By Jean Francois Mourier 
February 26, 2013

There is a great deal of confusion around the plethora of revenue management-related technologies available on the market today. It's hard to remember which technology calculates rates, which one manages inventory or if they do both. Some systems update rates in real-time, some only update once daily. Talk about technology overload!
 
Never fear, we're here to help you determine which revenue management technology will be most useful for your property. Let's compare two very important solutions: revenue management systems (RMS) versus channel management systems (also known as Œchannel managers).
 
What are they?
RMS will analyze reams of data, suggest a specific 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 doesn't have to manually update each OTA individually, making it an important piece of the revenue management puzzle - but it is only one individual component.
 
Rates
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 don't help calculating, changing, optimizing or yielding rates. It doesn't 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. It's not automated, and it must be manually updated (ugh, data entry).
 
Inventory
A big problem for hotels is overselling. Whether it's 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 don't offer any protection against overselling because they don't offer built-in, automated inventory control. With only a channel manager, each time a room is sold, the property's inventory must be updated manually for all affected dates.
 
Integration
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 middle man 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 let's 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?

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Jean Francois Mourier is CEO and Founder of REVPAR GURU, a company that provides hotels around the world with an alternative revenue management software system designed to deliver maximum bookings and profits.  You can reach Jean Francois through www.revparguru.com or by calling 1.786.478.3500.