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Article: Have Hotel Rooms Become a Commodity?

Nowadays, more travel is sold over the Internet than any other consumer product. In the United States Internet-booked rooms is the fastest-growing segment of hotel reservations in part because the Internet is a perfect medium for selling travel as it brings a vast network of suppliers and a widely dispersed customer pool together into a centralized market place.

In fact, the travel marketplace is a global arena where millions of buyers (travel agents and the public) search for travel services and sellers (hotels, airlines, car rental companies, etc.) work together to exchange travel services on the world's global distribution systems and the Internet distribution systems.

However, any mention of the Internet as a distribution channel for travel needs to start with an understanding of the existing electronic distribution infrastructure, the Global Distribution System (GDS). The airline industry created the first GDS in the 1960s as a way to keep track of flight schedules, availability, and prices.

The GDS’s were actually among the first e-commerce companies in the world facilitating B2B electronic commerce as early as the mid 1970s, when SABRE (owned by American Airline) and Apollo (United) began installing their propriety internal reservations systems in travel agencies.

The legacy of these GDS’s, namely Amadeus, Galileo, Sabre and Worldspan, today provide the backbone to the Internet travel distribution system and additionally there are thousands of private label Web sites like Expedia and Orbitz, as well as hundreds of tour operators, corporate booking portals, and regional convention coordinators.

Yet although technology has given hoteliers so many ways to sell a room, it has become nearly impossible for a smaller hotel operator to understand, let alone intelligently manage the available channels for room sales. In fact if you are the average small hotel, many of these channels have an allotment of your rooms, and it is likely most are showing out of date rates and incorrect availability.

Communicating with all of these channels in order to keep them current on your inventory and rates, requires in some cases, daily manual intervention with multiple faxes and phone calls. More importantly, verifying the accuracy of each channel's current allotment and rate by the property is critical but rarely automated. Most times hotel operators do not know where or how their rooms are being sold or at what rate until the booking confirmation arrives.

The tangle of reservation channels is not likely to be simplified soon. But with regard to the easy accessibility of hotel reservations on the Internet directly booked from hotel websites with their own integrated reservations systems, the system is working.

Unfortunately even now, the overwhelming majority of small to medium sized hoteliers far from realizing and exploiting the Web's true potential are still accepting bookings by telephone, form and fax from their websites or selling their inventory at reduced rates or high commissions via Web-proficient online intermediaries.

As such, hoteliers, who want to broaden their room’s distribution intelligently, improve margins and maintain their brand identity in the face of on-line distributors that would turn hotel rooms into a lowest-price commodity should seriously consider integrating a real time reservations system into their own website for the ultimate benefit of their own hotel and visitors.

After all, commodities tend to look and taste the same. Do visitors want a box they will rent if the price is right or a room experience they will wish to revisit again and again?  -- John Shenton - September, 2002
 

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N.B.** The articles were first published in the Times (Montreal, Canada) and written by John Shenton as special contributor to the Times Technology Section. Articles and Reports written by us may be printed or displayed on your website providing they are kept intact and a link/attribution to this website or Internet Merchandising Systems plus authorship is displayed.

 

 

 

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