Channel Management: Yesterday, Today and Tomorrow

Channel ManagementIf you run an accommodation business then it is highly likely you are using a channel management tool of some description or are at least planning to in the near future. If it is not on your immediate radar then you should consider putting it front and centre of your online distribution strategy.

Simply put, a channel manager is Internet-based software that allows accommodation providers to manage availability and rates across a multitude of online channels from a single easy-to-use web page. The real benefits to the accommodation business are many and significantly outweigh the investment requirements to get up and running on this vital piece of software. As an accommodation provider, the major business benefits accruing to you include:

  • More accurate availability and price parity on online booking channels – by making a single change, your staff can update multitudes of websites immediately. This means availability and pricing across sites will be current, accurate and require minimal staff training to maintain.
  • The capability to list on many more online booking channels with little or no additional effort for each channel you add. The result is increased distribution without increased cost and you are able to put your rooms in front of millions of consumers around the globe.
  • Free and easy marketing for your property – the major booking site players have the money and the will to market your property effectively online, so let them!
  • Increased accuracy with your availability and rates, coupled with increased exposure to local and international online booking channels means increased bookings revenue and more dollars on your bottom line.
  • Elimination of double bookings. Any channel manager worth its salt will automatically adjust inventory across all sites when a booking occurs on any site. This means you can have all your availability on all sites all the time and feel secure. This is known as the Pooled Inventory Model and it means you can maximise your chance of being booked without being overbooked.

So, we’ve established that a channel manager will increase your online bookings but what should an accommodation provider look for when selecting among the multitude of offerings on the market? Look for:

  • A product that is based on the pooled inventory model, where the tool automatically adjusts inventory across all sites as soon as a booking occurs on any site – this will maximise your inventory and reduce double bookings.
  • A product with no transaction fees. Channel managers that work on a flat monthly fee are the best value for money
  • A product that allows you to manage inventory on your own website’s booking engine as well as on the third party booking sites.
  • A product without lock-in contracts. A channel manager with no lock-in contracts has confidence in their ability to service your business and backs their own product – this is a good sign. Rapid changes in technology you could be left behind if you are locked in to a sub par product.
  • A product that does all their own product development in-house – they are more likely to be able to respond to the changes your business needs and adapt their product to a changing online distribution landscape.
  • Ensure that you select a channel manager that is backed by a significant support team that can ensure all your needs are taken care of under one roof.
  • Ensure your channel manager updates all the major international bookings sites. The local sites are not enough and the international majors are spending up big on marketing your property to the world. Remember, you have to be in it to win it!
  • Last but not least, it is advisable to pay your channel manager a visit and view their operation first hand. Many accommodation businesses are doing more than 40% of their business online. You cannot afford to put this business with a fly-by-night company. Remember, you are choosing a long term business partner, not just a product.

So what does the future hold for channel management?

Channel managers are rapidly evolving as the one-stop shop for all your online distribution needs, dis-intermediating some of the more traditional electronic distribution channels.

Channel managers are already connecting to online booking sites, wholesalers, traditional travel agents, GDS and inbound tour operators. Many additional channel options will be connected in the future and booking channels not connected to a reputable channel manager risk being left out in the cold.

The future will see the leading channel managers increasingly connected to more property and central reservation systems, providing seamless connectivity between the property management system and the online bookings channels. Facilitation of automatic delivery of all reservations from online channels directly into the property management systems, is an important capability of the future channel manager. Such a solution completely eliminates the need for the property to recapture online booking channel reservation emails into the property system.

With the proliferation of channel managers and similar distribution switch networks of the future, distribution and acquisition costs to accommodation providers will be dramatically reduced. Channel managers are a far more cost effective option than older distribution systems and these systems are already finding their market challenged with the new kids on the block.

The accommodation providers that embrace the right channel management technology today will have reap the benefits of increased online bookings, lower acquisition costs, increased business efficiency and ultimately, higher profit margins.

Can you afford not to?

2 Comments

  1. Todd Basham August 16, 2010 at 2:41 pm #

    well done Mike.

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  1. Tweets that mention Channel Management: Yesterday, Today and Tomorrow | Tourism Industry Blog -- Topsy.com - August 16, 2010

    […] This post was mentioned on Twitter by Graham Mann and Graham Mann, NZ Tourism Blog. NZ Tourism Blog said: New blog post: Channel Management: Yesterday, Today and Tomorrow http://bit.ly/clmsAf (a good follow on from last weeks post on CM options) […]

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