Independently Wealthy

The Internet has created a rich reservations and distribution system for one-of-a-kind hotels, enabling them to challenge the competition.

By Joan Marsan, Technology Editor -- HOTELS Magazine, 7/1/2000

When it comes to reservation systems and distribution

models, large hotel companies traditionally have had some inarguable

advantages. But the Internet boom is making independents equal players

in the game to gather better business. At the April American Hotel & Motel

Association conference in Phoenix, sponsors Pegasus Solutions, the

Cornell University School of Hotel Administration and HOTELS Magazine

gathered independent hoteliers to discuss the changes in the reservations

arena that the Internet has enabled. Their words and ideas, presented

here verbatim, reflect the great gains independents worldwide are

making as they reach, and capture, a broader client base.

Q: How are the new activities on the Internet and the way distribution

channels are changing affecting your properties from the standpoint

of reservations and distribution?

Rob Holeman: Since I don't have an online booking system on the Internet,

90% of my reservations are by phone. I see the Internet is generating

a tremendous amount of phone calls on a daily basis. I got a toll free

phone number [listed just on the Internet] that is running approximately

25% of my call volume. But because it is an 877 number, and a lot of

people do not realize that 877 numbers are toll free, they call me on

my regular line, too. So I would say about 38% of business comes from

the Internet. In the future, I would like to have an online booking

engine. I think that would cut down my call volume.

Randy Wilcott: We are still seeing our reservations coming through

the traditional channels of voice or through the GDS. About 40% to 50%

of our reservations still are coming through voice. We are using the

Internet as an awareness vehicle but spending more money on the technology

side in terms of our computers and our phone systems. We are providing

more efficient systems, so we have less abandoned calls and better conversion

rates. We are also looking at going into e-commerce. We are going to

hook our hotel property software system into the Internet, so they can

look at it and book right there. That is going to be coming in the next

three or four months.

Jules Sieburgh: It seems the Internet is the one channel people are

focusing on. If they look at the real numbers, even with the trends

in booking, it is still a very, very small percentage. It will continue

to grow, especially if you see examples where it is generating lots

of leads or bookings, even though you are not able to do the electronic

booking yet. But that would make it just more efficient.

Q: To what extent does an independent property outsource its Web site?

Mary Mantle: We just launched the Olympus Hospitality Group and Rock

Resorts Web sites. We worked with a local vendor, and the senior partners

are former hotel people. They also have marketing expertise and understand

how people use the Internet. From a design point, something might look

great, but it is not user-friendly or it is time consuming. I want to

make the easiest site for the consumers to use. We do not have an expert

in the Internet or technology on staff, and I look at this as a partnership

that works with us.

Holeman: We used a local vendor the first time, and we saw a plateau.

You do not build a Web site and set it out there. You have to have somebody

marketing it.

Geoff Andrew: We did a survey a couple of months ago of 700 properties

throughout North America. We found about a third of those hotels did

not have their own sites at all. The may be in some other third party

site, but they did not have their own URL. About a third had a URL,

but it was purely e-mail bookings. And then a third had bookability,

but the majority of those were not in an exclusive booking environment.

Most of the hotels with booking engines were linking into Travelweb.com

or WorldRes or somewhere else where the ability for the client to escape

them was right there.

Q: As your Internet sites grow and develop, are you going to have direct,

live, real-time inventory? Is that going to be automatically adjusted

by your property management system (PMS)?

Wilcott: It is going to be coordinated through the GDS and/or PMS.

Sieburgh: So you are not really direct, yet.

Andrew: That is one of the biggest things we are coming up against.

The ability to control any and all channels through one point, to be

able to have one data entry point that might be your PMS and then works

through the CRS and other distribution channels is definitely attractive.

That is one of the challenges these Internet-only reservation sites

are having. The hotels are not necessarily keeping up with availability.

Mantle: Right, the inventory controls. Properties want to limit the

amount of time spent controlling inventories. If you have only got one

single system to control, your opportunity for mistakes is limited as

well.

Andrew: And as more and more hotels hook revenue management systems

into the mix and decisions are being made and automatically pushed out,

you are going to increasingly want some kind of central automated view

of what your inventory is doing.

Q: Are you still putting investment dollars into the voice side?

Wilcott: No doubt about it.

