H & A Report, Volume III, Issue 5 January/February 1996

Whether addressing the Central Reservation and Global Distribution System connectivity needs for a single, independent hotel or planning them for a chain of properties, hotel executives have a range of options available to consider.  This article will define those options, identify primary evaluation criteria and list the vendors which service one, several or all of these options.

What differentiates Central Reservation and electronic connectivity options is the level of client participation — measured in management time, capital commitment and the degree of control required.  Striking the appropriate balance of these factors will largely guide the selection decision.

Before examining individual options, one key point needs introducing and emphasis.  None of the Central Reservation choices described here releases the hotel or hotel company from responsibility for actively monitoring and managing their relationship with, and the activity of, their solution provider.  The more informed the client is about the system’s capabilities, the marketing opportunities and the activities of their competition, the stronger the total performance.  The closer communications and cooperation are between the client and the vendor, the greater the success of the selected option for the client.

The spectrum of central reservations and global distribution connectivity options appears below.  They are displayed based on the degree of participation from the least to the greatest level of commitment and affording the greatest degree of control.

<————–Least to Greatest Degree of Client Participation————>

THIRD PARTY SERVICE

Many independent hotels and smaller hotel companies view operation of a reservation network, with international toll-free telephone accessibility and twenty-four hour service to be cost prohibitive.  A third-party reservations service is often contacted to gain these services.

Generally, two levels of service are available.  In the first level of service, termed “generic” service, calls are answered ‘Hello, Reservations”.  The second or “Private Label”, reservation agents respond to calls using the client’s name, “Good Morning, Beaumont Inn reservations”.  Within the Private Label option, the reservationists may be either pool agents, serving a number of clients, or dedicated — responding only to calls for their assigned client.

Adding to the appeal of this option is the opportunity offered to list clients in the airline Global Distribution Systems, and increasingly, in on-line services (America On-line, CompuServe, etc.) and on the Internet.  The steadily growing number of bookings made on GDSs, combined with the high expense of GDS access for low volume clients and the promise of the emerging alternative electronic booking channels makes use of a third party service the preferred option for many hotel executives.

In some cases, third party vendors will provide GDS/On-Line Service/Internet connectivity without supplying voice services, allowing continued use of direct-to-property 800 numbers for voice reservation processing, while providing electronic system connectivity.

The predictability of user costs, since service costs are generally transaction-based, and minimum volume requirements pre-defined, adds to the appeal of this alternative.

Principal drawbacks of the third party option are the lack of direct client control over the sales process, reduced system functionality compared with that available in other options and limited impact in enhancement prioritization.

OUTSOURCED RESERVATION DATA PROCESSING

To exercise greater control over the accommodation sales process, some hoteliers elect to operate their voice centers but to use the computer services of a vendor.  Here the hotelier’s reservation agents use a central reservation system owned and operated by an outsourced reservation processing company.  In doing so they directly manage product presentation while avoiding the expense of purchasing and operating a central reservation computer system.  Costs in this scenario are highly predictable.  Other than for minimum volume and monthly maintenance charges, expenses are booking transaction-based.

Limitations associated with using generic display screens and booking functions are balanced with the immediate availability and proven performance of the system, combined with no responsibility for its maintenance and freedom from substantial capital commitment.

Often suppliers of outsourced reservation data processing will offer GDS/On-line Service/Internet connectivity, either as a base feature or as an option.  Responsibility for data maintenance in these systems can be taken by the client or left with the vendor.

While this intermediate option offers more client control of the product’s presentation process than is available in a third party situation, system functionality may fall short of what is desired.  The interests of the full client base, as well as profit opportunities will affect the enhancement prioritization process.

CRS PURCHASE

Some hotel companies, most frequently the larger operators, determine ownership of their own central reservation system to be necessary.  The most frequently cited reasons include:  control over the screen displays, sales flow and data base design and contents, freedom to prioritize enhancements and determine implementation timing, and lastly, the significance of system ownership and feature exclusivity in management contract or franchise agreement negotiations.

In evaluating the ownership options, with its high degree of control and associated high responsibility for management and capital investment, several sub-options emerge for examination.  Depending on the functionality requirement, budget and activation timeline, the system may be an off-the-shelf package.  This essentially is a system designed for another client by the vendor and is now being duplicated and resold, a customized version of a base package, or a completely customized, “made to measure” software, hardware and communications package.

Those faced with purchasing must also decide whether to provide on-going maintenance for their system or whether that responsibility will be tasked to the system vendor.  Additionally, system enhancements — functionality expansion to maintain the client’s competitive positioning — can be developed by either the vendor, the client, or jointly.

Almost without exception in this option, GDS connectivity and links to alternative electronic distribution systems become the responsibility of the client.

In selecting a reservation processing approach, hotel executives can consider a range of options each serviced by numerous vendors.  Ultimately, the selection of one option over another will be determined by the degree of control required over the system, the cost and how much of a human resource commitment is required to effectively manage it.

Central Reservations GRID