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Emerging Reservation Technology

Electronic Distribution Channels give hotels a reason to adapt their CRS

Numerous and far reaching changes in hotel inventory management and distribution have challenged every hotel and forced them to revamp their central reservation procedures. Independent properties have also been affected by these challenges as their representation companies respond to the quickly evolving reservation arena. As we enter a new year – one that promises fewer changes -- it is valuable to identify and reflect on areas where significant change is taking place.

Easing the Inventory Allocation Process

Every hotel is wrestling with the question of where to allocate inventory to achieve the most – and most profitable – sales mix. Forrester Research reports that the typical hotel chain participates in seven merchant model web sites. That participation is in addition to listing of inventory on the GDSs, on the chain‘s branded web site(s) and in numerous other Web-based locations. The challenge for center reservation executives is to continually provide a greater degree of control to each hotel that allows them to achieve the optimum market mix for them – to easily manage and adjust that sales mix on a day-to-day basis in search of maximum revenues and profitability.

Such a capability requires the delivery of up-to-date and complete information on sales activity to property staff as well as an inventory management tool that is simple and fast for on-property staff to use.

The news in this area is encouraging. Many chains are forging relationships with the largest merchant model distributors that will include implementation of automated interfaces to these merchants’ sites, drastically diminishing the number of extranet screens, or worse – faxes – that hotels must deal with on a daily basis. Even more promising is the early work being done on "master extranet" technology – single-point-of-entry tools to streamline inventory maintenance. Tools such as these will facilitate the task of administering the guaranteed lowest rate programs now in effect in many hotel brands.

The Web Drives The Buy

A Reservation Center manager recently explained that virtually all of the callers to his CRO had reviewed the company’s web site prior to calling. The significance of this is huge for every hotel chain and every representation company. Final buying decisions are being made solely on the basis of the information displayed on – or omitted from – chain web sites. As the realization dawns that web site impact is vastly under-indicated by the number of web reservation received, hotel organizations are challenged to critically examine their web sites. Those that fail to provide sufficient, and sufficiently compelling data, are being passed over by an increasing number of consumers.

From Sales to Multi-modal Service – The Changing Role of CROs

Many hotel companies are reducing the number of Reservation Call Centers they operate or the number of reservation agents they employ. Declining call volumes are not the biggest news in the CROs however. More significant is that these operations are evolving from taking orders to becoming service centers. Call centers are answering the questions and providing personalized assistance for increasingly well-informed travelers and doing so using e-mail, instant messaging and web-cams, in addition to telephone calls.

Dynamic Packaging

"One stop shopping" in which lodging, air travel and car rentals can be reserved in a single purchase appeals to many consumers. Reservations and distribution executives continue to debate the best approach for the hotel industry in this area. Hyatt Hotels and Wyndham International have opted to use Expedia’s white label subsidiary World Wide Travel Exchange for this capability, while Cendant is beginning to leverage similar functionality from its Neat acquisition. Additional options may emerge in 2004 from Datalex and Vancouver-based Resolution, among others.

The Non-Decline of the GDSs

As Internet-based distribution gains acceptance, reservation executives find themselves in the unusual position of counseling their affiliated properties to continue their participation in the GDSs and specifically in negotiated and consortia rate programs. The growing buzz related to Web bookings overshadows the nearly 50 million hotel reservations delivered annually by Amadeus, Galileo, Sabre and Worldspan. This din surrounding Internet reservations tempts hotels to consider pulling back from these programs – an unwise move at this point in time.

Rich Media

As the Internet matures as a shopping and booking medium, more and more opportunities are available for hotel reservation managers to supply photos as well as video tours in one form or another. Administering this so-called "rich media" has become a double-edged problem. On the one hand, tracking which photo is on what site or in which GDS library is a massive content management undertaking. Sometimes equally (if not more) difficult is the task of obtaining differentiating, compelling photographs from properties.

New Leaders in Travel Management

Hotel reservation executives – like the entire hotel industry – watch the emergence of online travel companies and wonder how they will impact the traditional balance of power within the travel industry. Initially focused on leisure travel and unmanaged business travel, companies such as Expedia, Travelocity and Orbitz have clearly set their sights on large-scale managed travel – for the first time directly challenging the brick and mortar travel companies.

As organizations such as these achieve increasingly prominent positions in the travel management segments, and potentially extend their reach into the meeting and convention and tour and travel areas, striking effective, mutually-beneficial relationships becomes a steadily higher priority for hotel executives.

Representation Service Consolidation

Representation companies provide vital connectivity to GDSs and to the vast array of Web-based distribution sites for independent hotels. The seven largest representation companies together provide these services for nearly 20,000 properties. Fall 2003 saw a substantial reconfiguration of the representation landscape with announcement of two major acquisitions – of fourth largest Unirez by the largest participant Pegasus Solutions, and of second largest Lexington Services by sixth largest VIP International.

While the long-term impact is still unclear, the implementation of new central reservation technology for some customers will improved service levels and, in many areas, offer more effective competition.

And all this will happen as hotels look to their representation companies, and indeed to the lodging brands with which they are affiliated, to rise to the new challenge in 2004. That challenge? To aid hotels in more fully understanding, and more effectively utilizing, the array of electronic distribution channels available to them.