Mantle: When you look at independent properties, and particularly resort

destination locations, people go to the Internet to find general information

about locations and activities. But when they are ready to book the

reservation, they still call the hotel or go through their travel agent

because they also want to book other activities: golf, tennis, or the

spa. There are a variety of other things they want to find out from

a human voice. The Internet is a critical element for us as we continue

to market our brands and our independent properties, but we are still

seeing people go back to the voice for that final booking.

Wilcott: As independents, too, we are spending a lot of time and manpower

on creating awareness in the consortia side of things, getting to know

agents and building relationships there so that when they think of a

destination in our part of the country, they pick up the phone and book

us. We still want to build relationships.

Andrew: There is quite an interesting differentiation between what

is coming through on the GDS and what is coming through on voice. Typically

what comes through the voice system is a more complex leisure stay.

There is not a level of confidence when it is a more emotional buy for

a vacation or an extended business stay than that two-night corporate

stay. That flows also into international reservations. A high percentage

of the bookings we make in North America on the voice side are for the

rest of the world, not North America. Again, there is that level of

confidence about where you are staying. They are looking for advice

as much as anything else in making that booking. The rest of the bookings

are flowing nicely through electronic systems.

Q: How do you take what is perceived by consumers as an independent

property and bill it against mega-brands with 2,000 properties or 300,000

or more rooms worldwide?

Mantle: We have got to focus energies and efforts into reaching those

people looking for niche experiences. It is not marketing to the masses

of business travelers. It is marketing to the incentive market, the

upscale corporate small meetings market. You focus your resources on

finding those particular niches. And when we look at the vehicles to

do that, the Internet is still very prominent and will be an area where

we continue to spend dollars and efforts.

Andrew: Where we come into play as a collection and as a marketing

group is in the ability to provide an extension of sales and marketing

experts. For a lot of hotels, that is what you are looking for: the

international presence and a domestically broader set of programs with

which to work and share. Then there is that whole concept of shared

costs, to be able to aggregate some of the marketing, operational and

reservation aspects into a larger group, which is exactly what the bigger

chains are going form economies of scale. It is the ability to be able

to be yourself and have an independent identity but operate within a

larger environment with like-minded hotels.

You want to be on the Internet. You want to be successful. It's the

same model that is true in the legacy distribution world. Get yourself

in the right position on the GDS screens, and get yourself into the

right pricing level against your competition on the CRO screens. It

is a little more of an operational discipline there and a pricing discipline

to compensate for the branding side.

Sieburgh: I am a little concerned that we are talking about an era

where branding means everything. I think all of the statistics show

branding is starting to be less and less meaningful. If you look at

Priceline, it is a non-branded committed offer, and we get a lot of

traffic in there. There may be bands of brands, but brand concern is

dropping.

Q: Have you seen an evolution of the groups and meetings market? Do

you handle these reservations differently from transient sales and single

bookings?

Wilcott: Most definitely. As an independent, 65% of our business is

generated by the group meetings market, and 35% is generated by leisure.

The group consumer, the meeting planner, is really the individual that

we target on our Web site.

Q: How has the Internet affected the independent hotel's relationship

with travel agents?

Wilcott: The Internet has affected the travel agent's relationship

with the consumer more than it has with the property. There are consumers

that maybe used the travel agent before Priceline came around. But our

relationship with the travel agent has not been affected dramatically.

Mantle: We still view travel agents as a very important partner to

us. They have the capability of going on the Internet, pulling up information

they may not have on our properties, providing them with more resources

to sell the property and make another sale for themselves, as well.

We are not seeing the travel agents view our Internet sites in a negative

way. It is still a support tool for them.

Andrew: What we are seeing is incremental business. It is that 65%

to 70% of business that would have gone directly to property and is

now moving to the electronic environment. There is going to be an impact

there, but we are not seeing it now in any dramatic form.

GDS growth was bringing the hotel industry more into the electronic

environment in that first phase. With the whole airline commission cap,

there has been a surge toward hotels as a sensible and viable alternative

to replacing that revenue. We see more business from travel agents.

Q: How do fees get portioned out to these third-party providers?

Andrew: When the Internet started to excite people's

imagination in the industry, they felt, "Finally, no more distribution costs." But

the actual model has not changed at all. There is still

a huge desire to control distribution, and there

is still value to be added to the distribution chain.

