We often get questions from clients who are new to property management about hospitality acronyms and travel industry terminology. There’s a lot of jargon in this industry and it can be very confusing for the uninitiated! From travel metasearch engines to OTAs and GDS, we’ll explain the difference and how you can use them in your distribution mix.
But first of all let’s start off with the basics…
A hotel property management system (PMS) is a software application or platform designed to streamline and automate the operations of accommodation businesses, such as hotels, motels, vacation rentals, hostels, and other lodging establishments. Depending on the software developer, it can handle everything from the reservation process, front and back office operations, channel management, guest communication, housekeeping and maintenance management. While they were originally used in hotels and larger accommodation businesses, today PMS are used by all types of properties including motels, holiday homes and vacation rental and bed and breakfast businesses.
OTA is one of the most frequently used hospitality acronyms and stands for Online Travel Agents and as the name implies, it is where travellers can book a whole range of travel services including accommodation, flights, travel packages, car rentals, tours and activities. A hotel PMS should be able to integrate with an OTA so that the accommodation owner can easily manage bookings that come from these channels.
OTA’s have large marketing budgets, so they are a great way to get your property noticed by travellers locally and from all around the world. Accommodation owners allocate rooms / properties to individual OTAs for them to sell. While they may seem like an expensive proposition for smaller accommodation owners, they are an extremely valuable partner to help you sell your inventory.
OTAs mainly work on a commission or cost-per-acquisition model and have become a pivotal player in the online distribution mix for property owners.
If you’ve heard the hospitality acronyms: hotel PMS and OTA, you’ll no doubt have also heard of a channel manager. But what is a channel manager for hotels and accommodation businesses and why is it so useful in the travel business? A hotel channel manager is the software that links your PMS to the OTAs and enables you to list and manage your available rooms on multiple channels simultaneously. A channel manager gives you the opportunity to get great visibility for your property without the risk of overbooking as it ensures that your rates and room availability are updated in real time.
Among the other frequently used hospitality acronyms that you may hear is GDS, which stands for Global Distribution System. GDS channels provide travel agencies with real-time availability as well as preferred rates. They allow you to open your inventory to those booking their accommodation via travel agents, including those agencies that look after the corporate market, and confirm large volume bookings. The key difference between a GDS and an OTA is that customers generally use an OTA directly to source and book accommodation whereas a GDS is generally used by a travel agent.
Travel metasearch engines compile accommodation listings and room rates and display the aggregated results for travellers to compare. They are effectively price comparison websites that pull information from various sources including the OTAs, the hotels own website and other sites across the internet. When a consumer wants to book a room, the meta search engine redirects them to the booking site of their choice. So metasearch engines make it easier for travellers to compare available accommodation but don’t sell it directly.
That said, some meta search engines, such as TripAdvisor and Google, are now display ‘instant booking’ buttons that do encourage the browser to book directly from the search results. Properties wanting to take advantage of the instant booking facility need to have a direct booking tool available on their website.
Travel metasearch engines offer your best chance to get in-front of those searching for accommodation in a specific location. When travellers type in a destination online, Meta search engines collate and display results for hotels in the area, aggregating results across the web including listings from online travel agents.
As the primary objective is not to sell inventory but to collate and display a list of all available rooms and their rates, travel metasearch engines usually do not charge commissions to property owners but charge the booking sites for clicks / visits sent directly to them on a pay per click basis. If bookings are made directly with the property from the metasearch ‘instant booking’ button, the property does not pay anything unless it converts into a booking. The benefit of this from a property owners perspective is that you ‘own’ the guest right from the outset, rather than the OTA, so the cost could be viewed more as an advertising fee.
Private Letting Channels are essentially a different type of OTA that’s more tailored to self-contained apartments/holiday home rentals, and cater for small single property operators to large groups. Some examples include Airbnb, Stayz, HomeAway, Flipkey, Travelling Frogs, Aura and Tripping.
According to industry experts, these channels are expected to grow over the coming years, with the use of ‘sharing economy lodging services’ to increase by approximately 33% by the year 2020. Our recent blog ‘Private Lettings Channels: How To Reclaim Lost Revenue‘ has all the details.
Ideally your channel manager software should enable you to connect with all these online distribution channels and update your property’s availability and rates in real time. You should be looking to maximise your booking revenue potential by connecting to the entire booking ecosystem.
Investing in the right property management software (PMS) will ensure that you are able to gain exposure to the biggest travel metasearch engines as well as the market-leading OTAs.
At HiRUM we pride ourselves on industry leading PMS software being able to connect you with all the major travel metasearch engines and OTAs as well as the leading GDS channels. Whatever your size and whatever your budget, we can help you find the right solution for your property. We also promise not to bamboozle you with lots of hospitality acronyms!
This blog was first published in January 2019 and has been updated in August 2023.
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