Demystifying ‘Channel Management’ for Tours and Activity Operators
Let’s say you operate a popular New York City food tour. You sell out daily, get rave Internet reviews, and you begin expanding your offerings to accommodate the new demand. Suddenly, a few companies come knocking on your door, wanting to resell your tour inventory worldwide through their websites. This sounds like a great idea, a way to reach new audiences and grow your business even faster…until you begin to wonder how you’re going to manage it all. It was one thing to make your inventory available on your own website, to see your bookings as they came in, and to collect your payments directly from your tour guests. Your idea of expansion plans through resellers suddenly creates a lot more work for you as you try to figure out how to manage across-the-board inventory availability, pricing, payments, and sales promotions. Plus, these resellers start asking you to “hook up with our system by API” and speak about other jargon-y terms like “real-time and dynamic pricing” and “personalized tours.” By this point, maybe you’re thinking this growth strategy through resellers wasn’t such a great idea after all. Maybe it’s creating new work and more headaches than it’s worth. Maybe you should pull back and just keep doing business as usual, even if it means you’ll sell less?
This scenario might be the case, but there’s actually an easy solution that already exists. It’s called Channel Management.
Channel Management is a term common in the hotel industry that refers to a single-source means to manage all of the complexities and avenues by which you’re selling your product. You are the supplier and the channels are your distributors. When the Internet came along and allowed Channel Management to go digital, it enabled what now exists today: one single online platform to digitally connect with and “talk to” all the distributors’ systems on the supplier’s behalf. Channel Management handles all of the posting and transactional details in real-time, relieving the supplier of cumbersome and overwhelming manual processes. Distributor-booked reservations become as easy as direct onesbookings.
Now, apply this same concept to the tours and activities space. A Channel Manager in this sector similarly provides a single means by which suppliers can electronically connect to and seamlessly distribute their assets — inventory, real time rates and rate rules, booking requirements, marketing content and more — to resellers. With a Channel Manager in place, suddenly the overwhelming nature of reseller management doesn’t seem so daunting. A Channel Manager replaces the old headaches, hassles, and intimidating concerns of managing too many resellers with the excitement that you’re now free grow your partners, increase your revenues and reach customers you would not have reached on your own.
What Channel Management does specifically
The electronic connection a Channel Manager uses to connect one system to another is called an API, the abbreviation for Applications Programming Interface. Currently, however, there isn’t one standard industry API – your reservation system may have an API but it likely doesn’t exactly match that of all your reselling partners. In order for one system to talk to another and pass all the data required, the API often needs to be customized. The Channel Manager beautifully takes care of the expense and complexity of all this custom programming, managing and maintaining it for you. The Channel Manager is like the master surge protector: everything plugs into it and with a single streamlined cord, it provides the “power” to your business. And like a master surge protector, the Channel Manager doesn’t power one plug discriminatorily over another – it’s a universal, agnostic solution that just enables the flow of power – in this case all of the information needed to sell your products – to those doing the selling.
- Eliminates overbookings (which can happen if you have many partners and a manual inventory management process)
- Reduces costs and operational processes – you’ll need less labor and IT power!
- Mitigates fraud
- Avoids negative customer experiences on many levels: during the online selection and booking process, at the gate, and in-activity
- Enables tour and activity customization
- Maintains and possibly even improves branding consistency (as a consequence of better customer experiences)
- Improves yield management (a variable pricing strategy for time-sensitive, limited products that takes into account consumer demand at different times of year or under different conditions in order to maximize revenue or profits)
- Generates enhanced collection of customer data
- Makes the whole tours and activities industry better, stronger, and more scalable by overcoming the fragmented nature of lots of small suppliers and operators – known as “the long tail” of travel — and enabling them to do business with more distributors
What Channel Management is not
While a Channel Manager might seem like a total turnkey solution, it’s important to state what it doesn’t do. A Channel Manager does not replace commercial agreements between tours, attractions or activities and their distribution partners. It’s not a few connectivity extensions from your existing ticketing or POS solution. And having a Channel Manager does not mean you stop doing your own marketing and sales efforts or take your eye off the daily management and operations of running your business. A Channel Manager is a purely powerful tool to let you more easily grow your business, a revolutionary solution whose time has come to the tours, attractions and activities sector.