The hospitality industry is growing year by year, and accommodation providers can struggle to engage more guests. Сurrently, the most effective channels that hotels use for customer attraction are online travel agencies (OTAs) such as Travelocity, Expedia, and Booking.com. These channels work independently, and room availability is not synchronised - this can lead to double-booking, which is out of hoteliers’ control.
As a result, hotels face financial and reputational challenges. Their owners are forced to spend on average 1.1 – 2.5% of their revenue to reimburse guests’ expenses caused by double-booking. In addition, it can result in negative reviews, which damage the hotel’s image, so owners lose guest’s trust and have to spend a lot of money to redeem their hotel's reputation.
The Problem Analysis
According to Phocuswright, online travel agencies cover 33% of all reservations in the UK and 69% in Europe. In this regard, hoteliers focus extensively on effective cooperation with third-party online platforms. They are crucial promotional channels for small and medium hotels who do not benefit from having a world-known name. Such accommodation types always risk losing profit because of double-booking or underbooking.
Double-booking occurs when a hotel confirms a reservation of the same room for a particular date for two guests. This error can happen automatically, or due to human error. In the first case, customers make an identical booking using different online travel agencies. Another issue is related to the manual synchronisation of direct reservations and requests from travel platforms by an employee.
Underbooking happens when hoteliers try to avoid double-booking by placing all rooms on one online platform, or dividing room inventory by groups among discrete channels. There is a chance of losing profit when a customer wants to book an “X” category room with the help of Agoda, but a hotel places such rooms on Expedia only. As a result, the customer may not be aware that the hotel can provide the required room, so reserves a similar room in another hotel.
Extra Challenge - Deliberate Overbooking
A lot of hotels actively apply the practice of deliberate overbooking as an effective means of revenue growth and room downtime reduction. It is based on the analysis of previous reservation experience and room occupancy rates. Hoteliers calculate the anticipated number of guests who will not be able to check in (no-show), call off the reservations, change the booking details, or leave the hotel ahead of time. However, it is always risky and requires high data accuracy.
The background of such a reservation type is caused by the hoteliers’ concerns as to whether guests will occupy all the booked rooms. Hoteliers try to prevent possible losses; furthermore, they expect overbooking to overlap with no-shows, cancellations, and booking changes. This assumption is risky, and it requires careful double booking scheduling to succeed.
In brief, hotels are forced to expend substantial resources to manage booking activity and overcome issues with time-consuming channel synchronisation, qualitative research of guest behaviour and accurate forecasting of room occupancy. But today, these problems can be solved at once with the help of channel management systems for hotels.
The Solution Parsing
A channel manager is specialised software for real-time sharing of room inventory information among multiple promotion channels. After sharing, it retrieves reservations from each of the channels, puts them into the hotel’s property management system, and updates its occupancy dashboard. The purpose of the software is to maintain the accuracy of room availability and prices on all involved channels, including online travel agencies, the hotel’s website, global distribution systems, and so on.
Let’s take a look at the core of the channel manager software’s work. The channel manager is represented as a dashboard, including room inventory, calendar, and information about reservations. There are 3 simple steps to set up and synchronise the dashboards with different channels.
Step 1. Create the room inventory
First, a hotel’s owner chooses the most appropriate promotion channels, opens accounts and fills in profile pages. The profiles include the room inventory characteristics and prices of standardised room types, as well as payment methods for all channels.
Step 2. Link up the channel manager with chosen online travel platforms
After a hotelier creates and fills in profiles on all chosen platforms, they have to connect the channel manager software to all of them. Generally, the largest platforms allow the software to be linked through an option within their interface.
When all chosen channels are connected with the software, the next step is to activate them in the channel manager interface.
Step 3. Upload the room inventory information.
This step allows the hotel administrator to check the data accuracy among the hotel room inventory and channels, and make adjustments if it is necessary.
The process is complete - the chosen channels are synchronised, and the booking data from all of them is displayed in one comprehensive dashboard. The dashboard maintains data accuracy as it features real-time updates; the process is as follows:
- A guest requests for a room with specific characteristics;
- The channel manager processes the request, compares it with the hotel’s occupancy dashboard and displays available rooms according to required characteristics;
- If the guest decides to book a room, they have 10 minutes to complete the transaction. The room is blocked for booking on other channels for this period of time;
- In case of a successful transaction, the channel manager makes the room inactive for booking on all channels. If the guest calls off the transaction, the room becomes available again;
- After each successful transaction, the calendar is updated within 3-7 seconds, so the occupancy dashboard reflects actual data in real time.
As a result, staff always have access to the actual room occupancy dashboard, while guests can browse the availability on the most convenient channel for them. Received data is saved in history and used for statistical analysis. As such, hotel owners can evaluate the results of their commercial activity and make better decisions about its improvement.
Value in Use of Channel Manager Software
The automatic synchronisation of channel manager software helps not only handle double-booking, but also add values for businesses. Due to this synchronisation, hoteliers can expand their usage of promotional channels and maximise their profit while saving money on administrative and marketing costs.
These additional benefits are thanks to the synchronised two-way connection between online promotion platforms and the accommodation’s internal management system. All in all, synchronisation enables hoteliers to:
- make use of more promotional channels and maximise the number of reservations;
- save time, due to the real time updating of reservation information on all channels in one place;
- calculate room prices automatically by setting a required income for each room and the commission rates for each channel;
- avoid double-booking by changing room availability status on all channels to inactive after successful transactions.
