Channel managers provide connections to OTAs, agents and resellers, and often come with many other tools to increase efficiency and sales for tour operators
One of the most hotly debated questions in the tours and experiences industry is: what is a channel manager? Even within the companies that build these useful tools, there will be disagreement over exactly what they are and what they do. If you bring the topic up at an industry event, you can find yourself stuck in conversation for hours.
Channel managers have been used in the hotel industry for years. The most basic explanation of their use is that they are used to increase profits by managing bookings through different sales channels. Because it took longer for tours and activity providers to digitalise, the technology didn’t really become available until not long before the pandemic.
Functions of a channel manager
The main function of a channel manager is to act as plumbing for your distribution. It is the pipe that connects your reservation software to online travel agencies (OTAs) and other resellers. This pipe is called an API and it allows communication both ways between the technology you use and that of the reseller. Many other functions can be built on top of this to help you sell more trips and increase efficiency.
The API that a channel manager uses provides many connections. Each provider will have a slightly different list of resellers but they will all connect to the main OTAs, such as Viator, GetYourGuide, Klook and Tiqets, a range of smaller ones, and resellers that the provider has relationships with. If the technology provider works within a specialised market, such as hop-on hop-off, boat tours or walking tours, its connections will reflect this.
The functions a channel manager can provide will include the ability to change pricing by channel, dates and live availability, which has become an essential part of online sales. Other functions include seamless booking flows for you and your guests, customer records, adjustments, pickups and capacity management. Often, they will also provide website services and basic drop-in sales buttons that can be easily implemented on your site. When channel managers were first developed, they required a member of staff to update everything. Largely, they are now automated once they have been set up.
One thing to note is that while channel managers are working to automate as much as possible, this can depend on the company receiving the information. Unfortunately, logging in to OTA extranets is still a thing. In most cases, this is to update information that changes relatively infrequently, such as tour descriptions. This situation will change but there is a large debate within the tours and experiences technology industry about how to do so. Operators don’t really need to worry about this unless they are particularly interested.
One of the most interesting recent developments in the channel manager space is dynamic pricing. This is the ability to change prices for your products with little to no input from your staff. It is based on several factors, such as time to trip, availability, season, month, day of the week, or even time of day.
The cost of your product will be determined by an algorithm’s market analysis and what prices it thinks this will bear. These are widely used in the airline, hotel and ride-hailing industries. Most people know it as Uber’s surge pricing and customers are now very used to the concept.
Channel manager marketplaces
Some channel managers, such as TourCMS by Palisis, will also provide their own marketplace. These are large banks of resellers, agents and operators to make new connections with to distribute your products for a commission. If you wish, you will also be able to sell other operators’ products.
Channel managers can provide their own contracting solutions for their marketplace. This means that everyone is using the same terms and rates for each sale. Others, such as TourCMS, enable tour and activity providers to negotiate their own contracts with resellers where this option is available. GetYourGuide, for example, will offer you a standard contract. Once the terms are agreed, enter these into the back office of the channel manager and the commission on each sale will be calculated and paid automatically.
The pricing strategies that technology providers use vary. Some will take a commission on each sale, others offer a flat rate at a range of different plans, and then there can be a mix of the two. Most will offer a monthly or yearly rate with a small percentage paid on each booking. Take some time to calculate which is the best option for your business, and remember that rates will be negotiable if you have a large volume of bookings.
Choosing a channel manager will depend on your business needs. Small operators may only need the API connection — the pipes — to OTAs. Large operators will want the extra functionality built on top of the API, such as dynamic pricing, real-time management and access to marketplaces. Create a list of questions and your needs, and speak to a member of the technology provider’s sales team to discover exactly what is being offered.
Register for a free trial on TourCMS today. Our team will reach out to talk you through the set-up process and work out which OTA’s and partners will be best suited to your needs. You can also arrange a call directly with our team on our contact page.
Ready for more? Read Channelling growth: the key to thriving in the tours and activities sector.