Are you wondering what the best channel manager is for you? Today, we interviewed the founder of BookVisit, Magnus Emilsson, about current trends and developments in the hotel industry in regards to channel canagement in particular. Check out Magnus profile on LinkedIn here to learn more about him (he is also the master mind behind Visit group and many other companies both within travel and other verticals).
Which are the 5 most important things to think about when choosing a channel manager for a hotel?
- Our experience is that the number 1 thing to think about is the simplicity. By this I mean how easy it is to use the channel manager. A lot of channel managers are seen as simple at first but when you want to differentiate rates between distribution channels it suddenly isn’t that simple anymore. You should be able to have unique settings and rates between different channels and this should be easy to setup. Important is that you can map and control every channel from one place.
- The second thing I like to mention is to decide how you want to work with external channels and define that for yourselves: Do you want to differentiate between channels? Give them different inventory? Do you only sell rooms or also other more complex products? The answers to these questions decides what channel managers that can suit your strategy.
- The third thing is to think about is the interaction with revenue management. Do you have a separate tool for this and is it compatible with your channel manager? And how is this distributed in the channel manager? Make sure you have thought about this before you set up a costly channel manager.
- Number four I would say is to check if you can work with pooled inventory. This way you don’t have allocated inventory and instead all OTAs sells rooms from the same pool of inventory.
- Lastly, the price is of course important. Which model would you prefer? A flat fee or commission?
However, there are also numerous other things to address, for example, if the channel manager also offers a booking engine for your own website, how good this engine is, is it possible to sell complex products? What property management system (PMS) connections are available? How long is the contract agreement for? As you see a lot of questions need to be asked and thought about before choosing a channel manager.
In general, I would say the smaller the hotel the more focus on price and less on functions. And, in turn, the bigger the hotel the more focus on features and functions and less on price. You will earn it back for sure!
What are the most common mistakes hoteliers make when choosing a channel manager?
I would say that the most common mistake is that hotels don’t think enough about their strategy. This means that they focus too much on the price and number of connections each channel manager can offer them. You currently probably have five to seven channels that realize 99% of your volume, so having a channel manager offering a lot more channels than that might not even be valuable to you. Whenever a hotel is more focused on their strategy, we often see that they use less channels and focus more on the strategy to maximize the results with the remaining instead.
What’s the best price model or which one would you prefer, if you were a hotelier?
We think a flat fee is the best one. Otherwise you add up more commission on the commission you already pay for each booking to the different channels.
What trends do you see in channel managers and distribution in general?
- The biggest one is the focus on the cost of distribution. OTAs generally want between 18-25% commission and this hits the margin quite hard. So, lowering this is key. A lot of hotels want to drive more direct bookings and this is driven by technology. An active marketing strategy, including social media and meta search, is a good way to increase direct sales.
- We also see a trend that there are tools based on AI to help the hotels. This can be chatbots or revenue tools. For example, revenue management tools used to be mostly about reporting and then the hotels use these reports to make decisions about pricing. Now there are AI tools that predict what pricing is optimal at every time.
- The last trend I like to mention is that OTAs don’t sit still and wait while direct bookings to hotels are increasing. In the past, OTAs tried to use contracts to get last rooms, rate parity, etc. and they are now trying to replace contracts with technology instead. So they launch new features to help hotels maximize their sales on the OTA websites which in turn means maximizing their own sales. I think we will see more and more that OTAs offer technology to the hotels to boost their sales.
If you compare your own company, BookVisit, to the competition: what stands out and why do hotels choose your solution?
In our experience they often start with our booking engine and immediately see an uplift in revenue. This is because they can sell more products (packages, campaigns etc) with it and also that its more user-friendly than most competitors are. Once the hotels see this they also get curious about our hotel channel manager and want to try it. It becomes a natural step to have these two integrated.
The feedback we get about our channel manager is that its very easy to use but also offers possibilities to work with advanced strategies and with high flexibility. This makes it popular for small as well as big hotels.
Anything more you wan to add?
What we see is that many PMSs (property managment systems) are now starting to also offer channel managers and booking engines. This means they don’t specialize anymore as they used to. We also see some channel managers trying to become PMSs but with same result. We believe that the booking engine for your website and your channel manager should be the same. Then we try to develop connections to PMSs and also let other companies, for example revenue management tools, use us as a hub and develop add-ons for our tools.
The e-commerce of hotels is having a good booking engine and a good channel manager. And with BookVisit we try to focus on these two areas to make it really good.