Sieburgh: Like when computers came out, we thought there would be no

more paper. The model of how you sell a hotel room is shifting. There

may be no travel agent commission, but there are other ways of making

that money and selling that hotel room. You do not have to be specific

with rates because Prceline.com may make a margin on it or may subsidize

it.

Q: To what extent has the Internet leveled the playing field between

independent properties and the major chains?

Mantle: Independent properties have the same ability to hook into the

various search engines and other links out there. As long as we are

searching for those links, making sure we target those niches that our

customers look for, and finding those key words that people are going

to use, we can be just as proficient.

Holeman: We started three years ago with a Web site. We are going to

our third site this year. We are getting some incredible numbers. We

are projecting this month at 60,000 user session, not hits. That is

almost 2,000 a day, and for a 47-unit hotel property. It has definitely

leveled the playing field.

Tech Briefs

More Than Mints

In a survey of 272 hospitality units, Reed Business In-Stat Group found

that 73.9% of respondents are interested in adopting broadband access

for their guests. Of those, 82.3% plan to deploy systems within the

next two years. More than half (56.3%) of those interested anticipate

deploying high-speed Internet access to more than 50% of their rooms.

Three primary impediments to high-speed implementation identified by

hoteliers were cost (42%), lack of necessity (32%) and lack of technical

personnel to administer the system (19%). To recoup costs, the most

prevalent fee schedule emerging is a per-night charge averaging US$10.

Stay Connect

The 52% daily usage rates of in-room PCs (2% of guests connected laptops

to high-speed ports) tested in 800 rooms spurred Choice Hotels International,

Silver Spring, Maryland, to launch Stay Connect, Inc., a hospitality

services company created to provide to the lodging industry high-speed

Internet access for in-room PCs and laptops.

Stay Connect will provide a full hotel telecom solution, outfitting

all rooms with high-speed access and 30% of rooms with PCs. Hotels will

pay US$3 per day for each PC-equipped room, but will pay no up-front

installation costs. Participating hotels create their own models for

charging guests for the service.

"Choice Hotels is looking at this as potentially a huge opportunity," says

David Goldberg, vice president operations, Stay Connect.

Choice plans to offer the service to other hotels and chains, with

a goal of reaching 50,000 rooms by 2001.

Dual Access

The Hotel Phoenix, Singapore, introduced the Intelligent Key Card,

a smart card developed jointly by the Land Transport Authority (LTA)

of Singapore, the Singapore Tourism Board and the hotel. The key card

allows guests access to Singapore's public transportation, as well as

to their rooms. The launch of the cards coincides with the LTA's introduction

of contactless smart cards for public transportation systems.

Intelligent Key Cards have a stored value of $20 for payment of transportation

fares. The guest can claim a refund for any unused amounts from the

hotel's front desk upon check out.

Supplyline

• Bass Hotels & Resorts has created cross-selling

  clusters in Houston, Los Angeles and New York City using the Delphi

  Multi-Property Edition sales automation application by Newmarket

  International, Portsmouth, New Hampshire...

• Raffles International, Singapore, and Regal Knickerbocker

  Hotel, Chicago, signed subscription agreements with

  IXATA Group, San Diego, for their RFP Express service. Raffles also

  purchased a 10% stake in Singapore-based e-commerce provider IBEXCO...

• MICROS

  Systems, Columbia, Maryland, allied with Systems

  Union, UK, to offer the SunSystems back-office solution with the Micros

  hospitality management suite...

• Hotel Kämp,

  Helsinki, installed the back-office Integrated Management

  Information Solution by Scala Hospitality, Amersterdam...

• Hilton Hotels Corp., Beverly

  Hills, California, contracted with eKiosk.com, New

  Lenox, Illinois, to deploy high-speed public Internet kiosks in North

  American Hilton and Doubletree Hotels...

• The Regal Hotel Group, UK, chose Dallas-based

  Pegasus' Utell to provide marketing and reservations

  services...

• Inntopia.com, Stowe, Vermont, will be the

  first consumer site to use Resort Automation, Inc.

  software acquired in the Unexplored Travel Network, San Francisco,

  purchase of Resort Automation...

• Starwood Hotels & Resorts Worldwide,

  White Plains, New York, chose Ameranth Technology

  Systems, San Diego, to design a wireless housekeeping

  inspection tracking system... OpenGrid, Santa Clara, California,

  and WizCom, Parsippany, New Jersey, launched the OpenGrid solution,

  providing hotel bookings from wireless, Internet-enabled devices.