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Understanding and Maximizing a Hotel’s Electronic Distribution Options
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This article is from the upcoming Fall 2000 issue of Hospitality Upgrade, formerly the Hotel & Restaurant Technology UPDATE magazine. The Fall issue will be distributed in November at the FS/TEC in Long Beach, CA and at the IH/M&RS in New York City.
by John Burns, Partner with Hospitality Technology Consulting / Fall 2000

The number of reservations flowing to hotels through the electronic distribution channels – the global distribution systems and the Internet – is growing steadily.  Once a minor contributor of bookings, they are now primary business sources and grow more important with every passing month.

This productivity growth has heightened emphasis throughout the hotel industry on using the electronic distribution channels effectively and maximizing their potential.  Every director of sales and marketing faces the challenge of understanding, prioritizing and managing these electronic outlets on behalf of his or her property. 

How important is electronic distribution as a means of gaining reservations?  The Hotel Electronic Distribution Network Association (HEDNA) reported that in 1999 the global distribution systems delivered over 43 million bookings with a value in excess of $12.5 billion.  GDS booking growth continues at about 10 percent a year.   Everyone has his or her own stories of the impact of the Internet.  Some large chains are experiencing 200-300 percent growth annually.  Some small, boutique properties report that over 75 percent of their bookings now come from the Web. 

Regardless of the Internet’s current reservation production for your hotel, it bears only modest resemblance to the broader and ever-expanding impact it will have in the future.  As the number of people who have Internet access approaches 100 million in the United States and 200 million worldwide, research repeatedly indicates that consumers are turning to the Internet for travel-related information. They may not book online (although they will eventually), but they are already comparing you with your competitors before they pick up their telephone to call your CRO or drive up to the front door of your property.

As a hotel sales and marketing professional your limited resources are allocated to presenting your property in the sales channels that will be the most productive for you--be they print ads, direct mail, public relations, sales calls or electronic distribution channel participation and advertising. You strive to select the most cost-effective and compelling channels, that will in turn bring guests to your door and put heads in your beds.

This resource allocation process requires assessment of each potential business source’s target audience, opportunities for participation, probable production and costs.  This applies to electronic distribution just as it does to other sales options. 

Narrowing the focus to the electronic distribution channels, the two broadest categories are global distribution systems (GDS) and Internet web sites. 

The GDSs

The GDSs, of which there are four major competitors including Amadeus, Galileo/Apollo, Sabre and Worldspan, originated as private networks for use by travel agents.  In the 35 years since their inception, they have grown to serve a worldwide clientele who use nearly 500,000 access points. They have expanded from listing only air flights to presenting the full array of travel services. Recently, they have moved to make their rich databases of travel service information available to web sites – both their own and others managed by third parties.  Key considerations in evaluating GDS significance for your hotel include:

  • Worldwide, 24/7 availability
  • Extensive use by travel agents
  • Most common booking mechanism for consortia and negotiated corporate rates
  • Expanding their leisure product offerings
  • Little maintenance effort required – information provided to the central reservation system for your hotel chain or representation company is copied automatically to all four of the GDSs
An individual hotel automatically participates in the GDS as part of their membership in a hotel chain or representation company. This base level involvement provides the display of available room types and the rates for those rooms, for any date(s) in the coming 12 months, and a display of an extensive description of the hotel.

To improve its presentation in the GDSs, your hotel has several options:

  • Ensure it is open and available for sale in your hotel or representation company’s central reservation system (CRS) since the GDSs reflect the availability and rate data in the CRS
  • Provide a full spectrum of public rates – rack, corporate, senior citizen, government / military, weekend and promotional
  • Participate in consortia and negotiated corporate rate programs
  • Ensure the room descriptions provided by the CRS to the GDSs are appealing, as well as accurate
  • Periodically review the GDS property description for your hotel
The property description is frequently the only resource a travel agent reads prior to recommending a hotel to a client.  Copies of the property description that appears in the GDS to describe your hotel can be obtained from the GDS database department of your chain or representation company.  Use that same opportunity to request, review and revise your hotel’s property description in the CRS. 

Two further levels of GDS participation and promotion are available to you, one free of charge, the other at a fee.  In the first, no-cost bulletin boards are available in each of the GDSs for posting announcements about promotional rates, seasonal packages and important news about individual hotels.  These bulletin board announcements can draw travel agents’ attention to your special offers.  Contact your chain’s GDS or electronic distribution department to inquire about displaying your hotel’s information on these bulletin boards.

The second level offers a wide range of paid advertising options.  Each of the GDSs have sign on messages displayed to travel agents as they begin their day, as well as numerous on-screen advertising opportunities tied to specific cities.  All of these advertising options are now offered by a single a company, TravelCLICK.  It represents all four of the GDSs, allowing convenient one-stop evaluation and selection.  TravelCLICK has negotiated special corporate-wide purchasing discounts with many hotel companies.

Internet Web Sites

Directors of sales often receive an average of one solicitation a day asking them to list their property on a web site.  Evaluating the validity and value of those offers is often difficult. 

Who maintains the data about my hotel on the site?

