(co-authored with Robert M. Coyne)

Hotel & Motel Management April 22, 1996

The never ending flow of acronyms and initials — GDS, CRS, 4GL, UNIX, RMDMS — combined with complicated company names and products has to be confusing to hoteliers who just want to fill rooms in the most efficient and economical way.

The hospitality industry’s technology environment is a microcosm of the marketplace in general.  It has been the subject of dramatic changes in the relationships between customers and vendors, and between vendors themselves, in the past several years.  Interlocking business relationships have become common, and competitors have frequently become partners.

• Last year, Budget Rent-A-Car entered into an agreement with Avis to process Budget’s car-rental reservations.
• The Amadeus global-distribution system last year bought System One, which was owned by Continental Airlines.  Continental outsourced its management information needs, including reservation processing, to Electronic Data Systems.
• A new company, System One Amadeus, was formed and owned equally by Amadeus, Continental and EDS.
• Perhaps the most impressive example of competitors becoming partners was the establishment of The Hotel Industry Switch Company by 16 rival hotel chains.

To help bring clarity to this technological haze, examine central reservations from the global-distribution systems perspective.

The principal reason hotel central-reservation systems are linked to global-distribution systems is to further open up the hotel market to travel agents.

More than 96 percent of travel agents in the United States have one or more GDS available to them.  While the majority of centrally booked hotel reservations still result from toll-free service telephone calls, the number of bookings entered by travel agents using GDS terminals is steadily growing.

A BIT OF HISTORY

Prior to 10 years ago, interfacing between the hotel chains and the GDS was not widespread.  Booking volumes were too low to spur substantial development resource commitment.  The airline systems themselves were not designed to comfortably handle non-air products, and the hotel systems had not been developed to support links to other systems.

The original interfaces were rudimentary and provided limited room types (six), rates (sometimes room types and rates were the same) and no inventory (only open/close categories or allotments).  Updating of new rates and/or types for a chain in the GDS was performed manually and took up to six weeks to complete.  However, a major sales opportunity existed for both the GDSs and hotels.

In the last 10 years, the quality and features of GDS/CRS interfacing have improved dramatically, with many room types, negotiated rates, immediate updating of the hotel chain’s database on the GDS, complete descriptions of the hotel product and confirmation back to the travel agents within a few seconds.

SEAMLESS CONNECTIVITY

There is now a steady stream of improvements with new announcements almost daily.  The most significant recent GDS improvement has been the development and implementation of seamless connectivity.  Seamless connectivity provides the travel agent with displays of information drawn directly from the hotel chain’s central-reservation system.

In many cases, the quantity of information, particularly product descriptions, is considerably greater than was possible when those descriptions were drawn from the limited confines of the GDS data bases.  Not only are hotel companies now able to market on the basis of their product merits rather than on price alone, but seamless connectivity provides access to the hotel chain’s CRS rooms inventory, drawing still closer the goal of real last-room availability.

The first GDS to offer seamless connectivity (which was dubbed “inside availability”) was Galileo.  In the fall of 1993, Radisson Hotels, using the CRS/GDS communication channels provided by WizCom International, became the first hotel organization to implement inside availability.

Every major GDS has followed suit since that time, as indicated in the “Seamless Connectivity Implemention” chart:

During the first few years, when hotel central-reservation systems were establishing automated connectivity with the global-distribution systems, it became increasingly difficult for hotels to maintain these electronic links because each airline had different technical and operational needs.  As each hotel CRS added more connections to more GDSs, the task of maintenance got worse.

In the late 1980s, two companies began assisting the hotels by providing switching devices for universal electronic connections to the airlines.  The benefit of these universal switches is that instead of many electronic connections between the hotel CRS and each airline, there is only one gateway between the hotel CRS for all of the airlines.

THISCO’s Ultraswitch (owned by 17 hotel organizations) and WizCom’s (Avis) ResAccess are the providers of these switches.  They both support seamless connectivity.

The Hotel Electronic Distribution Network Assn., recently reported that GDS hotel bookings rose 22.1 percent in 1994 over the previous year, and increased a further 30.8 percent in 1995, to now exceed 26 million reservations — producing more than 50 million roomnights — annually.

As pressure mounts from agency management to use the faster GDS booking process to consolidate itinerary elements in the passenger name record, and to utilize their commission tracking and accounting facilities, GDS booking volumes will continue to increase.