The number of walk-ins in the hotel industry drops yearly. The internet has become the most important source for travellers to find and book accommodation. In fact, the online booking market size is estimated to double from $432 billion in 2020 to $833 billion in 2025. Nearly 40% of those bookings are made via Booking.com, 32% via other aggregators, and 21% through a hotel’s website. [Statista]
This shows the importance of connecting to various online booking channels and the heightened need for channel management software to support hotels and hosts in effectively selling their inventory across a broad portfolio of channels to maximise revenue.
This buyer’s guide looks at channel management and the benefits of channel management software.
We’ve also curated ten expert questions to ask software providers that can help you narrow down your options and make the right investment.
Channel Management is the administration of different booking channels to achieve your sales and marketing goals. Distributing your rates and availability through multiple channels, including your own website, is a great way to reach a wider audience and sell more rooms.
RoomRaccoon data reveals that the average hotel uses between 3-5 booking channels to distribute its inventory.
Managing rate and inventory updates across an extensive network of extranets is a huge challenge for hotel staff, leading to time-consuming manual processes often fraught with mistakes and double bookings. In this day and age, it simply isn’t viable.
A Channel Manager is a software solution designed to simplify and speed up this process through API connections to various booking channels.
Quick fact: RoomRaccoon boasts one of the fastest Channel Managers with a top speed of 5 seconds synchronisation.
The powerful tool automatically updates room availability in real-time when a booking is made and when you make any rate changes to your listings. More importantly, it keeps your reservations calendar synced across your sales channels.
By importing bookings made on third-party websites directly into your property management system (PMS), a channel manager helps keep all of your reservations in one central location for better monitoring and organisation.
The moment a reservation is made on any booking channel, the channel manager automatically delivers the reservation details back into the hotel’s reservation or property management system and instantly reduces inventory across all channels, including the hotel’s own website.
rooms
1 Automates and simplifies rate changes, reducing manual labour and business disruptions.
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2 Achieve a boost to your direct bookings with the power of the OTA billboard effect.
Increasing inventory visibility on multiple channels leads to increased bookings and revenue.
4 Reduces the risk of double-booking and overbooking rooms. Accept credit cards and process payments
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5 Insights around best-performing channels, improving the effectiveness of your channel management strategy.
An OTA sells accommodations, tours, transportation, and trips on an online platform. They are third parties who sell services (mostly directly to the public) on behalf of hotels and other accommodation providers.
Agency model : Accommodation providers pay a commission per booking from an OTA.
A metasearch engine is a search tool that sends user requests to several other travel sites and aggregates the results into a single list.
Cost-Per-Click (CPC), or Pay-Per-Click (PPC) Model: Accommodation providers pay a cost for every click on an ad. Google Hotel Ads also offers Commission Per Stay.
A GDS is a worldwide channel between travel bookers and suppliers. It displays live product, price, and availability data to travel agents and online booking sites. The GDS is often used to tap into the corporate travel market because it can present hotels, flights, and car rentals.
Pricing : Accommodation providers pay a commission per booking from a GDS. Connecting to prominent GDSs through a Channel Manager prevents you from paying individual connection fees for each GDS.
A wholesaler sits between travel agents and suppliers to act as a middleman, sourcing products (rooms, rates, packages) in bulk and selling them to various clients (travel agents, OTAs, tour operators).
Pricing : Negotiated prices with accommodation operators for rooms or packages.
A Booking Engine processes online bookings on the property’s website.
A mobile responsive website and user-friendly Booking Engine are the only way to increase direct bookings and pay less commission to OTAs.
Pricing : Most Booking Engine vendors charge a monthly or annual subscription fee on top of commissions per booking.
At RoomRaccoon, we’re firm believers in offering commission-free direct bookings to every user — no matter how large your property portfolio is. That’s why we’ve included our innovative booking engine technology in all packages — at no extra charge!
Hotels listed on OTAs can benefit from a phenomenon known as the billboard effect. This means that OTAs provide advertising for hotels and other lodging providers on their platforms.
Bookers looking for better deals or more information about the hotel may go to the website of that particular hotel to make a direct booking.
Buyer’s Tip: Hotel websites with a user-friendly booking engine enjoy more commission-free bookings by listing on OTAs.
