Wondering how to choose a channel manager or Property Management System (PMS)? You may be new to the hospitality world following a recent guesthouse purchase or by virtue of having inherited a Bed & Breakfast. You could be a seasoned serviced apartment operator. Although you may have been operating for years, you may be seeking to advertise on more OTAs to expand your reach. Your ultimate aim may be to increase your occupancy levels by putting more heads on beds. Alternatively, you could be seeking to systematise your processes. Perhaps business automation is what you’re after. Whatever the reason that you are facing this question, hopefully, the tips for choosing a PMS or channel manager mentioned below may help you in your decision-making process.
PMS vs Channel Manager: What is the difference between a PMS and a Channel Manager?
I like to think of it this way. Imagine yourself as a 5-year-old who’s left on their own in a candy shop. Lots of lovely little candies sitting in front of you. Candies of all colours, shapes, and sizes. What’s more – they’re free! Yes, take one and get one free – you heard that right. Paradise for your little 5-year-old self, right? But, and that’s the big problem (because you’re a bit lazy), they’re not actually in your mouth. They’re in front of you, but you need to reach out to them. That’s what your hands, or channel manager, are there for. Get all the goodies. A channel manager links to various sites where you can advertise your accommodation and allows you to bring in more bookings (except for, in this case, they’re not free!).
Now what? So – you’ve got a whole bunch of sweets that your hands can grab. You’ve eaten as many as you possibly could. You can’t stuff them all in your pockets, oh no, there’s way too many of them! And you want to take some for your friends also – the yellow one for Low, the red one for Ned, the blue one for Andrew, and the green one for Saleem. But how can you keep track of them if you throw them all in a paper bag? Hmmm – jars. That’s it – jars – they’re a great idea! Let’s get them all sorted neatly. That’s where your brain, or the PMS, kicks in.
The Property Management System is the backend that helps manage your reservations. It usually sends out rates and availability, which the channel manager then distributes to the various sites. Whenever somebody makes a booking, the channel manager grabs it and sends it back to the PMS. The PMS then processes it and can have additional functionalities to help automate various aspects of your business. Some PMS-es automate payments. Some give you a central calendar of your bookings. Meanwhile, others could even help you keep track of your housekeeping. Others still could have features such as automated communications, check-in management, or also maintenance issue tracking.
But my channel manager does these things! And that’s a no-brainer (pun intended)!
Quite right – what I’m describing above is why we have two separate names for these pieces of software, this is how things used to be. However, nowadays, as with most things, it’s all got mixed up, or rather messed up in some cases. There are several providers out there who call themselves channel managers, yet have some PMS-like functionalities. There are others still that are PMS-es, but go under the guise of a channel manager (due to that having become the most popular term). They may not even integrate with many channels at all!
So where does all of that leave us? If you’re confused, you’re not alone, and justifiably so! One would have thought that someone must have got it right and built a software that did everything, right? That’s what this hybrid software is trying to do, yet they only succeed to varying degrees. So how do you go about choosing the one that works best for you? Keep reading and find out my three top tips for choosing a channel manager or PMS.
1) Does it do what it says on the tin?
You may have gone and drawn up a neat spreadsheet with a list of features that your ideal solution should offer. If you’re planning on getting a demo with every provider out there to finalise your full-blown research – stop! Right there! Don’t just fill in those cells with ticks and crosses. You need to understand fully “how” the provider solves your problem, not just whether or not they say they do. You will find that most providers will say they solve a specific problem. Once you start using their service, you’ll notice that they do it in a wholly inadequate way! So – focus not on the ‘whether’, but on the ‘how’.
Something else you may want to bear in this mind is the age of the company. If they’ve been around for ages, why don’t they have a feature that you expect them to? It may say something about their attitude to adopting feature requests or improvements that you may suggest down the line. On the other hand, a young start-up with a limited feature set, committed and has shown releasing new features is more likely to get you to where you want in a shorter window of time.
2) Will, it cost me what they say it will?
Once you’ve got your top 3 or top 5 providers narrowed down, you want to start looking at their pricing model. Don’t do this before you’re done with step 1. I reiterate, don’t select a provider based on their pricing. Don’t even ask what it is until you get to this second round of coming up with your shortlist. Your first step should be to look at their features and whether what they provide will help solve the pain points that you have or envisage you may have in your business.
Even at this stage, don’t judge the prices yet. Just try to understand in detail what their charges consist of. The industry is plagued with providers that advertise a fee, and then they charge all sorts of extras on top of every single breath that you want to take. Some even charge you with extras to activate an integration. Others charge percentage fees on all bookings – even those coming through your website or cancelled ones. Others still have a pricing structure that consists of so many variables that you can’t figure out what it’s going to cost you!
Another thing to watch out for is any upfront set-up or training fees that they may wish to charge. Whether they’re tying you into a contract of a specific length, whether it automatically rolls over, and what their notice period is.
3) Will it cost me what I think it will?
Once you have your shortlist and a clear understanding of their pricing, the next factor is to understand the actual cost to your business of using that software. If a channel manager or PMS is cheaper than another one but offers you a more limited feature set, or a much lower quality of support, then in all probability it is more expensive. As the saying goes: “Buy cheap, buy twice.”.
What you should do is look at your total cost
Total cost = cost of software + cost of any necessary integration partners + cost of required admin time to run it + extra revenue it can generate – savings offered by the software
Most of the above are self-evident as to what they mean. The additional revenue is the one that may require some clarification. By selling add-ons such as early check-ins, you can add a sweet icing to the cake in terms of the profit that you make each month from your units. Another way of increasing your revenue is by upping your visibility across more OTAs & listing sites. However, remember, as these charge up to 18% commission, what is going to have the most significant impact is how much the software can help you increase your direct bookings by. Here, the quality of the website that they offer and the conversion rates that the booking engine can achieve are essential.
I hope that the above tips will help you in selecting a channel manager, a PMS, or hybrid software more efficiently. If you are running serviced apartments, you may want to take a look at my take on what features are needed to reduce the hassle of day-to-day operations at zeevou.com/features. Zeevou is an easy-to-use online platform that automates hospitality management – from marketing to bookings, to operations. Replace your traditional channel manager and property management system with one unified hub.
This article is a guest blog post written by Na’ím Anís Paymán, the Chief Revolutionary at Zeevou -> The Direct Booking Revolution. To find out more about them and keep abreast with the latest developments in their cutting-edge hospitality management hub, follow them on Facebook and Instagram.