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CRS: Looking Back, Looking Forward

H & A Report March 1998

1997 was another transitional year for central reservation technology. Both the CRS products and the organizations which develop, offer and support them changed markedly in the past twelve months.

The CRS continued its evolution from being primarily a stand-alone transaction processor to its new role as the heart of a complex, mission-critical inventory management, electronic distribution and data analysis mechanism. Indicators of that advance included:

  • Partnering by CRS vendors with revenue management vendors to offer revenue management technology
  • Adoption of sophisticated data warehousing and data mining tools with which to compile and strategically analyze CRS activity data
  • Acquisition by CRS vendors of, merging with or strategic partnering with, PMS vendors to further expand the single-stop product family
  • Movement beyond interfaces toward true system-to-system integration
  • Redesign of CRS electronic distribution interfaces to support not only "seamless" communication with Global Distribution Systems but, simultaneously, real-time inventory access by Internet booking sites
  • Addition of revenue management, data base analysis and other major functions to the original transaction processing role challenged the basic architecture of the CRS. Data storage, retrieval, analysis and presentation are basic requirements for revenue management and data base management systems, just as they are for the CRS.

These functions place huge incremental demands on CRS resources, requiring real-time electronic interaction which often vastly exceeds the original design parameters of many central reservation systems. The outcome for CRS vendors has been painful soul searching as they evaluate their basic business directions and the major redesign/redevelopment commitments needed if their systems are to be re-engineered to support 21st century user requirements.

Hotel company Reservations and MIS were confronted by those same system enhancement issues in 1997. Corporate interest in the benefits of revenue management and data base marketing often led to evaluation of vendors and their wares, together with hard questions concerning the capabilities of the current CRS to support the additional demands of these added features.

Decisions to install new functions launched projects involving extensive participation by operations and marketing staff to determine the best route and the best product. Inevitably the realization came that, unlike the core transaction processing the function of the CRS which needed little day-to-day participation or involvement by non-reservations staff, introduction of revenue management or data base management capabilities would fundamentally change many of the daily inventory allocation, rate determination and lodging sales processes.

Property staff were only slightly less affected as inventory management, rate setting and sales procedures changed in response to introduction of this new technologies. The need to upgrade existing computer systems, to expand staff training and to continuously demonstrate management’s commitment, day-in and day-out, to use of the new processes spawned by revenue management, data base management and distribution though new electronic channels, became clearly evident.

On the supplier front, CRS sales continued to be dominated by the two major vendors -- Anasazi, Inc. (now REZsolutions, Inc. - more on them later) and MICROS-Fidelio, Inc. While Anasazi secured an important new Hilton/Hilton International contract in 1997, MICROS-Fidelio completed its Westin installation and wrapped up significant sales in the Asia/Pacific market.

In 1997 the CRS marketplace welcomed invigorating competition with the successful emergence of Hotel Data Systems (validated by its system sale to TSR and sales partnerships with Prologic for Europe and HSI for Asia), Intermezzo with its implementation in Canadian Pacific Hotels and the conquest of Europe by Global Resources with its Falcon reservation system.

And now for 1998....

So what can we look forward to in the next twelve months? Well, further migration of CRS vendors toward the "single-stop shopping" business model is inevitable. Hoteliers increasingly prefer to buy a package delivering PMS, CRS, revenue management, GDS connectivity, Internet connectivity, and data collection and analysis. They seek the convenience of single contact for sales and support combined with the increased likelihood of component integration. CRS vendors sense that interest and are responding accordingly.

This migration prompts the question "What can be successfully included the CRS vendor’s product family?" The rules of the game changed in 1997 with the merger of Anasazi Inc. and Utell International, to form REZsolutions. The combination of the technological powerhouse of Anasazi (including the sales prowess of Tom Castleberry and Dennis Kolodin) combined with the amalgamated representation resources of the ubiquitous Utell International and the quickly expanding Anasazi Travel Resources may gel to produce a marketplace-reshaping enterprise. Challenges await -- the corporate cultures of Anasazi and Utell International could not be much more dissimilar -- but the team moving the merger effort forward should not be underestimated.

There is a lesson here, too, for central reservation representation services. Single stop shopping appeals as strongly to reservation service buyers as to reservation system buyers. Those representation organizations which expand their product portfolios to offer integrated revenue management, data base marketing and other services, will find themselves advantageously positioned in 1998.

The Internet’s pervasive impact CRS -- indeed on all aspects of inventory management and distribution -- will become much more apparent in 1998. While it will begin with real-time inventory access for consumer-targeted web sites, this will be only the tip of the proverbial iceberg.

Internet-driven technology will result in remolding of user interfaces to provide the look and functionality of web browsers. Next, the Internet will make property-to-CRS communication costs largely irrelevant -- enabling real-time inventory synchronization, facilitating the unrestricted exchange of guest, financial and other business data between headquarters and every property (regardless of its geographic location) and (just possibly) allowing use of thin PC technology for PMS and CRS functions.

The Internet will enable the CRS data base to be used for one-to-one marketing with unprecedented effectiveness. More significantly for the current players in the electronic distribution game, it will propel movement toward direct connections between suppliers and buyers -- on both the retail and wholesale sale levels. Disintermediation -- a term most commonly heard in reference to the demise of travel agents -- may come to apply equally to GDSs, switch companies and other "middlemen" as hotel companies activate inventory access links to their largest customers (frequently via Internet communication channels), without use of these traditional intermediaries.

Internet reservation volumes -- growing steadily in 1998, but still small compared to GDS -- will in time prove to be a only one aspect, quite possibly just a secondary indicator, of the Internet’s influence on the hotel industry. More germane, much more far-reaching in the long term, will be the restructuring of business relationships and roles prompted by the arrival of the Internet.

When direct links to your best customers -- with whom you continuously electronically interface -- become reality, when communication costs become irrelevant -- unleashing a host of previously impractical projects -- and when the network becomes the platform, anything can happen.

Like 1997, 1998 will be a year of transition. Systems and companies will change -- some will disappear. All that can be safely forecast is that the pace of change, and probably surprises, will grow steadily faster.