How central reservation systems must evolve to compete with OTAs
The central reservation system (CRS) that hotels know today traces its history back to the 1950s, following a chance encounter between the CEO of American Airlines and a senior IBM sales representative. The earliest versions of a CRS debuted in the 1960s, and by the following decade, hotels had begun widely using that technology.
By the 1990s, the CRS had evolved into a complex, interconnected network used to manage rates and reservations across a multitude of channels. Starting in the 2000s, the creation of brand websites and online travel agencies (OTAs) offered new ways to sell direct to travelers. Hotels could distribute far and wide through a range of channels, opening doors to new markets around the world.
The tech boom hasn’t stopped, however. From metasearch sites to last-minute booking apps, the Internet age keeps inventing new distribution channels and booking methods. As hotels scramble to keep up with the ever-changing market, many of them have left their most profitable booking channel—their website—fall by the wayside.
But consumers have grown more technically savvy, and the market has shifted to favor third-party distributors that offer a better user experience. In fact, a growing percentage of consumers now deal exclusively with OTAs, and many hotels are seeing slimmer profit margins as their share of direct bookings shrink.
This over-reliance on distributors is becoming hard to ignore. Many hotels have realized that better optimizing their own websites is sound revenue strategy, but where to start?
It starts with rethinking the entire concept of a CRS.
From CRS to dynamic e-commerce platform
The technology that runs hotel websites and booking engines hasn’t changed much since the early 2000s. At present, it a disjointed and cumbersome system, functional in its ability to make reservations, but less so in its ability to compete with more advanced technologies.
One of the biggest issues is the isolation between the booking engine and hotel website. The CRS generally speaks only to the booking engine, and this segregation creates a less-than-ideal booking experience, one that is out of sync with how modern travelers book travel.
Today’s traveler visits at least 38 sites before booking, usually to compare price. But CRS systems provide room rates only after a traveler has put dates into the booking engine. In some cases, the website and booking engine are visually different, creating a clunky transition between the two. If users click away from the booking engine to browse the website again, their previous date inputs are lost and they have to restart their rate search again.
The central reservation system we know today needs to evolve. Hotels must treat the CRS, booking engine, and website as a singular e-commerce entity—a dynamic system designed not just to play the role of the reservationist, but also the role of the salesperson.
In short, the CRS of today must be conversion-driven.
The CRS as a conversion machine
When it comes to understanding conversions, the OTAs have truly outpaced hotels. But that is to be expected—these companies invest millions per year to understand how and why consumers buy online. In fact, Expedia carries out 1,500 A/B tests per year to optimize their site.
The takeaway for hotels: it’s all about user experience.
User experience extends far beyond the aesthetics of a website. Instead, it’s about creating a seamless experience, from researching a hotel to completing a booking. A new model of this system would better connect the CRS to the website directly, sending key information to the website that better enhances the researching and booking process.
In this model, the website is able to pull info directly from the CRS, allowing travelers to browse rates for specific dates without entering the booking engine. Travelers are also able to browse various rooms without having to re-enter dates.
Additionally, the CRS should send important information to both the website and booking engine that can help convince a traveler to book—or in industry parlance, “conversion drivers.” Based off simple marketing psychology principles, these tools are intended to influence consumer behavior in the following ways:
1. Create a sense of urgency—As many of the OTAs currently do, the CRS should tell the booking engine and website to inform travelers when a low number of rooms are remaining or when time is running low on special offers.
2. Show popularity—Travelers look for social proof when they book hotels; that’s why reviews are crucial. By integrating tools such as a TripAdvisor badge and a widget showing the number of recent bookings, you can prevent users from navigating away from the hotel site.
3. Offer complete price transparency—Many travelers already cross-check metasearch sites to compare pricing for hotels, so why not offer it directly on the hotel website? The modern CRS should be able to check prices across all their distribution channels. This also enables the hotel to offer an Automated Best Rate Guarantee whenever prices are lower elsewhere.
4. Streamlined booking process—Much of the success of “on-demand” travel companies such as Uber and HotelTonight stem from its booking process, which minimizes any friction the buyer may experience. A modern CRS also takes this into consideration, from the design of the booking engine to the number of options presented during booking. Easy payment is also important; minimizing form fields and integrating new forms of payment like Google Wallet or Apple Pay can help streamline bookings.
What’s next for the CRS
As technology continues to advance, hotels must look ahead and the CRS must continue to evolve to stay relevant. So what’s next for the central reservation system?
The key may be in personalization. Using big data and smart algorithms, technology could build robust profiles of consumers as they are accessing the website, which could allow the CRS to deliver unique one-to-one pricing to individual travelers. Expedia is already working on a similar technology, investing billions into “personalized travel graphs.”
The idea is in its nascency, but the building blocks for this are already there. OTAs and some CRS companies already have the ability to deliver geo-targeted pricing to consumers based on their location. What’s next is the ability to better understand customer preferences and desires in order to build special offers unique to each traveler.
This advanced method of content personalization is already being by Amazon and TripAdvisor to great effect, enabling them to tailor recommendations based on a customer’s previous browsing trends and spending habits. And by employing machine learning—as Netflix does with its movie recommendations—the system will only improve over time.
It’s tempting to imagine the possibility of a CRS as an automated travel agent of sorts, packaging a special offer of room, amenities, and ancillary services on demand as a customer browses the website. But for now at least, hotels must prioritize catching up to the OTAs when it comes to technology. Only then can the CRS take the next technological leap forward.