20. Provide examples of how social networking applications such as Facebook, Twitter, LinkedIn, YouTube, message boards, websites, or blogs could be used to increase guest reservations, improve guest communications, or create a guest history.
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C A S E S T U D Y 4 0 3
The owner of an independent full-service lodging property has reviewed your proposal for the instal- lation of a property management system. The pro- posal is thorough; it includes all the necessary steps outlined in this chapter. However, the owner says that due to economic conditions at this time, “we have to cut back and purchase only five of the eleven modules” in the proposal. Which of the five modules would you maintain? Justify your decision.
1. Reservations
2. Revenue Management
3. Registration 4. Room Status 5. Posting
6. Call Accounting 7. Back Office 8. Housekeeping 9. Food and Beverage 10. Marketing and Sales 11. Night Audit
Notes
1. CARA Information Systems, Inc.; Computerized Lodging Systems, Inc.; ECI/
EECO Computer, Inc.; Hotel Information Systems; and Lodgistix, Inc.
2. Ibid.
3. Reprinted from Hospitals 56, no. 9 (May 1, 1982), by permission. Copyright 1982 by American Hospital Publishing, Inc.
Key Words
access time accounts payable accounts receivable back office
balance sheet banquet sheet blackouts brownouts call accounting computer supplies
characters per second (CPS)
cursor debit balance direct mail letters disk drive email ergonomics
fire safety display terminal floor limit
flow analysis processes function sheets gigabyte
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134 C H A P T E R 4 ■ P R O P E R T Y M A N A G E M E N T S Y S T E M S
guest histories hardware house limit inkjet
inquiries/reports in-room guest checkout interfacing
Internet intranet
I/O ports (input/output devices) keyboard
keypad laser letter-quality main menu megabyte megahertz modem monitor needs analysis
online
outstanding balance report paid in advance (PIA) payback period point-of-sale posting
ppm (pages per minute) printer
processor speed
profit-and-loss statement
property management system (PMS) rack rate
revenue management room status
self-check-in process single-sheet
social networking software
tickler files touchscreen
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O P E N I N G D I L E M M A
Two days remain before the first guest checks in for the Forest Conservation Conference. A quick review of the reservation module report indicates several of the new desk clerks took guaranteed reservations (35 rooms) for the convention that account for 10 percent more rooms than are available.
Reservations are a necessity for travelers and an important marketing tool for lodging establishments. Travelers in various market segments depend on a well-organized reservation system that is easily accessible via toll-free tele- phone numbers or the Internet, or at a few moments’ notice through social networking opportunities such as Facebook, Twitter, and LinkedIn. Lodging establishments want to provide a continuous flow of guests, which will bring profits. A reservation system must ensure efficient means of accessing, process- ing, and confirming information (Figure 5-1). Without an efficient reservation system, all aspects of managing a hotel are negatively affected. For example, while overbooking reservations may guarantee a full house for the hotel, it also leaves the guest who is turned away with a negative impression. This not only decreases the hope of repeat business but also ensures the dissatisfied customer will tell others of the negative experience. This chapter examines the reservation system as an integral part of progressive front office management and discusses the operation of a well-run system.
C H A P T E R
5
Systemwide Reservations
C H A P T E R F O C U S P O I N T S
■ Importance of guest
reservations to travelers and lodging establish- ments
■ Overview of reservation system
■ Sources of reservations
■ Forecasting reservations
■ Overbooking (occupancy management)
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Importance of a Reservation System
Profitable business ventures rely on effective marketing, which includes reviewing people who require hotel products and services, determining their specific needs, developing products and services that meet those needs, and making a profit on the sale of those products and services.
A well-organized reservation system allows hotels to ensure a steady flow of guests into their properties. Hotel chains, through their central reservation system, enable mem- ber establishments to fill 30 percent or more of available rooms nightly. Independent hoteliers, in contrast, must create exciting marketing programs to capture room business.