Web sites, like the GDSs, require several types of information in order to sell lodging – availability, rates and product description.  In some cases, web sites link to existing sources of this information and need not be manually maintained by on-property staff.  This is true of web sites for which data is provided by – or powered by – the hotel chain or representation company’s central reservation system, a switch company or one of the GDSs.

Often the decision to participate in a CRS-, switch- or GDS-powered site is made at the chain or representation company level.  In other cases, no arrangement or permission is gained.  In some cases, the information is redisplayed by an associated onward distribution site. 

Onward distribution describes the process in which web sites repeat data maintained in another system or site.  In most cases, this repetition is agreed to by the provider site.  One example is Travelocity and its redisplay of Sabre’s hotel and travel services data.  Another is TravelWeb, who supplies its hotel data and booking capability to over 200 sites including CNNtraveller.com, Lastminute.com and Travelscape.com.  In another much less desirable case, without permission a site screen scrapes information (sometimes only infrequently, resulting in out-of-date information being displayed) from a source site.

While individual properties have little control over whether they appear on these sites, since participation decisions are made at the corporate level, there often remains the opportunity to correct or enhance the data displayed.  Periodically reviewing these sites will allow you to attempt to correct data displays that do not do justice to your hotel.  Your chain or representation company’s electronic distribution director should be able to supply you with a list of all of these sites which they are aware.

Does it target a market segment that is important to my hotel?

Web sites are no different from any other distribution or advertising medium in that they have specific user demographics.  Site sales representatives should be able and prepared to describe those demographics to you.  You in turn must decide if that constituency matches a priority market segment for your hotel.
If a site is not powered i.e., does not draw its availability, rates and descriptive data from a CRS, switch or GDS, then the responsibility falls to the property to maintain the information on a day-to-day basis.  This commitment cannot be taken lightly.  Even the simplest of systems takes more time to maintain than the sales patter for the site generally suggests.  Some hotel staffs take the position that only occasional maintenance need be given, such as when occupancy begins to build they turn off these sites.  In doing so, they shortchange a valuable opportunity for last room sale.  This is occurring more frequently than most general managers and directors of sales are aware. 

The web site maintenance situation is improving, but widespread relief is months, and for most hotels, years off.  PMS vendors are adding functions to allow a direct link to property web sites, so that a hotel can use its PMS as the real-time booking engine on its web site.  Elsewhere, web site operators are beginning to develop PMS interfaces to allow automated downloading of Internet reservations to the PMS, and later, uploading of availability data.  Additionally, master databases are in design, which will allow a one-time updating of a single master data file those updates will be instantly communicated to all of the web sites where you are listed. 

Web Site Promotional Opportunities

Difficulties in first evaluating and later maintaining your hotel’s information on travel web sites do not diminish their importance and a hotel’s need to participate in them.  The Web is quickly becoming a mainstream promotional and sales medium.  It is essential to have a strategy for the extent and manner to which your hotel will participate in the Web and then the processes to ensure that strategy is applied on a day-to-day basis. 

Once your have chosen to list your hotel on a site, that and every other site where you are listed should be reviewed on a regular basis to verify that the data for your property is accurate, complete and compelling.  If it is not, correcting the deficiencies needs to be a top priority.  Next comes a commitment to maintain the same rates and availability data on the web sites as in all of your other sales vehicles – the front desk, the reservations office, the chain’s reservations centers and the GDSs. 

Differentiating the Web from the GDSs is the presence on the Internet of not only traditional “shop and buy” travel sites but also specialty sales sites.  These sites, whose use may be appropriate from time to time by your hotel, specialize in selling distressed inventory.  They operate using several models – discounted prices, auctions, reverse auctions and consolidators.  Examples of each appear in Figure A. 

Like the GDSs, web sites offer supplemental promotional opportunities.  Preferred placement of your listing in sites or search engines, banner ads and additional on-screen graphics are just a few of the extra cost options.  As you decide to list your hotel’s inventory on a site, inquire about the site’s promotional possibilities.  For the sites where participation has been arranged at a corporate level, ask the individual in your corporate office to provide you with a description of the opportunities offered by each of the sites.

Electronic distribution and, in particular, the Internet is a complex and quickly changing sales environment.  In the end, the powerful and productive sales tool called electronic distribution can be effectively employed because fundamental marketing principles apply to it just as they do in every marketing decision.


John Burns is a partner with Hospitality Technology Consulting, providing CRS and Electronic Distribution consulting services. He can be reached at info@burns-htc.com or at (480) 661-6797.
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Contact:


Geneva Rinehart
Associate Editor
Hospitality Upgrade magazine 
and the Hospitality Upgrade.com website
http://www.hospitalityupgrade.com
grinehart@updateplus.com

 
Also See: The Future of Electronic Payments - From Paper to Plastic and Beyond / J. David Oder /  Hospitality Upgrade Magazine / Summer 2000
Timeshare Technology Steps Up / by Elizabeth Lauer / Hospitality Upgrade Magazine / July 2000 
Biometric Payment: The New Age of Currency / by Geneva Rinehart / Hospitality Upgrade Magazine / Mar 2000 

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