Internet Marketing

VOLUME 4. Dec 20th 1999. On-Line Reservation Systems (OLRS)

A Marketing Channel.

By: Ian Clayton, AXSES SCL

Mail to: All BTA, BTA Partners PR and Advertrising Agents, BTA cliernts, Hotels and Travel operators etc. To unsubscribe simple reply to this email.

On-Line Reservation Systems (OLRS) - 1.

On-line Reservation Systems (OLRS) are Internet services that allow travelers to find whether accommodation is available for specific dates and to book it on the Net. There are a growing number of OLRS and several are now hoping to sign up business with BTA. BHTA, Treasures and the BTE. The level of service, ease of use, price and market exposure varies considerably between vendors and the pricing is changing constantly.

The next few chapters will explore the market issues and the pros and cons of these systems and will look at the major vendors and consider their solutions relative to market impact, cost and service. This issue reviews the market position of the Global Distribution Systems (GDS), and contemplates their future market role.

Global Distribution Systems:

The major market force in on-line travel bookings are currently the Global Distribution Systems (GDS) like Sabre, Amadeus, Worldspan and Gallileo etc. These systems were originally designed for Airline reservations but have extended to car rentals (40% of car rentals are on line with GDS), hotels (10%) and other services. The GDS attempts to book accommodations have not been hugely successful so far, but this is changing. To date hotel bookings accounts for only 10% of total GDS revenue. There are several reasons for this:

a. Complexity. It is far more complex to sell a hotel room than an airline seat. Hotels are not standard products and seek to differentiate themselves by providing highly personal and targeted advertising. The traditional GDS systems have not been able to accommodate the deep information needed.

b. Connectivity. The cost to maintain accurate on line availability of rooms has been prohibitive for the hotel or hotel groups. It requires a dedicated and technology savvy staff, who must pay constant attention to room inventories, rates and trade discounts etc.

c. Customs and Culture: Small hotels are reluctant to use computer reservation systems of any type.

d. Distribution. The majority of hotel rooms are sold locally, through travel agents and tour operators, or through direct repeat business. Hotels tend to target these key areas and rely largely on personal selling. The expectation is that most hotels will continue to be booked through these traditional channels for the near future.

Sabre, the worlds leader in airline bookings, is now aggressively organising for the hotel reservation business. Today Sabre has only 300 Caribbean Hotels in its world travel network. Early in the year 2000 Sabre will launch the new Internet Hotel Group starting with 5000 Caribbean Hotels. It expects to be the largest Internet booking system in the world, and will be used by many major players including America On-Line (AOL).. This group will also serve Sabre's consumer Travel sites: Travelocity, Preview and Priceline. Others may be added. The Internet Hotel Group will have a huge market exposure and a massive user base. Its service will be free of administration costs but will carry market commissions at 10-15% per booking.

Most Internet OLRS, by contrast, are smaller independent companies that sell technology to Destination Management Organisations (DMO), hotel associations, hotel chains and other service suppliers. The product, price and promotion offered by the OLRS vary considerably. Compared to giants like Sabre they typically have incomplete coverage and provide limited market exposure. One notable exception is Pegasus, with links to the GDS network of more than 800,000 travel agents as well as to Microsofts Expedia, Excite, USA Today and others; its market exposure is formidable. The pros and cons of these and other types of OLRS services will be explored in future issues.

Stay tuned for the next issue of OLRS, "Pegasus and Other OLRS"

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INTERNET MARKETING NEWSLETTERS.

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Internet Marketing -Intro mch 8
vol 1. Travel on net mch 12
vol 2a. Promo on the net mch 21
vol 2b. Features of the net mch 29
vol 2c. The new marketing mix Apr 8
vol 3. iNet Advertising-SE Apr20
vol3a. Keywords May 2
vol3b. Popularity May 9
vol3c. Java & Scripts May16
vol3d. Final word May24