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Chapter 3Reservation Systems

Managing Technology in the Hospitality Industry

Sixth Edition

(468TXT or 468CIN)

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Competencies forReservation Systems

1. Describe the role played by e-distribution systems and distinguish global distribution systems from Internet distribution systems.

2. Explain the use of distribution service providers and extranets in meeting the needs of hotels and the e-distribution channels they use.

3. Summarize the services provided by intersell agencies.

4. Distinguish affiliate from non-affiliate central reservation systems.

(continued)

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Competencies forReservation Systems

5. Identify the basic functions and services performed by a central reservation system.

6. Explain the elements and procedures of a property-level reservation system.

7. Describe the revenue effects of using various distribution channels and explain the difference between the merchant model and the wholesaler model.

(continued)

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Electronic Distribution Systems

• The selling of products or services over the internet or some electronic medium.

• A less expensive source of bookings compared to traditional models

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Electronic Distribution Systems

• Has 2 major categories:– Global Distribution Systems– Internet Distribution Systems

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Global Distribution Systems (GDSs)

• Owned by airlines

• Used by travel agents

• Formed as joint ventures linking a number of diverse businesses.

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Global Distribution Systems (GDSs)

• Access travel/tourism inventories worldwide

• Link to reservation systems of: o Hotelso Airlineso Car Rental Companieso Travel agencies

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Global Distribution Systems (GDSs)

• Smart Switch– Translation of reservation transactions into as

many unique formats.– Allows users to share data from different

reservation systems without having to deal with complex formats, files and operating systems.

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Global Distribution Systems (GDSs)

• Seamless Integration– Links GDS and a hotel/suppliers CRS.– All distribution channels operate from the

same data base (Singe image inventory)

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Global Distribution Systems (GDSs)

• Examples include:– Sabre– Galileo– Amadeus– Wordspan

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Internet Distribution Systems (IDSs)

• Owned by independent Web companies

• Used by consumers; functions as self-service e distribution channels.

• Links to:o Hotel central reservation systemso Switching companyo GDS

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Internet Distribution Systems (IDSs)

• Two types of Processing Models– Transparent Sites– Opaque Sites

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Internet Distribution Systems (IDSs)

• Transparent Sites– The names and locations of Candidate

hotels appear in the qualifying range of a customers search criteria.

– Examples: Expedia, Hotels.com, travelocity

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Internet Distribution Systems (IDSs)

• Opaque Sites– The names and locations of Candidate hotels

do not appear.– Marketed by price and star stratification.– The hotels brand and location is revealed on

the completion of the purchase.– Opaque Sites work on an auction basis– Examples: priceline.com and Hotwire

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DSP Connectivity

• Distribution Service Provider– Also known as the Switching Company– Links between a room and rate data source

and the Electronic Distribution channel.– Communicates room and rate availability data

from a CRS to a participating GDS and IDS entity.

– Examples include: Pegasus, Travel Click

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Extranet Connectivity

• Extranet– A secure external website that links e-

distribution participants to the hotel/airline.– A website or partitioned and password-

protected portion of a website that is available to a select users.

– Simplifies data transfer and acquisition.– Examples: Hotels.com and PlacesToStay.com

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Intersell Agencies

• A reservation network that handles more than one product line.

• Handles reservations for an airline, car rental and hotels.

• A one-stop-shop

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Central Reservation Systems• An external reservation network that

centralizes marketing and sales efforts in relation to the reservation process.

• Has 2 types:– Affiliate

– Non-Affiiate

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Affiliate reservation systems (hotel chains)

• A Hotel chains central reservation system where all participating properties are contractually related.

• All properties are represented and is required to provide availability and inventory data on a timely basis.

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• Overrun Facility– Properly selected to receive reservation

requests after chain properties have exhausted room availabilities.

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Non-affiliate reservation systems

• A Subscription system that links independent properties.

• Subscribers take responsibility for updating the system with accurate room rate and availability of data.

• Leading Hotels of the World

• Preferred Hotels

• Distinguished Hotels

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CRS Functions and Services

• Real time information should be given

• Its goal is to improve guest service while enhancing profitability and operating efficiency.

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CRS Functions and Services

• Providing access to special room rates and promotional packages

• Instant confirmation of reservations

• Communicate with major airline, travel and car rental agencies

• Create comprehensive reservation records

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CRS Functions and Services• Provides properties with necessary technology

• Communicates room availability to e-distribution channels

• Delivers reservations to properties

• Maintains statistical information (call volume, talk time, conversion rates, denial rates)

• Provides customer relationship management (loyalty programs)

• Maintains demographic information about callers

• Bills properties for handling reservations

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Property-Level Reservation Systems

• Includes a property’s own website.

• Involves a guest contacting the hotel’s reservation department directly to ascertain room rates and availability information.

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PMS Reservation Process

1. Reservation inquiry

2. Determination of availability

3. Creation of the reservation record

4. Confirmation of the reservation

5. Maintenance of the reservation record

6. Generation of reports

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PMS Reservation Reports

• Rooms availability report

• Revenue forecast report

• Reservation transaction record

• Expected arrivals list

• Expected departures list

• Commission agent report

• Turnaway report 

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Distribution of Revenues

• Arbitage– The simultaneous purchase and sale of an asset

in order to profit from a price difference.– Purchase of a hotel room/airline ticket using a

GDS entails losses for the supplier due to discounts and commissions.

– To offset or mitigate the effects of the losses properties try to sell more.

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Distribution of Revenues

• Merchant Model– Also called the mark up model– Negotiation of reduced room prices with a

supplier hotel. (net rate)– Merchants are responsible for marketing the

rooms at discounted rates– Adds interest to net rate– Examples: hotels.com, orbitz and travelocity.

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Distribution of Revenues

• Wholesaler Model– Commission Model– The hotel pays a commission to the wholesaler

based on a percentage of the hotel’s net rate.– Hotel sets the selling price and the wholesaler

receives an agreed upon sales commission.– Suppliers prefer this type of arrangement– Examples: Expedia, trip.com

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