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Third-Party Internet Reservations--Outsource with an Expert

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October 01, 2002
Bernard Ellis

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© 2002 Hospitality Upgrade. No reproduction without written permission.

There are very few hotel properties without a Web site anymore. Hotels have come to know that if they don’t have a Web presence, the hotel down the street is only a click away.

In the past hotels viewed their Web sites as a necessary evil, something to be outsourced to the first Web company that called. Now, most of them view their Web sites as a significant marketing tool, deserving of a high proportion of a hotel’s marketing budget and attention. Given today’s tough business climate, hotels have looked to their Web sites to be the silver bullet in reducing their distribution costs. They hope that with some intelligently placed marketing dollars, their Web sites will be inundated with free bookings.

In addition to being inexpensive, the other good thing about the Web is supposed to be that, unlike most other marketing expenditures a hotel makes, the effectiveness of Web marketing is very easy to measure. This is actually good and bad. On the positive side, it is so quick and easy to see what is working and what isn’t. But, disappointingly, when hotels assess their Web site marketing efforts on a cost-per-booking basis, it usually doesn’t seem so cheap anymore. And, when hotels add to that the prospect of paying their technology provider a commission or transaction fee for reservations booked on their own Web site—reservations they brought in through their own marketing efforts—that can put them over the edge.

Whereas before hotels didn’t have many options for making their Web sites bookable, they are now surrounded with them. With so many choices, the option to own your own Web booking technology is very tempting: Any webmaster can write a decent booking engine for a hotel for one fixed cost. But this approach usually means having to manage a separate inventory for Web bookings, a practice most hotels have found extremely inefficient and laborious. As an alternative, most leading property management system companies now offer solutions to make hotel Web sites bookable right out of their own PMS inventory. Once purchased, these solutions offer a promise of effortless, free bookings forever.

But, there are pitfalls to this approach too. This free solution means a hotel has to host its own Web server hardware and connectivity. Every consumer on the Web who checks availability will be competing with your staff for PM system resources. As you attract more bookings to your Web site, are your property manager and systems managers going to be up to the task? Do you even have a systems manager?

Most property management systems have to go down for an extended period of time during the night audit process. To handle voice reservations in the middle of the night, front desk personnel usually work off printed reports. That works for them, but what about the midnight Web surfer, or the international guest 12 time zones away? By nature, these people want to confirm a booking immediately, and when informed by the system that they must call the hotel for reservations, they will simply click to your competitor.

Unlike today’s top central reservations systems, most property management systems were not designed to provide good channel management tools. At the time, it simply wasn’t their job. So, while it may be convenient to have Web site users booking out of your PMS inventory, does your PMS offer the flexibility you need to offer Web-only rates? Can you have different stay controls for your Web site? Even more importantly, can you configure room and rate descriptions specifically for your Web audience, or will they see the same cryptic coding that your reservations agents use? For example, most consumers have learned never to book a rate listed as rack. Instead, they will click to another hotel that is offering a Web special. While we’re talking about Web specials, many hotels have jumped on the bandwagon of offering a lowest-price guarantee on their Web sites. If you are using a different system to handle your other Web channels, are you confident you will be able to continually maintain a consistent Web strategy? The prospect of this makes many reservation managers break a sweat.

Next, now that airlines have stopped paying travel agents commissions on domestic airfares, the travel agent community has an invigorated interest in booking hotel rooms, and has become quite receptive to incentives to book directly on a hotel Web site, rather than their more convenient GDS terminals. But to become a trend it will need to be easy for them. Central reservation systems often house the entire IATA database, so travel agents do not need to enter all their contact details. PMS hardware and software usually isn’t up to the task of storing and updating this database of over 400,000 travel agents.

Most importantly, owning your own booking engine means just that—you are on your own. No one else has a stake in the success of your Web site marketing efforts. When a transaction-based central reservations provider makes your Web site bookable, even if they are purely a technology provider, it will be in their best interest to give you helpful advice on how to present your inventory, how to optimize your appearance on search engines, and what partnerships are available out there. High commissions for hotel Web site bookings have gone the way of the dot-bombs, in favor of low, flat transaction pricing. But, if you still think this cost is too high, be sure you are ready to go it alone.

Bernard Ellis is VP product strategy with SynXis Corporation.

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