Statistics and Reports
Channel manager software for hotels calculates and records all essential metrics of the hotel’s commercial activity, including Average Daily Rate (ADR), Revenue Per Available Room (RevPAR) and Average Occupancy Rate, then presents them in charts. These statistics enable owners to make better, and more expedient, management decisions and get comprehensive reports which enable them to:
- monitor occupancy rates, including the number of check-ins, no-shows and cancellations to foresee any risk of the room inventory underfilling;
- analyse reservation history to predict the most probable deliberate overbooking amount;
- determine the most engaging and profitable promotional channels to improve marketing and advertising strategy;
- investigate inventory demand to expand and modernise the room inventory and supplied services.
Cost-Effectiveness and High Performance
Some hoteliers used to shift the duty of channel synchronisation on an employee, particularly when running a small accommodation. This method is the cheapest and easiest, but we expect hospitality establishments to give it up - the method has a high risk of inadvertent human errors, which can lead to uncontrolled double-booking. It requires a member of staff to thoroughly, and constantly, track the incoming booking and quickly update the room inventory occupancy. Such a process is performed manually and can take a lot of time, so new ways have begun to replace this outdated method.
Today, hotels can apply different methods of synchronising their promotional channels, and they expect each chosen solution to be favourable, but are their expectations met? Let’s try to make sense of them.
1. Hire a channel manager
Accommodation size: Small and medium.
Number of promotional channels: Up to 30.
Expenditures: Based on the room inventory size and number of promotional channels. Channel manager salary is on average £65,000 per year.
Billable time: Monthly pay.
Statistics and demand forecasting: At an extra charge.
Flexibility: Need time to study new functions.
Double-booking possibility: Is conceivable.
2. Exploit channel manager software
Accommodation size: Chains of medium and large hotels.
Number of promotion channels: Extensible set.
Expenditures: Dependant on chosen pricing plans and service packages. Costs can vary from £1,170 to £2,330 for hostels and hotels with 50 rooms and less; from £2,400 to £2,850 for hotels with 100 rooms.
Billable time: Monthly/yearly pay.
Statistics and demand forecasting: Dependant on the chosen service package.
Flexibility: Functionality is wide, but limited by pricing plans.
Double-booking possibility: Is impossible.
3. Develop proprietary channel manager software
Accommodation size: All accommodation types.
Number of promotion channels: Extensible set.
Expenditures: Dependant on the software functionality and number of promotional channels.
Billable time: Pay for the development service only.
Statistics and demand forecasting: Dependant on the software functionality.
Flexibility: Full flexibility.
Double-booking possibility: Is impossible.
One method is to hire a channel manager who establishes the connection between the hotel and distribution channels. The key advantage of this method is gaining a closer and more comprehensive interaction with prospects and guests, which facilitates the identification of the hotel’s strengths and weaknesses. At the same time, the hotel has to spend a lot to hold the manager, and it does not guarantee full elimination of double-bookings.
Another way is to exploit channel manager software products provided by specialised companies. On the one hand, this method allows users to choose between different pricing plans and service packages based on the hotel’s room inventory and the number of channels. On the other hand, it limits hoteliers’ choice of feature set - they can receive more benefits from a premium subscription, but usually, they consist of numerous additional features and related products. These offers often include unnecessary components, but not some necessary ones.
There is a more practical and up-to-date solution - to develop proprietary channel manager software. It is designed to meet the specific business needs of a particular accommodation, so it provides flexible and extensible functionality. The owners can obtain the most applicable feature set, combining their goals and business suggestions offered by software companies, so, the software only includes valuable functions and performance does not lag due to various unused components. It entirely excludes expenses related to double-booking, as well as requiring no additional payments after the initial development. Moreover, the channel manager works independently of providers technological base or product changes, which ensures its smooth operation. As a result, the hotel owner pays once for a well-performing software suite adapted for the specific business environment.
To sum up, hoteliers can choose from a variety of tools for channel synchronisation, each of which have their pros and cons. This comparison shows some options and recommendations for different accommodation types on how to promote the room inventory. Relying on our expertise in this area, we consider the most rational and fully-featured option is to develop personalised proprietary channel manager software. It is the most flexible solution when it comes to the implementation of required features, as well as the most cost-effective tool in terms of its development and exploitation. Proprietary channel manager software makes it possible to reach the full occupancy of the room inventory without any problems with double-booking and unmet guests’ needs.
Summarising All The Thoughts
Double-booking leads to financial losses, tarnishes the hotel’s reputation and inhibits proper delivery of the room inventory. In this regard, hoteliers are concerned about how to manage overbooking in a hotel. Channel manager software deals with the lack of instant booking synchronisation, ensuring the reservation data is accurately displayed in real time. It helps keep the relevant room availability data visible from a user side and successfully manage the reservation processes from an accommodation side.
When choosing the right channel manager software, hoteliers wonder whether to apply ready-to-use products or develop proprietary software development. The first option saves time and provides a fast solution, but it puts a limit on the feature set owners can select. The second option needs some time for the development, but it provides a fully-featured and expanded software, adapted to the accommodation environment.
Proprietary software creation is always the ideal decision for several reasons. First of all, it is fitted with the necessary functions only. The functionality is entirely adjusted to the hotel’s specific needs and can be further expanded. The software performance does not depend on the provider’s technological base and internal software updates. Additionally, it ensures robust data security and encryption. This solution does not require any extra payments and starts to pay off right from the beginning.
All in all, the hospitality industry is a high-growth industry with a strong competitive environment. In order to keep up, an accommodation needs to involve more online travel channels for room inventory promotion purposes. It is difficult and resource-consuming work, but we hope our pieces of advice will help hoteliers facilitate this activity and thrive using the full spectrum of promotion opportunities offered by channel manager software.