Use of channel management tech ‘will double in two years’

The proportion of hotels in the UK and Europe embracing channel management technology will double in two years, according to hotel technology firm SiteMinder.


Just over a year after establishing an office in London, SiteMinder says it has seen the percentage of revenue from sales in Europe overtake that from its home market of Australia for the first time.


And Mike Ford, managing director of the channel management, reservation and online booking technology firm, believes it is still at the start of what it can achieve in the northern hemisphere.


“We really feel we can take the hotels here into the future. For us it was just a glaring opportunity and it’s starting to prove so in the numbers,” Ford said.


“We expect this market to be bigger than our Australian market within the next two years.”


He estimated that in Asia Pacific around 80% of hotels currently use channel management, a situation he believes was driven by the greater proportion of last-minute deal sites in that market.


In Europe Ford thinks around 40% of hotels currently use channel management support technologies like SiteMinder, but that it is poised to match levels in the southern hemisphere within two years.


That would put it on a similar growth track to SiteMinder’s home market, which Ford said saw a jump from around 40% of take-up since 2008.


SiteMinder opened its London office in Hammersmith in May last year. While all the development still takes place in Australia, the UK has a full sales and support team now numbering 15.


It has 5,000 hotels in 70 countries on its system, predominantly in south east Asia, and has signed 1,000 in the last year alone.


Recent new business in Europe has come from Grange Hotels and the Rocco Forte Group.


“The model we operate is very easy to implement and very scalable. It’s very transportable and basically we have taken the blueprint from Australia and brought it here.


“We could have been profitable in our own market, but we knew we have about two years’ lead time on our competitors in terms of our integration capabilities.


“So for us not to come here would just have been to cut off our nose to spite our face. It would have been crazy not to capitalise on our technology because we know people need it.”


Ford said hoteliers are increasingly understanding the need to not only provide dynamic pricing through their distribution channels but to expand their global reach to regional OTAs.


This has seen hotels move away from traditional static-rate allocation agreements with wholesalers, some being linked to as many as 50 distribution channels and generating up to 60% of business online.


Ford said the marketing nous third party distributors provide will ensure they have a future in the distribution mix, but they have to make sure they are linked up to the channel management system.


“If you are not connected to a channel manager it’s hard to get the inventory because of dynamic rates.


“It’s very important as a distributor to actually have connectivity to the main channel management players, otherwise you get strangled for inventory,” he said.


SiteMinder touts its bespoke API technology as the only one in the market that allows hotels to fully integrate their own reservation systems into it so bookings are fed straight back in.


It believes this two-way relationship potentially makes its system a more cost–effective option to the GDSs, which charge a fee per transaction in contrast to SiteMinder’s monthly subscription.


 “Our goal is to become the switch that property management systems hook into to get access to online booking channels. We want to establish ourselves as the dominant switch for the online world.


“The way our system is structured, our technical capability and API mean we are very well placed to achieve that,” Ford said.


SiteMinder is one of four major global channel management firms also including RateTiger, EZYield and Travel Click’s ChannelDirect system.

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