VOLUME 4. Jan 5th, 2000th 1999. Marketing Vol 4a. OLRS OPTIONS-

By: Ian Clayton, AXSES SCL
 
 

Hotels Search for a Solution

Frustrated with the inability of the Global Distribution Systems (GDS) to provide an adequate service for hotels, several large hotel chains decided to do something about it. Their aim was to create a central clearing house of available rooms that linked the hotels own booking systems to the GDS.

Pegaus is Borne

It was 1984; the central clearing house became know as Pegasus' UltraSwitch, a standard for connecting different and incompatible Reservation Systems to the GDS network. Today Pegasus connects 31,000 hotels worldwide to all major GDS (Sabre, Galileo, Worldspan, Amadeus) as well as to Internet Travel Sites (All-Hotels, CNN, TravelWeb.com, Preview Travel, MSN-Expedia, Travelscape, Travel Hero and many others).

It is an important network estimated to account for 83% of all Internet hotel sales. It leverages the existing market channels and also reaches out to the new Internet travel sites. For this the hotel pays Pegasus a subscription fee of approx. $250US per month and a nominal switching fee ($0.5UUS) per booking. Hotels also pay agents commissions and transaction fees with each booking. For Internet sites connected to Pegasus, such as Preview Travel, the transaction fee is $2.50US and commission are 10% on average. By contrast Sabres GDS transaction fee is $5.00US. This also applies to Internet bookings on its site Travelocity.

Pegasus provides OLRS connections, and e-commerce support, but it is not an OLRS. Hotels that subscribe to the Pegasus must be connected to a Pegasus approved OLRS (which could include the hotels own reservation system, linked to Pegasus). This will change as Pegasus plans to offer a complete OLRS service, with a full on-line database of rates and availability. This is planned for sometime in the summer of 2000. However, until that time Pegasus is an expensive option, as most small hotels do not have automated booking systems to connect to the network.
 
 

New Players

Others have jumped into the market to provide alternative options. These are the Independents, providing propriety reservations processing and calendar (rooms availability) technology. They generally bypass the GDS and thus offer a lower cost but a more limited distribution system. They do not market the destination and have nominal presence on the Net when compared to the GDS, Pegasus or the major Internet Travel Sites.

The new players take many forms. The simplest solutions are the Single Service suppliers that list rates and availability and provide on-line bookings. Others provide more Integrated Services for managing special packages, wholesale prices, agents discounts and room options. Many also provide an integrated front office hotel reservation solution that synchronizes with the Internet service and relieves the hotel of maintaining a separate Internet database of availability. The top of the line service is the Destination Management System (DMS), an integrated suite of tools to help a destination manage the entire tourism service, including the on-line reservations.

The new players are companies like: Hotels On Line (HOL), Connect, Digitalrez and Travelinx. Their cost and technology vary widely. The basic Single Service charge a fixed fee per transaction ($3-$10us) and may charge setup fees and annual maintenance costs. Integrated services like the DMS setup fees are normally higher and transactions are similar to the standard agent fee (up to 10% of the booking).

Many of the new players prefer to work with the incumbent destination marketing partners and on-line service providers. With this approach, hotels and destinations link their websites to the OLRS for availability and booking services. Hotels then maintain a single premium site, which the OLRS and other marketing services link to. The traveller can then have the option of contacting the hotel directly, via email, or checking availability and booking on-line. Linking from the existing website is usually the least cost alternative. It leverages the existing investment and market position, reduces unnecessary duplication and facilitates long term marketing and administrative efficiencies.

But not all OLRS follow this approach and there are pros and cons to the services and alternatives. The next issue will look at DMS and the various options provided by the different OLRS.