Easy access to a chain hotel’s data bank of rooms helps hotels meet customers’ needs as well as reach a targeted daily occupancy rate, average daily rate, yield percentage, and RevPAR. A reservation system is the primary means of producing positive cash flow and a favorable income statement. Social media applications are a recent emphasis:
There appears to be little doubt that the social media networking tidal wave has hit the hotel industry. To varying degrees, many hotels and hotel companies are attempt- ing to implement some active level of social media marketing. Whether it is Facebook,
F I G U R E 5 - 1 A reservation clerk is ready to process a guest’s request for a room reservation.
Photo courtesy of the author.
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Twitter, corporate blogs, LinkedIn, or a myriad of other platforms, social media is rapidly changing the networking landscape. In addition to SEO [search engine opti- mization], now social media optimization (SMO) and, online reputation management (ORM), are emerging as viable factors in managing effective online visibility.1
Overview of the Reservation System
The hotel industry is powered by sales derived from the use of computerized reserva- tions systems. The systems used to fill rooms consist of the hotel’s primary efforts (via marketing and sales and use of their own brand reservation system), their toll-free num- ber, global distribution systems (GDS), travel agents, and third-party sources such as wholesalers who buy rooms from the hotel and resell them on the Internet. The following information shows how hotels rely on a combination of these well-organized systems to produce a profit.
Choice Hotels International
The following information on Choice Hotels International, (formerly Bass Hotels &
Resorts), Carlson Hospitality Worldwide, and Pegasus Solutions provides a concise view of the importance of computerized reservation systems to the hospitality industry.
Choice Hotels International, with 5900 franchisees in 30 countries and territories, and with more than 479,000 rooms, operates under the Comfort Inn, Quality, Clarion, Sleep Inn, Econo Lodge, MainStay Suites, Rodeway Inn, Comfort Suites, Cambria Suites, Suburban Extended Stay Hotel, and Ascend Collection brands. Choice’s implementation of a new training program for reservations in 2004 assisted in the success of their reser- vation system.
By fall 2007, [the] central reservation system had handled six $10 million days and two $11 million days of gross revenue. The training improvements also resulted in a conversion increase from 36 percent to 43.8 percent in the last four years. This conversion brought an incremental $5.6 million in revenue through [the] reservations centers in 2007.2
Hilton Hotels
Hilton Hotel Corporation has taken a new approach to managing its reservations ser- vices by developing a home-based reservation service.
Hilton currently has more than 3000 hotels and 500,000 rooms in 74 countries and territories. Keeping those rooms booked is Hilton’s top priority. The challenge for managers at Hilton Reservations & Customer Care is to provide high-quality customer service as efficiently as possible. The company decided that a work-at-home program for
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its call center staff could both increase its quality of customer service and decrease its call center costs. Hilton Reservations also saw in work-at-home programs an opportunity to reduce its number of call center locations, potentially resulting in savings on real estate, power, natural resources, and other physical support costs. The group has since reduced call center staff numbers enough to close one full call center and shift the work out to 200 home-based agents. In this way Hilton Reservations avoids costs associated with rent, utilities, and maintenance.
To outfit an agent completely, Hilton Reservations supplies a Wyse client, Netgear firewall, Citrix license, and a Microsoft Terminal Server license. This costs approxi- mately $1200, which compares favorably with the $1300 it costs to outfit an agent sta- tion at a call center. “Saving $100 on equipment costs per employee may not sound like much,” says Rick Sloane, IT support manager for Hilton Reservations and Customer Care, “but we are rolling this out to 2500 individuals throughout time, representing close to $250,000.” Hilton also saves resources by adjusting the hours available to its work-at-home staff to match changing levels of demand. This enables Hilton to respond to seasonal variance and to deliver excellent customer service, with minimal wait times for incoming callers, without having to pay staff when it doesn’t need that extra capacity.
