Channel Management: What you need to know today

Channel Mgt Blog

By Estella Hale, VP of Products

In 2013, SHR published an article about channel management. The aim was simple: to introduce hoteliers to the three most important things they had to know about channel management at that time. Two years later, the original article is still a valuable resource to understand channel management. Of course, in the meantime, things have changed significantly. Today, SHR presents you with three more things you need to know to successfully manage your channels as a hospitality business operating in 2015.

The landscape has changed

The last article covered the most relevant OTAs (online travel agencies) back in 2013. Since then, the landscape has changed significantly. Many big players in electronic distribution are merging – in 2013, you needed to know about four OTAs. Now, two years later, there is really only need to talk about two big names: Expedia and Priceline. Expedia is just in the process of finalizing its acquisition of Orbitz after they acquired Travelocity earlier this year; the company will now claim more than 75 percent of all US bookings processed through OTAs. Its only serious competitor at the moment is Priceline, which merged with Booking.com back in 2005 and most recently purchased PriceMatch.

But that doesn’t mean that the landscape is getting more homogeneous – new booking channels are emerging. TripAdvisor, for example, has introduced TripConnect, a tool that enables you to take direct bookings via your TripAdvisor page. This summer, Google quietly integrated a facilitated booking system into their interface; no longer do search and booking have to happen on two different websites. Meanwhile, there are plenty of smaller, more niche-oriented OTAs available on the market, such as HotelTonight and Journeyful. Sounds confusing? It sure can get messy. That’s why channel management tools are a must for any hotelier looking to optimize every single channel and increase sales. The right channel management tool not only helps you manage your rates and distribute rooms efficiently but also allows you to be as productive as possible when dealing with and comparing your OTAs.

Understand pricing & booking

To understand who owns the guest relationship, it’s important to understand how the different pricing models and booking models work. One crucial thing to keep in mind is to always review your pricing strategies. If you are paying OTA commissions for every successful room booking, you are already giving up an important part of the customer relationship. This trade-off makes it essential to constantly review deals and ensure that some OTAs don’t cost you significantly more than others. Don’t be afraid to negotiate the relationship if it turns out not to be profitable for you. Similarly, the cost of PPC (pay per click) has increased over the last few years, but if you want guests to book through you rather than your OTAs, having a strong search engine presence should not be underestimated. PPC is costly, yes – but at the same time, done the right way, it empowers your business to build a relationship with the customer as early as the first click.

There are significant differences when it comes to various booking strategies. An important strategy to keep in mind is metasearch engines, which use another search engine’s data to produce their own results. This is a growing business, and a strong presence on metasearch sites can help hoteliers to regain more control over their bookings, shifting power away from OTAs. After all, one goal for hoteliers is to score more direct bookings through their own website to avoid commission rates. A strong brand and clever PPC advertising can help hotels get there. Of course, it’s difficult to cut out 3rd party bookings completely – OTAs such as Expedia and Priceline are crucial for bringing in business. But it’s your responsibility to know your pricing and booking strategies by heart to be able to make informed choices.

Choose your CRS wisely

Hoteliers in 2015 need to choose a CRS (central reservations system) provider to work with – and choose it wisely. Factors to consider are whether your CRS provider has direct connections to the big OTAs to reduce costs. You also want to look for a CRS provider who can offer you a channel management solution that accommodates more niche OTAs that you might choose to add as potential partners. Last but not least, it’s important to choose a provider with access to new and innovative sales channels as they become available, allowing your business to operate on the cutting-edge of digital sales technology. This will ensure that you can be flexible when it comes to both channel management and distribution that can help your business succeed.