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Direct Booking 2.0: How Reservation Systems are Changing

December 18, 2018

 

 

The history of hotel bookings took a sharp when travel reservations went digital. Much of the friction was removed from the process. Suddenly you didn’t have to visit a travel agent, or make phone calls to airlines and hotels. As more and more properties came online, the options seemed limitless. But how were people supposed to sort through the possibilities and make timely decisions? Was Netscape really the best way to survey the landscape and make the best booking decisions? What about putting your credit card details into so many “independent” booking portals? How could you know that your sensitive information was safe?

 

The brilliance of the early OTA ­was that they delivered timely answers to these questions. You were able to search hotels and flights for any destination you wanted. You could look at photos, read reviews, and book travel plans immediately. You could trust a booking platform, and you didn’t have to enter your personal data in several different systems. You could write your own reviews, and grade hotels on the service they provide.

 

And for the hotelier, OTAs originally marketed themselves as last-minute room fillers. It was around the same time you could wait at an airport and get a cheap ticket just before a flight departed so travellers started looking for the bargains.

 

It was a dream solution, and it made perfect sense. OTAs quickly established themselves as a hugely profitable business, and hotels gained exposure by being part of the platform.

 

But as time went on, the relationship soured. Maybe it was the moment when Booking.com became more valuable than any hotel chain in the world. Gradually, hotels began to see that the exposure provided by OTAs was a thorn-covered rose. The price paid for those bookings increased, and it became impossible not to consider how a hotel’s bottom line would change if they owned the booking process, rather than farming it out to specialists.

 

Its funny that hotels embraced OTAs initially as a great way to solve the unused stock problem but it almost appears that the solution ended up being worse than the problem it was addressing. The challenge of course is to own the booking process whilst answering for some the main benefits that OTAs provide: Flexibility for guests, visibility for hotels, and digital security for everyone involved. A company as big as Marriott is in a position to take a robust stance on the direct booking issue, and that’s exactly what their new reservation system – which rolls out in 2019 – will try and do (online security notwithstanding).

 

At the Skift Global Forum in New York in October, 2018, Arne Sorenson discussed the process of transitioning Starwood properties into the Marriott reservation system. He also touched briefly on what the new reservation system will entail: namely the ability to search for specific room attributes, or what’s being called “attribute-based selling.” Essentially, guests can search for rooms by bed-type, layout, amenities, or even views. It’s conceivable that rooms could be selected based on their location within the hotel, such as choosing a room that’s close to the gym, or selecting rooms on a certain floor.

 

What this feature does, essentially, is bring the dynamic OTA search experience into the realm of direct booking. It also makes choosing a hotel room a little more like choosing an AirBnb property: The unit you see online is the one you get when you arrive at the hotel. No more discrepancy between the room in the photos and the real-life result.

 

When you’re Marriott, and you’ve just completed the largest acquisition in the history of hotels, you have the diversity of product (not to mention the investment capital) to create your own dynamic booking system. On its hotel development page, Marriott notes that 100% of its reservations are centrally processed. Details on the architecture of the new system have not been forthcoming, but it’s obviously a proprietary system, rather than a “plug-and-play” integration.

 

Smaller chains and independent hotels should not be deterred though from exploring reservation system upgrades of their own. Proprietary systems and central processing can be a mixed blessing for company like Marriott, as illustrated by the recent data breach, which saw credit card and passport details of 500 million Starwood guests exposed. Proprietary systems are also expensive to build and maintain, and they run a greater risk of becoming outdated.

 

There is a strong argument for staying away from in-house inventions (which could quickly become outdated) and continuing to use third-party software and cloud-based services. Most hotels use external payment processors like Cloudbeds or Little Hotelier, which can be integrated into proprietary web sites and property management systems. Over time, however, it’s easy to grow complacent about a direct booking system that can best be described as ‘adequate.’

 

Striving for a dynamic reservations experience

 

Although hotel bookings have changed drastically in recent years, best practices continue to be shaped. It may be unrealistic for most properties to “own” the entire reservation and payment process – but by re-exploring your current infrastructure around direct booking, and by making smart strategic decisions, your hotel can reduce dependency on OTAs, boost revenue, and open up new possibilities for loyalty. A big part of doing this, as Marriot demonstrates, is creating a dynamic booking experience that creates more options (i.e. attribute-based selling), provides more detail, and gives guests more of what they like about the OTA experience.

 

So, whilst the solution may have overtaken the problem, we should probably be thankful that the OTAs came along and challenged us to be better.

 

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