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What is a Channel Manager? How does it work?

A graphic listing the benefits of a hotel channel manager

What is a channel manager?

A channel manager is a software that helps hotels manage inventory and rates across various online channels such as online travel agencies (OTAs), metasearch, global distributions systems (GDS) and the hotel brand website. It also helps consolidate bookings from various online channels in one place. A channel manager acts as a technology provider between the hotel and OTAs.

What are the benefits of a channel manager?

  • Increases sales through common pool of inventory

    OTAs require hotels to update rates and inventory into their system. When a hotel has inventory listed on various OTAs such as Expedia, Booking.com, MakeMyTrip, etc., it becomes a tedious task for revenue managers to manually manage inventory. In the absence of a channel manager, hotels resort to allocation. They provide a subset of their rooms to each online channel. The downside of this method is that if one channel sells out their allocated inventory, they are starved of new sales. Similarly, a non-producing channel may hold on to allocated inventory. Hotel rooms are eventually a perishable commodity. If a room isn't sold today, it’s a loss in revenue for the hotel.

    Therefore, one crucial function of a channel manager is to enable a common pool of inventory and to ensure that room prices and inventory are always correctly listed across all online channels and in real-time. If the hotel has a common pool of 10 rooms of a certain category on a certain date, the channel manager enables the hotel to update all online channels with 10 available rooms. Now, if one room is booked on one channel, the booking is pushed to the channel manager, which now decrements the inventory for that room category, on that date, to nine rooms and updates all the channels that only nine rooms are available. This feature ultimately increases sales for the hotel.

  • Increases sales by enabling hotels to easily update pricing across channels

    Channel managers enable hotels to reflect the same rates at multiple OTAs with a single update. Therefore, it becomes easier for hotels to implement dynamic pricing strategies across all online channels. Hoteliers can increase prices across all online channels if demand is high and reduce prices if demand is low with a single update.

  • Minimises the chances of overbookings

    Consider a hotel which doesn’t use a channel manager and allocates full inventory to all the channels. Imagine that the hotel has one room of a certain category available on a certain date. Now, if that room is booked on one channel, and the booking is not decremented across all channels on that date, the same room may be sold by other channels causing overbooking and a poor guest experience. A channel manager can minimise the probability of overbooking.

  • Minimises manual work through two-way connectivity

    Channel managers offer a two-way connectivity between the hotel and other online channels where rates and inventory are pushed to these channels, and at the same time, these bookings are received and consolidated in one place. In many cases, channel managers also offer the same two way connectivity with Property Management Systems (PMSes). This reduces manual work and the chances of errors.

The Simplotel Advantage:

Today, technology in the global hospitality industry is rapidly evolving. There are numerous channel management companies that service hotels, resorts, guest houses, service apartments, et al.

At Simplotel, we prioritise creating a seamless experience for our hotels and their customers. Therefore, the Simplotel Booking Engine and the Simplotel Reservation Desk provide a seamless, two-way integration with various channel managers across the globe to help our customers choose from best-in-class products.