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June 01, 2003
Bill Peters - bill.peters@outrigger.com

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© 2003 Hospitality Upgrade. No reproduction without written permission.

For some reason, change, especially technology change, is very hard for the hospitality industry to accept. Discussions at every conference focus on how difficult it is to control the merchandising of your own hotel because of the Internet. The Internet has become a discount house affecting the revenue performance of all hotels. In many ways these concerns are valid. The interesting thing is that the industry has the Internet more under control than they realize. The only inventory and rates that can be sold either directly to the consumer or through a merchant model have been authorized by the individual hotels.

If we look back in time the industry has gone through similar changes once before. During the early 1970s, the airline global distribution systems (GDSs) started to make their mark in the hospitality industry. In those early years the GDSs were willing to make a direct connect to a hotel. Those direct connects were through a dial-up modem with a dedicated terminal and printer. The availability was kept up manually and all reservations had to be printed out and re-keyed into the hotel’s property management system. Sound familiar?

In the 1980s switching companies such as ThisCo and WizCom developed interfaces into the hotel company CRS. This was the same effect the Internet has today. Change was upon the hospitality industry and everyone was uncertain about the control that the GDSs would have over the industry. Hotel companies rushed to get connected. Millions of dollars were spent on these new sophisticated interfaces. The GDS became one of the most important channels of distribution for the industry and improvements and enhancements started almost immediately. Organizations such as HEDNA were formed to help the hospitality industry feel that they were in control of their fate through the GDS.

One of the enhancements to the GDS was the ability to book corporate negotiated rates through the system. This caused an uproar in the industry similar to the uproar about the merchant model currently being sold on the Internet. The industry felt they were losing control of their rates and availability. What was a hotel to do except blame the new systems? Then came the consortia and the industry felt more out of control.

There were many other birthing pains as the GDS came into its own. Fortunately, the hospitality industry realized that the GDSs were here to stay and started to work with them and the switch companies. This enhanced the hospitality industry dramatically.

A travel agent in London could now electronically book a hotel in New York city at their client’s corporate rate. That booking would electronically be processed into the hotel’s PMS and give the travel agent an instant confirmation number. The industry started to go paperless. Then came automatic availability updates plus automatic booking processes. Then the Internet arrived in full force circa 2000. The hospitality industry rushed to get connected to this new channel of distribution, similar to the way it rushed to get connected to the GDSs decades before. Millions of dollars have been spent by hotel companies getting connected. Just as we thought things were going along smoothly the merchant model raised its head. All of a sudden hotels needed blocks, contracts and net rates.

The hotels also had to upkeep availability and reservation processing on a manual basis. Déjà vu. Most merchant model reservations are being faxed to the properties for input. The hotels have not had to deal with this amount of paper since the mid 1980s.

Change and automation will happen. The industry needs to make it happen now. There needs to be direct electronic connections to all Internet reservation providers. These direct connections may need to go through the networks that have already been created, Pegasus (ThisCo) and Wizcom. As an industry we need to demand this process transpires as soon as possible.

The hospitality industry needs to make the current connections to Internet reservation providers go the way of the GDS connections of the past (future). Do away with individual manual connections, outlaw the teletype machines and unplug all fax machines. Have an automated process from start to finish—similar to the way our guests actually think they are.

Bill Peters is vice president of reservation services at Outrigger Hotels & Resorts. He can be reached at bill.peters@outrigger.com or (303) 743-3219.

© Hospitality Upgrade 2003. Reproduction without written permission is prohibited.

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