Although the amount the company pays per hour worked has gone down significantly, overall the performance and quality of services agents deliver to Hilton customers has dramatically increased. “With the convenience and flexibility of working at home, we attract more applicants and can afford to be more selective,” says Sloane. “Many appli- cants already have full-time jobs, but [they] can work extra hours if they don’t have to drive to a workplace and if they can choose their own hours. Agents use an online program to build their schedule each week, signing up for specific hourly slots to meet expected levels of demand.”3
Marriott International
Marriott International has more than 3200 lodging properties in the United States and 66 other countries and territories. Executives have sought additional marketing exper- tise in booking sources, rates, and length-of-stay patterns from TravelCLICK, Inc. The following information provides insight about managing a reservation system, reviewing guest-stay data, forecasting, and evaluating the competition.
Marriott International recently signed an agreement with TravelCLICK Hotelligence®
in 150 of its select service and extended stay properties including Courtyard, Residence Inn, Fairfield Inn, TownePlace Suites, and SpringHill Suites. Hotelligence reports will provide Marriott properties with insight on booking sources, rates, and length-of-stay patterns for their individual hotels and for hotels they define as their competitors.
By 2012, 65% of the largest companies—like Marriott—will leverage information, processes, and business intelligence tools to make informed, responsive decisions on significant changes in their business and markets.”4
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Global Distribution Systems (GDS) in Securing Reservations
A global distribution system (GDS) is a distributor of hotel rooms to corporations such as travel agents that buy rooms in large volume. GDSs that play a prominent role in securing guest reservations include Amadeus, Galileo, SABRE, and Worldspan. The fol- lowing details the concept of their operations.
TravelCLICK, is a Global Distribution Systems (GDS) that also has capability for measuring advertising, reach to a travel agent audience. A new feature that has been added is the best available rate (BAR) display in their ads. These features increase transparency and functionality. The constant update of BAR data increases the like- lihood of a booking. Also, next-generation methodology pinpoints participating travel agents.5
How important is electronic distribution as a means of gaining reservations and boosting revenue? Representing almost 30 percent of hotelier bookings, in 2008 GDSs delivered over 115 million room-nights with a revenue value of almost $20 billion.6
Role of the Internet in Securing Reservations
The business and pleasure traveler have entered the marketplace with a great degree of sophistication. Armed with information from advertising television promotions, direct mail promotions from credit cards, airline frequent flyer incentive plans, Facebook, LinkedIn, Twitter, and other promotional sources, they want to secure the best rates and value for their accommodations. They search the Internet for the best price and make sure they are satisfied with their hit. How did this free marketplace come about? How did it seem to become a buyer’s marketplace? Why do hoteliers grimace at the thought of the Internet rate? The following discussions on the background of room rates offered via the Internet, the effect of the Internet on pricing rooms, and consumers’ use of the Internet in making reservations show how technology has changed the way hoteliers do business. Jerome Wise, vice president of eCommerce for TravelCLICK International, reports, “According to Google™, networking is going to be the second-most-popular online activity by 2012, overtaking shopping and surpassing both communication—such as email—and entertainment.” He adds, “Hoteliers who explore social networking early on in its development will have a clear competitive advantage as it matures.”7
Background on Room Rates Offered via the Internet
Sharon H. McAuliffe outlines thoughts for you to consider on room rates offered via the Internet.Prior to the Internet’s entrance into the marketing of rooms, the only public rates available for consumers were those published in brochures or obtained by telephoning the hotel property or a travel agent. Any discounts were offered to wholesalers and corporate clients based on their volume of business or length of stay. When the dot-com
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mania hit consumers, wholesalers decided to advertise free offers to entice consumers to use the Internet. This left a lasting impression on the consumer’s purchasing manner. An initial wholesaler offered to take empty hotel rooms into inventory on the Internet, and hoteliers were grateful to sell the rooms at low sale prices. Internet volume was light, and everything seemed fine. Then other Internet sites began to offer similar models with discounts and a guaranteed lowest price. The result is a transparency of rates. Guests can explore room rates before check-in to see if their guaranteed room rate has been offered at a lower price online.8
However, a new concept—customer relationship management (CRM), or manage- ment of guest services with technology—has entered the hoteliers’ workaday world via electronic media. Max Starkov provides insight into the electronic application of CRM.
