Revenue Management Systems vs. Channel Managers
By Jean Francois Mourier, CEO of REVPAR GURU
What are they?
RMS will analyze reams of data, suggestaspecific room rates, forecast demand levels, monitor booking pace and factor in multitude of market segments. A sophisticated system will be a turnkey, all-in-one system, which would handle all aspects of the revenue management process, automatically, from start to finish.
In contrast, channel managers are only able to distribute room rates to the various OTAs used by the property. It is a very helpful tool because the revenue manager doesn¹t have to manually update each OTA individually, making it an important piece of the revenue management puzzle - but it is only one individual component.
Sophisticated revenue management systems analyze the market, historical data, booking patterns, booking pace, room availability, etc. in real-time to determine the best rate at the right time to secure the maximum number of bookings. The goal of the RMS is to accurately assess the level of demand in the market and produce a rate that will not only drive the bookings for a given period but also one that will help the hotel maximize the revenue opportunities.
Channel managers don¹t help calculating, changing, optimizing or yielding rates. It doesn¹t suggest when to raise/lower your rates, or suggest specific dates to monitor. They take the rates (that were calculated manually, or through an RMS or just chosen at random) and distribute the rates to all OTAs. It¹s not automated, and it must be manually updated (ugh, data entry).
A big problem for hotels is overselling. Whether it¹s because of human error or incorrect yielding, it is not a good thing for business. Additionally, allocating rooms to different OTAs and replenishing inventory can become a huge headache. While not all RMS will manage your inventory across all channels, an optimal system will ensure that your inventory is adjusted automatically and in real-time. This will prevent overbooking and ensure that your rooms are available for sale on all distribution points.
Channel managers don¹t offer any protection against overselling because they don¹t offer built-in, automated inventory control. With only a channel manager, each time a room is sold, the property¹s inventory must be updated manually for all affected dates.
A key factor in the successful implementation of a technology product is whether or not it integrates into the technology that is already being used at the property. All systems should be integrated because it removes the Œmiddle man¹ and allows the technologies to communicate directly. Integration between all hotel management systems (whether by choosing one single system that does it all or whether you combine multiple technologies) makes the technology more effective, more efficient and will create better results.
Channel managers will distribute rates, eliminate (some) errors and labor costs due to manual data entry, but let¹s face it, they will not help you increase revenue.
Hotels face important decisions regarding what to sell, when to sell, to whom to sell and for how much. At the end of the day, both channel managers and revenue management systems are important tools, but have very distinctive advantages/disadvantages. Instead of choosing a stand-alone channel manager, why not invest in an all-in-one revenue management system to help you reach optimal results and really increase revenue?
About REVPAR GURU
REVPAR GURU provides hotels around the world with an alternative revenue management software solution, designed to deliver maximum bookings and profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is the only real-time revenue management software available on the market, it meets the rapidly changing needs of hotels in a very demanding business environment. REVPAR GURU"s solution offers dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management and GDS sales distribution, to increase a hotel's RevPAR intelligently and effectively, while maintaining rate integrity and automated rate parity. Since 2004, REVPAR GURU"s software solution has been used by hotels worldwide to increase occupancy and RevPAR. Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.