No, don't use a hotel channel manager software. Here is why.
Today there is a plethora of hotel channel managers available. But, do you really need them? Most of them connect to over a dozen online travel agencies like booking.com, Google Hotel Ads, Trivago, or Expedia. At the same time, most of the hotels, motels, hostels, and resorts only have a few dozen rooms. If you are located in any touristy area, tour groups may already make out most of your bookings. They are usually not interested in booking over online travel agencies as discounted bulk prices can be negotiated by directly booking at the hotel. This improves the overall bottom line of the tour guide companies while decreasing overhead costs for the hotel which would usually occur by selling to each individual guest.
Additionally, channel managers for hotels can be very expensive while only providing a limited amount of value as you have to compete with other establishments in your area which usually leads to price wars to get the best spot on the online travel agency. In the worst case, you'll be spending 80 percent of your time and resources to achieve 20 percent of your revenue if the Pareto Principle applies. Not to mention, that online travel agencies take an additional fee on every successful booking in addition to the fees that your are already paying for the channel manager. It's no wonder, that hotels with a higher liquidity also have a higher profitability. To increase your liquidity, you better not pay high fees for each booking.
But, there may be some value in offering some of your rooms on online travel agencies. This is especially true during off seasons to attract business customers. They are usually not as price sensitive as tourists and the extra fees charged by the online travel agencies do not hurt as much as it's the case during the highly competitive tourist season. For business people, characteristics like location, amenities and services are more important than saving a little bit of money.
Simultaneously, the person which selects the hotel won't spend hours finding the best deal on all the available online travel agencies. Instead, they will use the most popular platform with the biggest supply of hotels. Again, offering your rooms on a no-name platform for penny pinchers where the platform takes an additional cut isn't a wise choice.
However, some people may still be interested in a hotel channel manager software. Especially if your hotel has hundreds of rooms and outsourcing the distribution of these may make economic sense. So, we will look at the hotel channel manager software industry more in detail by answering some of the most pressing questions.
What is a channel manager for hotels?
They allow you to automate the synchronization of room availabilities with online travel agency platforms like booking.com. Reservation details are automatically transferred into your channel manager and ideally forwarded into your property management system.
This automatic process can save you 2.5 hours per week if you have a business with more than 30 sales a week on these online travel agency platforms. We are assuming that you need at least 5 minutes to transfer your reservation information into your property management system with a labour cost of $20 an hour. According to the Austrian Economic Chamber, in 2016 40% of the people booked via the internet. Unfortunately, we do not know whether the bookings happened via a platform or a direct reservation. But, let's suppose 80% happened via an OTA and 20% via the website. As a result, 32% of all sales happened on average via an OTA. We additionally know from the Austrian Economic Chamber that the average occupancy rate was around 44% in 2018. If we combine all these numbers, you would have to have at least 30 rooms to achieve 30 sales a week via online travel agencies. Or, in revenue terms, you'd be making $240,900 in annual revenue with a RevPAR of $50, 30 rooms and an occupancy rate of 44%.
What is an OTA channel manager?
An OTA channel manager stands for Online Travel Agency channel manager. It's used to distribute the sale of hotel rooms across multiple online platforms to generate higher revenue numbers and occupancy rates.
What is the best channel manager for hotels?
Today there are lots of channel managers available. Most of them connect to the same amount of popular online travel agencies. Ranked by their perceived popularity on Google in the USA via estimated data from Ahrefs in June 2021:
- Cloudbeds: https://www.cloudbeds.com/ (~4300 monthly searches on Google according to Ahrefs)
- SiteMinder: https://www.siteminder.com/ (~3200 monthly searches on Google according to Ahrefs)
- Little Hotelier: https://www.littlehotelier.com/ (~1100 monthly searches on Google according to Ahrefs
- Sirvoy: https://sirvoy.com/ (~800 monthly searches on Google according to Ahrefs)
- beds24: https://beds24.com/ (~200 monthly searches on Google according to Ahrefs)
- hotelogix: https://www.hotelogix.com/ (~200 monthly searches on Google according to Ahrefs)
- Hostify: https://hostify.com/ (~80 monthly searches on Google according to Ahrefs)
- STAAH: https://www.staah.com/ (~80 monthly searches on Google according to Ahrefs)
- d-edge: https://www.d-edge.com/ (~30 monthly searches on Google according to Ahrefs)
- HotelFriend: https://hotelfriend.com/ (~10 monthly searches on Google according to Ahrefs)
- roomraccoon: https://roomraccoon.com/ (~10 monthly searches on Google according to Ahrefs)
- getduve: https://getduve.com/ (~10 monthly searches on Google according to Ahrefs)
How does a hotel channel manager work?
A hotel channel manager software typically employs different quotas for different online travel agencies because they want to prevent overbookings. For instance, if you had 50 rooms available for guests and you were connected to 5 online travel agencies, the software should allocate 10 rooms to each one in the simplest case.
More sophisticated hotel channel manager software vendors should employ either a statistical model based on previous bookings to prefer a certain online travel agency. Alternatively, they should allow you to set custom preferences to define the quotas for each online travel agency according to your opinion.
Ultimately, they have to resort to this method, because online travel agencies could take a few seconds before a reservation is registered in the channel manager. Subsequently, it would take another few seconds to get the updated available room count into the remaining OTAs where you are advertising. This could lead to overbookings in a time window of just a few seconds. As we all know, overbookings are very annoying and create a bad customer experience that should be avoided at all costs. So choosing a channel manager should be done with care.