ChannelGain

Industry Background

In hospitality industry, hotels could be run on various revenue models. They could be

Hotel Revenue Management

In hospitality industry, a hotel faces the twin problems of meeting business expectations (that of maximizing revenue, occupancy and profits across all their locations (for hotel chains) and rooms for each property for every given day of their operational year) while meeting customer expectations. This is the goal that revenue management aims to fulfill by providing the required service to the customer at the right price at the right time. Revenue Management, as a factor to organizational success, has gained significant prominence in recent times for the hotel and hospitality industry, with several hotels creating dedicated full-time positions of Revenue Manager. Performance metrics like RevPAR, Best Rate Guaranteed, Best available rate(BAR), Average daily rate, Rate Parity, etc. have been developed to measure and track revenue performance of hotels and its management.

Revenue Classification

Revenue sources for hotels are primarily from room accommodation services, food and beverage services and some ancillary services like laundry, wi-fi/broadband, meeting rooms, etc. Market segment wise the revenue sources of a hotel can be classified under two broad segments

As a high level estimate, contracted business is generally 70% in terms of total revenue and profit of the hotel and non-contracted is the remaining 30%. For the non-contracted part, online travel agents (OTAs) generally charge 15-25% in commission whereas for bundled rates, this could be as high as 35%.

Non-Contracted Business

Here the key revenue sources are leisure travelers, transient travelers, last minutes business and personal travelers. This is generally the most profitable market segment as the cost of distribution is lowest for this segment.

Rate Parity

Rate Parity is the concept of selling rooms of a certain hotel with exactly the same rate structure across all distribution channels.

Rate parity was investigated in 2010 by the UK competition authority, the Office of Fair Trading (since renamed Competition and Markets Authority), for alleged breaches of competition law, as a result of a complaint by the website Skoosh, and a Statement of Objections has been issued.

Channel Management

A revenue manager in a hotel is tasked with inventory management, price management, distribution channel management and evaluation of revenue management efforts among other tasks. In current scenario, for distribution channel management, the revenue manager is faced with managing two distinct types of channels for distribution of their inventory (no. of rooms)

1. Offline (Non-Electronic) Channels– Traditional phone and fax availability inquiries and bookings, walk-ins, etc. Different types include
   1. On-property transient sales
   2. Property direct telephone sales
   3. On-property group sales
   4. Convention & Visitors Bureau
2. Online (Electronic) Channels – Relatively younger means of distribution, and still evolving, these include
   1. Traditional CRS/GDS availability inquiry and bookings - CRS are the Central Reservations System and GDS are the Global Distribution Systems
   2. Internet - Search, price comparisons and bookings via internet and now even mobile phones/gadgets. Internet Distribution Systems (IDS) typically consist of websites which help hotels to sell their inventory.

Online Channel Management

For the online medium of distribution via internet and mobile phones there are various options. Some key players include Expedia.com/Travelocity.com (in US), booking.com (in Europe), Ctrip.com (China), Cleartrip.com (India), Zuji.com (Southeast Asia), Wotif.com (in Australia) among several other regional and international players. Each of them can be referred to as an OTA (online travel agent) or a channel. Increasingly new channels of distribution are becoming available with interesting new strategies. Given the myriad channels existing today and the rapid evolution with the introduction of new channels on a regular basis, it creates the problem of channel management for hotels who have to constantly keep up with latest online channels and trends to maximize their revenue potential. Each of these OTAs provide hotels with their own Extranet, requiring hotels to manage multiple extranets. Additionally it causes the problem of maintaining rate parity across all their contracted channels. This creates the challenge of channel management which RateGain’s product ChannelGain solves.

ChannelGain

ChannelGain is a web-based online product which integrates with several OTAs to provide a consolidated channel management platform for hoteliers.

Integration

ChannelGain in integrated with hotel revenue management products to automate online inventory management.

Multi-Lingual Support

ChannelGain is available in both English and Spanish.