A channel manager is software that keeps a hotel's room prices and availability the same on every travel site at once. When a room is booked on one site, the channel manager reduces the free rooms on every other site within seconds, so that the hotel never sells the same room twice. Each place that sells the hotel's rooms is called a channel.
A hotel in India may sell its rooms on ten or more channels. These include large online travel agencies (OTAs), the hotel's own website, and travel agents who reach hotels through a global distribution system (GDS). Without a channel manager, a hotel employee must log in to each site and change the price and the room count by hand. That is slow. When the hotel is nearly full, mistakes lead to overbooking, which means taking more bookings than there are rooms. The hotel must then move a guest to another hotel, often at its own cost.
The channel manager connects to each travel site through that site's connection for hotels. It does two things. First, it sends updates out. When the revenue management system (RMS) changes a price, or when the front desk blocks a room for repairs, the channel manager sends the new price and the new room count to every channel. Second, it brings bookings in. When a guest books on any channel, the channel manager receives the booking and passes it to the property management system (PMS), the hotel's main system. Then it reduces the room count everywhere else.
Imagine a 12-room resort in Coorg on a Saturday in October. Only one cottage is left for that night. At 9:14 a.m., a family books it on one travel site. Within a few seconds, the channel manager receives the booking and sends it to the PMS. It sets the cottage's availability to zero on the other six travel sites and on the resort's own booking engine. Two minutes later, a couple search for a cottage on another site. That site shows the resort as sold out for Saturday, so no second booking is taken.
The channel manager also makes rate parity easier. Rate parity means showing the same price for the same room on every channel. Because one change from the revenue manager reaches every site, the prices do not drift apart.
Keeping one stock of rooms correct on many sites at once is the problem described in multichannel inventory management. Airlines face the same problem with seats. Companies in vacation rental management use channel managers too, to list holiday apartments on several sites.