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Online booking systems

26 April 2005

Online booking can dramatically widen your target audience, but deciding which approach to take and how far to automate the process can be daunting.

Should you offer your rooms through a distribution system or via an e-commerce site? Can you integrate online reservations with a property management system? This article tells all.

What different options are available to help take bookings online?

Hotels wishing to allow online booking have three main options available to them:

  • Take reservations by e-mail
  • Use an online reservation system directly
  • Use a global distribution system (GDS) which will feed other systems

Is e-mail booking not enough?

It's not really an online booking solution. It's slow, customers have to wait for confirmation, e-mails get lost easily and it's harder to negotiate the details of the transaction.

Could I build my own system?

Small hotels can rule this out from the start. Hosting your own online booking system requires an understanding of servers and programming languages. As a busy hotelier trying to run a small business, this will place too many demands on your time and lead to an online booking service which is unreliable.

Do I lose flexibility with a service that is hosted for me online?

Think of an online reservation system as a rented service that is accessible over the internet. An online service lets you list your available rooms online and shows them to customers, taking bookings over the web.

Online services can be flexible enough for small hotels. Generally, such services offer hotels the chance to configure their accounts using a password protected area of the website. You should be able to set criteria such as prices and the number of rooms available.

How do I reconcile online bookings with reservations made in person or on the phone?

Some reservation systems handle everything online, meaning that if you take a telephone booking you must log into the website to update it. In some cases, it is possible to integrate a property management system running on a local PC with an online booking system to consolidate reservations and ensure that rooms don't end up being double booked.

For example, NFS Hospitality sells a property management system that integrates with an online reservation portal that it operates for its customers. The company keeps the property management system operated within the hotel up to date with information about online bookings made through its portal.

Will online services allow people to book through my website?

Any good online service should provide you with some code that you can cut and paste into your existing website design. This will enable people surfing your website to make an online booking, often by taking them to another website operated by the online service.

How can I work with large, branded travel sites?

Whether you offer hotel booking via your own website or not, it is a very good idea to work with well-known brands in the travel industry such as Lastminute.com, Expedia, or Travelocity.

These sites market their services to a huge base of potential customers, and they also put together package deals with car rental, air travel tickets and events. Package deals can be useful according to Murad Hajeebhoy, regional director of Expedia.com and Hotels.com (which are both owned by the same operating company). He says that 30% of his customers book hotels as part of a larger package.

How do the e-commerce sites work?

Many of the large, branded sites require you to speak to their sales people first rather than signing up online. Lastminute generally doesn't work with hotels that have less than 30 rooms unless they have some kind of boutique or niche quality. Hotels with more than 30 rooms will be asked to direct Lastminute to a website, so that the company can determine if the property matches its needs.

The broker will also send a description form for the hotel to fill in, and asks for some digital pictures of the hotel. It then gets the hotel to sign a contract and confirms logistical information such as bank details.

Once you are a signed supplier, there are two ways to deal with these sites:

  • Using an extranet
    Expedia, Lastminute, and Travelocity all allow hotels to fill out available room details using a web form on its extranet (a private website open to business partners only). When using an extranet, these companies also use a net rate system that the hotel receives, along with another rate that includes its own margin.
  • Using an intermediary global distribution system
    Companies such as Sabre, Worldspan, and Amadeus offer global distribution systems, which you can think of as online wholesalers selling information about rooms to travel agency websites. These services let you list your available rooms on their systems, and then make that information available to the world's travel agents (including large, branded customer-facing e-commerce sites).

A GDS prefers to connect with a central reservation system (a system serving many different hotels) because this makes more economic sense for the company than dealing with small hotels. Independent properties can deal with a GDS by going through a representative company such as Utell, which is operated by Pegasus. Pegasus is itself a distribution company which also acts as an interface between individual hotels and the large GDS services.

Expedia's Hajeebhoy says that 85% of his suppliers work with Expedia as part of its merchant program, which uses the extranet, as opposed to the GDS program. This opens up opportunities for merchandising and promotions with Expedia that would be more difficult to run with a hotel under its GDS program, says Hajeebhoy.

The company is also rolling out a direct connect technology designed to appeal to individual hotels in addition to chains, which would help automate the update of hotel records online by talking directly to a hotel's property management system.

Executives at Lastminute say that the company will connect directly to a hotel's property management system if it supports the necessary interfaces, but that this is mainly happening with larger hotel chains at present. However, it connects to the Pegasus distribution system (as does Expedia).

Is online booking worth it?

Much will depend on your general room availability. If you regularly find yourself with unfilled rooms, then advertising your rooms online makes good business sense. Given that initiatives such as Expedia's merchant program require no sign-up fee, and enable you to list your rooms on a site that reaches millions of customers each year, you should at least investigate the opportunity, as the cost of entry will be mainly administrative. In short, there are no good reasons not to do it.

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