CHOOSING A RESERVATIONS REPRESENTATION COMPANY
Both individual hotels and hotel companies seek the services of a reservations representation company and frequently I am called on to assist in the evaluation of vendors of these services. Since both the capabilities and suppliers in this market are in the midst of considerable change, I believe it would be worthwhile to get an overview of the services currently offered and identify the major evaluation criteria applied in the selection of a representation services vendor.
In the case of individual hotels, representation services are secured in order to gain broader toll-free telephone reservation processing than the hotel can affordably provide, together with GDS and Internet distribution. Brand-affiliated hotels often receive these services as part of their chain membership, although they too sometimes wish to supplement their chain’s efforts by membership in one or more representation services.
The distribution challenge is larger for independent hotels. The Global Distribution Systems (GDSs) – Amadeus, Galileo, Sabre and Worldspan – generally do not work with individual properties to allow them to list themselves in their respective distribution networks; therefore, use of a representation company (who aggregates the data for a number of hotels, simplifying the GDSs’ administration responsibilities) is necessary.
Multi-property hotel companies use representation services when they prefer not to operate their own worldwide structure of reservation offices or when they wish to delegate responsibility for GDS distribution and reservation processing, as well as broad Internet distribution, to an expert third party.
Obtaining and thereafter operating a central reservation system, together with maintaining sophisticated connections to the GDSs and numerous onward distribution Web sites, is an expensive and complex undertaking. Many hotel companies feel this is outside their core competency, can be a significant, possibly serious distraction from their primary businesses, and is better delegated to a competent reservations representation organization.
TWO CATEGORIES OF SERVICES
The services of representation companies can be divided into two categories – those that are “generic” and are destination-centered and those that are referred to as “private label” and are provided in the name of the client.
Callers to the reservations offices of generic services ask about hotels in a city or region and are informed (usually based on selection criteria such as rate) of the names of that representation company’s client hotels in that location (Good morning, All Star Reservations. To what city are you traveling?). GDS searches, which are always destination-based, function in the same way. Generic representation Web sites are organized by destination, with clients clustered together by city. Both individual properties and entire chains contract for generic representation services.
By contrast, in private label service callers telephone a toll-free number specifically assigned to one client and those calls are answered in the client’s name (Good morning, Acme Hotels…). GDS listings are organized by the hotel chain’s own two-letter identification code and a chain-specific policy/procedure/contact data file – a DRS – is maintained. Internet reservations processing is provided on the hotel chain’s own site with only that chain’s properties displayed. With a very few exceptions, private label representation is used exclusively by multi-property hotel chains.
TIMING OF THE SEARCH AND IMPLEMENTATION
The process for a single property to become a client of a generic-style reservations representation service is relatively simple, although the extended sequence of time-consuming steps makes it a longer process than might initially appear.
Defining requirements, identifying vendors and making the initial selection of those vendors to whom the requirement definition will be sent and proposals requested, detailed proposal and capability examination and, finally, contract negotiation typically consume 60-90 days. Once a service agreement has been signed, activation requires a further 45-60 days, although 30-day or less implementation can be accomplished in “rush” situations.
The process is considerably longer when a hotel chain is seeking a representation service supplier. This is largely attributable to the added complexity of each step in the process – defining the requirements, assessing the proposals, negotiating the contract, collecting the property data and entering it into the CRS, the GDS and onto appropriate Web sites all take longer because of the greater volumes involved. Hotel chains typically begin to evaluate their private label service options and vendor capabilities 12 months prior to activation, with 15 months often an advisable starting point for the process and 9 months the minimum in most cases.
A TIME OF INDUSTRY TRANSITION
As individual properties and hotel chains look today at the reservations representation marketplace, they see a much-changed scene from that of just a few months ago. Recent developments include:
- InnPoints Worldwide – takes on a much higher profile in seeking and serving clients
- Lexington Services – continues its remarkable decade-long growth
- Pegasus Hospitality Group – operates in a restructured environment in which Sterling Hotels & Resorts and Summit Hotels & Resorts have been sold to IndeCorp (operator of Preferred Hotels & Resorts), while reservations processing for all of IndeCorp has been transferred from TRUST International to Pegasus Solutions
- Preferred Hotels & Resorts – becomes a division of IndeCorp
- Relais & Chateaux – enters a marketing alliance with The Leading Hotels of the World and selects Pegasus Solutions for private label reservations processing
- Sceptre Hospitality Resources – becomes an integral component of SWAN, the new Service World Network
- Sterling Hotels & Resorts and Summit Hotels & Resorts – become divisions of IndeCorp
- SynXis – emerges as one of a new generation of central reservations technology-based representation suppliers
- The Leading Hotels of the World – creates a small hotels division, establishes four joint ventures for member services and enters marketing alliance with Relais & Chateaux
- TRUST International – becomes a wholly-owned division of Bertelsmann Distribution GmbH
- UniRez – emerges, with SynXis, as developer of latest generation central reservations technology on which it bases its services package
- Utell International – restructured as a wholly-owned subsidiary of Pegasus Solutions
IN THE NEXT ISSUE
The next issue of Hospitality Upgrade will contain an extensive list of the major criteria – used by individual properties and hotel chains alike – in their evaluation of reservations representation service vendors.