers requires meticulous preparation. Businesses form partnerships that benefit all parties involved. To sustain strong working relationships, businesses must understand their partners’ goals, their own business goals, and how to create a framework that fosters development for all parties toward their objectives. They also need to create plans adaptable to changes in business objectives.

3. Channel Strategy

   A channel strategy is a plan of action for implementing channels. It contains your sales and distribution strategy and your market expansion strategies. For example, you may develop a channel strategy outlining the activities you intend to take to boost your digital marketing outreach. Another example may be designing a strategy to incorporate a partnership program that adds value to your resellers.

4. Pricing

   Businesses can incorporate price into their channel management strategy. Businesses that employ this management technique consider where and how their customers buy things. Customers who buy through different channels may be willing to pay varying prices. Therefore, the location and manner of purchase might influence the price set by businesses. For example, a company may market a product as a luxury item and sell it at a higher price through a merchant in a wealthy neighborhood because people in those locations are more inclined to spend more for a product.

5. Revenue Management

   Managing revenue entails employing tactics that maximize the money you generate from your inventory. One example of revenue management includes discounting seasonal items near the end of the season to encourage sales, reducing the inventory of less in-demand products, and increasing the inventory of more in-demand things that can be sold at full price. This method optimizes revenues from available inventory. For example, a hotel may offer discounts during slow periods, enticing them to visit the hotel.

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Further Read: Optimizing Pricing Across Distribution Channels

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Overcoming Challenges In Channel Management

Effective channel management frequently involves a unique set of obstacles. For example, assessing partner performance and recognizing underperforming partners can be time-consuming and difficult. Implementing defined KPIs and leveraging technology can help to simplify partner performance management. Other frequent challenges businesses encounter with channel management include:

1. Non-Reporting Relationships

   In the case of a direct sales force, the structure, hierarchy, and authority are all clearly established. You have a salesperson who reports directly to the sales manager. However, in a channel structure, a channel partner, an individual, or a firm reports to a channel manager via an indirect reporting connection. If the direct sales team fails to meet their expectations in two or three quarters, they are fired due to poor performance.

   However, if the channel partner underperforms in the short to medium term, firing him may be difficult due to various factors. Over time, if a channel partner fails to perform, that partner may be removed, but not as swiftly as if you were managing a direct sales team.

2. Different Needs of Partners

   Channel partners cater to different types of clients. Furthermore, they have distinct talents and competencies. Furthermore, the partner’s success is determined by their abilities and competencies inside the environment in which they operate. Both channel managers and organizations often fail to adapt to each channel partner’s individual demands, which is why many channel-wide initiatives fail to have the anticipated commercial impact.

   Furthermore, larger partners carrying a larger target share are more valuable to the organization than partners not offering the entire product line. Allocating the desired amount of resources to high-velocity and high-volume partners vs low-velocity and low-volume partners complicates channel management even further.

3. Various Organizational Structures

   Regarding direct sales forces (whether direct or contractual), we have greater control than we have over channel partners. This is because, although some channel partners are firms, others are individuals. Individuals are pretty easy to manage, but corporations are made up of salespeople, technical people, and marketing people – so we manage an entity rather than individuals. This paradox in managing stakeholder expectations adds a lot of complication. Furthermore, channel partners have different priorities.

   The difficulty here is that such priorities may not always correspond with the organization’s priorities and may even change over time. It is possible that while the organization is attempting to promote a specific product, enter a specific market, or need the channel partner to adhere to a specific sales process, the channel partner is unwilling to carry out the necessary activities. As a result, the organization must understand its partners’ goals rather than arbitrarily pushing agendas and allocating resources to achieve the intended commercial outcomes.

4. Forecasting Challenge

   Developing accurate projections is one of the most difficult tasks in channel management today. Demand can be predicted within a few percentage points for non-seasonal businesses, such as retail. However, if a company or product is in the growth phase of its life cycle or if the general economy is having difficulty, developing a forecasting model becomes difficult.

   This is where it is crucial to understand the various types of channel partners, their sales velocity, and the product mix that drives that velocity. Accurate forecasting is unlikely to occur without suitable systems and processes in place.

Emerging Trends In Channel Management

Several new trends, such as the following, are expected to influence channel management in the future:

1. Increased use of data and analytics: As the volume of data created by consumers and channels grows, businesses will need to leverage data and analytics to get customer behavior insights and optimize channel management strategies.
2. Increased usage of digital channels: As more consumers purchase online, businesses must focus on creating and managing digital channels, such as social media platforms and e-commerce websites, to reach and communicate with them.
3. A greater emphasis on customer experience: With rising competition and shifting consumer expectations, businesses must provide a smooth and personalized customer experience across all channels to maintain and attract customers.
4. Rise of Omnichannel Marketing: Omnichannel marketing uses many channels, such as physical stores, internet platforms, and mobile apps, to create a consistent and integrated customer experience. This strategy will likely grow more significantly as customers expect a consistent experience on all media platforms.
5. Continued globalization: As the global economy becomes more integrated, businesses must adjust their channel management strategies to account for changes in customer preferences, cultural norms, and regulatory frameworks across regions and markets.

Conclusion

A good channel manager can help all hospitality properties and hoteliers – from luxury hotels to tiny guest houses. If your property sells inventory to multiple online travel agents, you should hire a channel manager. It will reward you in time saved, bookings won, double reservations avoided, and sanity conserved.

A channel manager is a complex software that automates operations associated with promoting hotels on online booking channels, such as real-time rate and availability updates, managing different rate kinds, and centralizing bookings into a single dashboard. A channel manager is specifically developed to meet the demands of hotel businesses, providing a single interface for effortlessly managing all reservation sites.

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Frequently Asked Questions

What are the signs that my hotel might be underperforming?


Some signs your hotel may be underperforming due to channel management issues include declining occupancy rates, high OTA commissions, frequent overbooking, and increasing guest complaints around pricing or room availability.

Why is a channel manager crucial for hotel success?


A channel manager automates inventory and rate management across booking sites, saving hours of tedious manual work. Channel managers enable hotels to easily analyze channel performance, avoid overbookings, maintain rate parity, reach more guest segments, and maximize revenue potential.

What are the common issues faced by hotels without effective channel management?

Common issues faced by hotels without effective channel management include:

• Overbooked inventory from taking reservations across disconnected systems
• Wasting time on manual channel updates
• Losing revenue from limited distribution reach
• Breaking rate parity promises frequently

How do you balance direct bookings and third-party channels for optimal results?

The optimal channel mix includes branded website bookings augmented judiciously by high-value OTAs. This balances high-margin direct bookings with extra exposure, corporate volume, and specialized customer segments from agencies like Expedia.

What tools and technologies are available for streamlined channel management?

Leading solutions include all-in-one property management systems with integrated channel managers using automation and AI to calibrate rates and allocation. Similarly, bid management tools allow hotels to manage OTA campaigns efficiently. Also, cloud-based distribution platforms enable expanding channel reach. And business intelligence dashboards provide actionable analytics on channel productivity.

The post Why Your Hotel Might Be Underperforming Without Channel Management appeared first on RateGain.