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 Connectivity! Connectivity! Connectivity! 
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Achieving "Really Real Time" Room Inventory Management 
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by Craig W. Cooley, November 2005

I predict for 2006 the future for hoteliers will be all about “connectivity”, active and passive, one way, two way, one and one half way, and no way, all bundled with various commissions, fees, and implementation costs; all directly linked to our ability to sell our “perishable” product and minimize our “rotten bananas”. I will endeavor to bring some clarity to the topic and address why I feel it is such an important consideration.

No-Way Connectivity Configuration:

We must start at the beginning with the “no way” connectivity configuration. Not too long ago many small to midsized hotels received their GDS Travel Agent and Consortia reservations via fax, a new technology, the telex machine faded into history! This was a great leap forward, a considerable improvement, as they could be keyed into a PMS or scribed into a reservation book in a passive manner, as time permits. It was essentially a manual operation and depending on how fast your staff is with their typing and computer skills you can see that the annual cost for one 250 room hotel can be estimated to be approximately $7,500!
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This method is still the preferred method for smaller independent hotel groups. Perhaps the biggest down side to this is that when we are keying in this information we are sacrificing the quality of our hospitality service by pulling our staff away from the guest, not to mention the potential for errors; misspelled names, double bookings, incorrect arrival dates, resulting in noshows and erroneous guaranteed reservation billings, and ultimately an unhappy guest and lost revenue.

One-Way Connectivity Configuration

The one way connectivity configuration should really be a minimum standard for hotels and their PMS’s. It essentially is a connection to the GDS, wholesalers and 3rd party resellers, “channels”, via the internet, to our own PMS.  The flow of the information is from the various “channels” to the PMS; it is “one-way”. The biggest benefit is that it quickly eliminates the many key strokes of a “no-way” system. The PMS will recognize and accept file transfers for reservations, individual or batched. The information can be set up for an automatic transfer on a schedule, or prompted with a manual authorization.

The downside for this configuration is that the hotel staff must still maintain multiple data bases of rates and room inventories; often one with the GDS provider’s booking engine, (Pegasus, Lexington, Synxis, InnLink, Etc.); one for each wholesaler / 3rd party resellers; via the extranet, as well as our own property level PMS inventory. So while we save by being able to avoid the multitude of data entry for each reservation, we still must manage and maintain, at a minimum two, and in some instances up to twenty five, for the most part, duplicate inventories!

Two-Way Passive Connectivity Configuration:

This is where it becomes a little more confusing.  Some GDS, wholesale / 3rd party resellers will state that they have two-way connectivity when in fact what they have, may appropriately be called a “one and a half way” or passive interface. Don’t be confused, it is not a last room available bi-directional inventory and rate management system.

In this configuration the “channels” will send to the PMS the reservations electronically via the internet, just like the one way, but the property PMS can manage the rooms inventories and rates by sending availability updates of our rates and allotments back to the “channels” again via the internet. So the big improvement here is that hotel management only has to manage one rate and inventory data base utilizing their PMS.

That is provided their PMS has its own integrated CRS and booking engine and it is dynamic enough to communicate, “broadcast”, this information with updated rates and allotments to the various “channels”. It is typically NOT automatic, but often can be scheduled for transmission, hourly or once a day.

While this configuration has a benefit of combining the rate and inventory management into one system, and virtually eliminating reservation keystroke errors it also has an even greater benefit and savings potential. That is if the PMS you utilize has it’s own CRS / Booking Engine you can step away from outsourcing it and the fees and commissions that go along with it. Consider the savings for a 250 hotel with an ADR of $125 utilizing the services of a 3rd party booking engine from the various GDS connectivity providers compared to a PMS booking engine as outlined below:
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Suddenly “connectivity” and the capability of a dynamic PMS becomes a major consideration when we realize the efficiency with which we can operate and the savings potential it presents.  Certainly the actual saving will vary by property systems and the contractual obligations presently in place. And certainly these fees and commissions have become very negotiable now that the GDS was recently de-regulated.

The downside with a Two-Way Passive Configuration is that the “channels” will not always have the most current rates and rooms’ available inventory information until it is sent their way. We can oversell if we are not paying close attention, particularly with high compression in a local market combined with the new electronic methods selling our rooms.  Or there may be an oversight when we suddenly have an inventory available due to a group booking cancellation that is not communicated to the “channels” in a timely manner.

Two-Way Active Configuration:

In my opinion this is the ideal configuration.  In this setup, all the rates and inventories are managed by utilizing the property PMS. When a reservation is being made via the internet, whether a travel agent or a shopper using our own web site, or wholesale / 3rd party resellers (provided we have direct connectivity), the systems actually checks with our PMS, specifically our booking engine, for room availability.

If a room is available at the property it will be available everywhere. When the reservation is confirmed to the shopper it communicates to the PMS that it is sold and the PMS removes it from the room’s available inventory, immediately.

This is really real time, last room available bidirectional room’s inventory management. We have one rate and room inventory data base to manage and as soon as it is updated the information is available and populated to all the selling outlets, “channels”, electronically, seamlessly. This is also valuable in another respect and that is that we have greater control of our booking engine, its appearance, our “store front window”, and its dynamics to offer other nearby sister properties when yours is sold out, or to offer other room types or upgrade options, when the specific requested room type is not available.

While “I want it all and I want it now!” and I do see this configuration becoming the standard, I feel the industry is not quite there yet.

There are still some major technical challenges in that the various dated and prior generation software utilized by the “Global Distribution System” is fairly cryptic and different from system to system, and in that the new internet based server applications, (ASP), are still being developed and will continue to evolve. 

Also, not all PMS servers can handle the demand that electronic rooms availability enquires will put on the system from all the resellers, “channels”, and not all PMS have the ability to provide the connectivity to the various “channels”.

For now I would not settle for anything less than Two-Way Passive connectivity and look to the near future for a Two-Way Active connectivity to become available. For me, it is ASAP, as I want to sell all the “produce” I can and leave the “rotten bananas” to the competitors!

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Contact:


Craig W. Cooley
Intellatech Marketing
10815 Rose Avenue, Ste 6
Los Angeles, CA 90034
Ph: 310-254-5871
Fx: 323-843-9465
craigwcooley@comcast.net
www.intellatech.com
 

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Also See: Yes, Hotels Can Make Money and Sustain Growth! / Craig W. Cooley / September 2005

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