In addition, channel management can also be described as the online distribution strategy you use to achieve your desired business goals; increased bookings, revenue growth, international exposure, and ultimately more profits.
An online distribution strategy involves setting goals and creating a framework for what you want to achieve from each channel. For example, utilising a GDS can be highly advantageous when it comes to gaining international corporate business.
Each channel has its benefits and drawbacks, and it’s essential to understand how they differ to establish an effective channel management strategy.
When deciding what channel opportunities are best for your business, there’s a lot you could consider. Channels can be very different in terms of traveller type and general structure. That can make it difficult to line them up and compare.
If you take a step back, you can compare all channels using these key criteria:
How much does selling through the channel cost you? Are the fees primarily transactional (i.e., commission per sale vs pay per stay), or are there higher overhead costs?
When expanding your business to new channels, you must integrate new processes, technology, and mediums. Check if your channel management software integrates with your current channels and the ones you plan to add to your distribution mix.
This represents the size of the market, but it isn’t necessarily limited to the number of customers you can reach through a channel. Consider the customer profile (leisure vs business travellers), including how much they will typically buy (5-day package deals vs one-night stays) at a time and how frequently they may buy (seasonal holidays vs frequent business trips).
Different channels provide or require different levels of engagement with your customer. For example, you must respond to reviews and direct customer messages on Booking.com. Consider how each channel will impact your brand and what you must do in each channel to ensure your brand is maintained.
Shopping for channel management software? Here are 10 expert questions to ask channel manager vendors to make the best investment for your business.
There are two types of distribution models: pooled inventory and allocated inventory.
Hotels prefer pooled inventory because it evenly distributes your inventory across all booking channels, including your website. In this case, your overall inventory reduces whenever you receive a booking.
On the opposite, allocated inventory means that you give each channel a certain number of rooms. This limits the number of rooms each channel can sell, which creates a scenario where one channel sells out completely and leaves another with unsold inventory. Also, overbookings are more likely to occur.
2. Do they support global channel connections?
As the world becomes increasingly connected, it’s more important than ever for businesses to have a presence on global booking channels. Sites like Booking.com, Expedia, Airbnb, and Agoda are essential for reaching international travellers. By being listed on these popular global channels, businesses can ensure they’re maximising exposure.
It’s also good to check if the software provider integrates with global channels with reliable XML connections to provide smooth data transfer between the two systems.
Think of an antenna with weak reception and the results: hazy visuals. The same happens when there is a weak connection between two software systems. You may experience delayed rates and availability updates resulting in more overbookings and missing reservation details.
3. Is comprehensive reporting part of the system?
Having reliable information related to the performance of your booking channels and revenue analysis is crucial for making more sensible choices concerning distribution and fine-tuning your channel management to drive up income for your business. Knowing what works and what doesn’t can unlock greater opportunities for success.
A channel manager with a Channel Report will show a detailed overview of your top-performing channels, occupancy rates, and revenue, which you can compare against previous months or years.
4. Can you manage additional channel features with the channel manager?
Besides selling rooms, hotels use booking channels like Booking.com and Expedia to run channel promotions and accumulate reviews from past guests. These features are usually maintained within the channel’s own extranet.
Rather than constantly clicking through multiple extranets, the most effective channel management software will allow hotels to manage essential channel features in one place. This makes it easier for them to stay organised and efficient.
Other features that you can manage within a channel manager:
• Channel promotions
• Guest reviews
• Content management (room descriptions and photos)
• Booking confirmation emails
5. Can the channel manager integrate with my existing systems?
Before selecting a channel manager, you must inquire whether the software can successfully integrate into your existing systems and tools. This will allow for improved accuracy and a more efficient operation of both your property’s front and back ends.
To achieve optimal results, many hotels choose to pair their channel managers with the following systems:
• Booking engine or portal
• Property or reservation management system
• Revenue management system (RMS), or pricing tools.
Buyer’s Tip: Avoid a complicated tech stack by choosing an all-in-one hotel management system (HMS) for automation precision like RoomRaccoon.
VS All-in-one HMS with a PMS, booking engine and channel management software
1 Set-up-and-play.
2 One subscription/contract.
3 One support line.
4 Affordable all-in-one platform complete with core systems: channel manager, property management system, booking engine, and a revenue management system.