The truth is that CRM in travel is much more than technology or database man- agement. CRM and its online application, e-CRM, are business strategies aiming to engage the customer in a mutually beneficial relationship. Electronic customer relationship management (e-CRM allows travel companies (travel suppliers and online travel agencies—OTAs) to engage customers in strong, personalized and mutually beneficial interactive relationships, increase conversions and sell more efficiently. The main components of an e-CRM strategy in travel and hospitality include the following:
■ Know Your Customer
■ Customer Service
■ Personalization
■ More Efficient Marketing
■ Build Customer Loyalty9
Effect of Internet on Pricing Rooms
Visitors to a hotel’s website must be turned into guaranteed reservations. An article from SynXis shows how this marketing challenge of room pricing is managed:
Hoteliers using Guest Connect Booking Engine are already reporting significant increases in both the volume of bookings and conversion rates from visitors to their websites. Guest Connect was developed by SynXis, the Sabre Holdings.
Guest Connect templates guide the flow of the booking process and enable the hotelier to incorporate the specific product elements that will best merchandise their property or chain, from expanded property descriptions and rich images to dynamic packaging, promotional pricing (with “slash-through” pricing), room preference selec- tion, upgrades or links to a virtual concierge for additional services. In addition, hotel managers have access to integrated, comprehensive tracking tools that give a complete view of their return on investment (ROI) for online marketing efforts.
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At Remington Hotels at its Inn at Key West by comparing before and after sta- tistics, they found that the Guest Connect booking engine produced over 250%
more bookings than the old booking engine when compared on a weekly basis. This increase resulted in more than $45,000 in incremental revenue each week for the 100-room property.10
Consumers Response to Use of the Internet—Third-Party Websites
Third-party websites, such as Expedia and Travelocity, provide the consumer an oppor- tunity to view hotel room availability and rates with a few keystrokes on the computer.
Consumer response to the opportunity to book room reservations online has been over- whelming. TravelCLICK, a Chicago-based electronic provider of reservations for consum- ers, serves over 14,000 customers in more than 140 countries. It indicated consumers’
reliance on the Internet to process reservations.
TravelCLICK, Inc., the leading provider of ecommerce solutions for the global hotel industry, announced that as global markets realized a decline in demand through the first part of the year, TravelCLICK’s independent client properties are performing strongly across more than 100 markets worldwide, delivering 39% more revenue and 29% more room nights for year-to-date May 2008 than in previous years. Trav- elCLICK hotels’ direct web performance led the way, increasing 42% in web direct reservations and 46% in web revenues.11
This overwhelming response to the Internet continues. Starkov emphasizes the impor- tance of e-CRM, evidenced by high consumer use of computer generated travel bookings:
Even with [an] expected decline in travel demand, online travel bookings in North America in 2009 are projected to grow by 10.5% and reach $116.1 billion and grow by 11% in 2010 (eMarketer). This growth is primarily the result of the dramatic shift from the offline to online channel. Similar is the situation in Europe and APAC. In 2009, more than 55% of all travel bookings and up to 40% of all hotel bookings in North America will be generated from the Internet (eMarketer, HeBS), which repre- sents a double-digit growth over 2008. At least another third of hotel bookings will be directly influenced by online research, but booked offline. Over 65% of online hotel bookings will come from the direct online channel, i.e., via the hotel’s own website (76% for the major hotel brands). The hotel website has become the first, main, only and in many cases last point of contact with past, current and potential guests.12
Social Media
The new methods of reaching consumers via social media technologies such as Facebook, Twitter, YouTube, LinkedIn, and blogs requires hoteliers to consider these options in developing their marketing plans. John Davies provides several concepts to consider in deciding how to develop such a plan.
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1. Define your strategy and long-term objective. Is your goal to communicate to or with your prospective guests? Are you seeking fleeting fans or building long- term, lasting relationships with your customers? Is the goal to enhance the cred- ibility and reputation of your brand or promotion of the week?
2. Make sure there is a commitment to Social Media Marketing (SMM). Social media marketing is a process that involves participation, interaction, resources, commitment, follow-through, and time. Someone has to be there to monitor and be the resource for the guest.