5 Easy staff adaption to a central dashboard with consolidated data.
6 Marketplace with integration partners like POS and CRM to customise your property with more tools and apps.
Time-consuming integration.
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Multiple subscriptions/contracts. 3
Many support lines. 4
Software is priced individually: channel manager, property management system, booking engine, and revenue management system. In the end, it ends up being more expensive.
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Training staff to manage different interfaces is challenging and takes them longer to adapt
Marketplace with integration partners to add to a platform assembled through multiple disparate acquisitions, each with a different underlying tech stack.
6. Can the channel manager import and auto-charge VCCs?
A virtual credit card (VCC) is a temporary, digital Mastercard that OTAs use to facilitate payments from bookers. The OTA loads the payment onto a VCC that the hotel can charge like a regular credit card. All VCCs have an expiration date; if you miss this deadline, you’ll lose access to the funds.
Typically, the hotel staff must access the OTA extranet to charge the credit card for each reservation. A powerful channel manager will simplify this process and import the VCC into the hotel’s property management system (PMS).
Good to know: RoomRaccoon imports the VCC straight into the guest reservation for easy access and visibility and can auto-charge the VCC when it’s activated, so you never miss out on revenue!
7. Can your channel rates automatically adjust according to demand?
The accommodation industry is very competitive, and hotels need to be able to sell at the right rate and time to maximise occupancy. Channel management software with yield management functionality gives you greater control over planning and pricing strategies.
When the demand is high, increasing your rates is an excellent strategy. And when the demand is low, decreasing your rates can incentivise more bookings. After all, you cannot sell a room that was vacant the day before.
The yield functionality monitors your occupancy levels and automatically adjusts rates in real-time across all connected booking channels. Designed to capitalise on available opportunities, this intelligent pricing tool assists you in maintaining competitive channel rates and increasing revenue.
8. Is the pricing model per channel, reservation, or flat fee?
Let’s talk pricing. Independent hotels typically have constrained budgets, and pricing guides their decisionmaking. In most cases, the technology will pay for itself through results.
However, it’s still important to understand the different pricing models and which are better suited to your budget and property management needs.
This pricing model charges per channel you connect to. This means budget-conscious hotels will be limiting their reach.
This pricing model is based on a commission basis, similar to OTAs. This means that hotels will end up paying a double commission per reservation.
This pricing model charges a monthly or annual subscription for the software with an allocated amount of booking channels, depending on your package.
The benefit is that you’ll know exactly how to budget since your software price will stay consistent. It also means you can connect to channels without paying additional fees. This is the preferred model for big and small accommodations.
Buyer’s Tip: Most software providers offer a 10%-20% saving when you choose an annual contract.
9. How long does it take to implement the software?
Unlike legacy technology that requires onsite physical installation, cloud-based providers give you the ‘plug-and-play’ experience where you can set up your profile quickly and easily.
The best channel managers have dedicated onboarding programs with a knowledgeable implementation expert to take you through your setup and training online. In fact, many of the biggest steps are managed for you. Things like mapping room rates and categories for each channel can be done without any extra effort from your end.
10. Is adequate support and resources available in your native language?
When an issue needs to be addressed at your property, prompt action is essential. This is particularly true for hoteliers, as access to experienced support staff with a grasp of the local language can make all the difference. Further, resources like FAQs and help articles should readily be available to guide you.
Generating more revenue is your primary goal, and a channel manager is an invaluable sales tool that helps to boost your bottom line. High-performance channel management software makes time-consuming yet essential tasks like advertising on thirdparty platforms, online payments, and rate & availability management a natural part of your daily workflow.
For independent hotels and B&B hosts that don’t have the same amount of resources as larger hotel chains, a channel manager can help level the sales playing field. As you tend to your guests with the utmost hospitality, your calendar will be filled with reservations from various sources.
RoomRaccoon is an award-winning hotel management platform with fully integrated channel management software. The RoomRaccoon channel manager imports OTA bookings directly into the property management system and automatically updates rates & availability across all sales channels, including the built-in booking engine.
Request a personalised demo to see firsthand how a channel manager can work for your business.
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