DALLAS—While hoteliers have been successful in implementing technology to simplify much of the hospitality experience, a byproduct of technological advancements has complicated the reservations process on the back end.
Because booking options abound, hotel central reservation systems are having difficulty keeping up. And what happens when a hotel CRS can’t keep up? Your hotel might not show up in a traveler’s search results.
According to Dallas-based Pegasus Solutions, look-to-book ratios—which measures the number of information requests made to a CRS for every actual conversion—are at record highs. In January, the look-to-book ratio measured by Pegasus was 4,500-to-1, meaning OTAs made 4,500 information requests for each booking processed.
The ratio has been growing at an average pace of 20% year over year and continues at a steady climb. In January 2010, Pegasus measured the look-to-book ratio at 3,800-to-1, a record-high at that time. The look-to-book ratio broke into the 4,000-to-1 range for the first time in September 2011.
David Sjolander, VP of product management, distribution, for Pegasus
“The direction we’re heading isn’t sustainable for the industry,” said David Sjolander, VP of product management, distribution, for Pegasus. “More and more, the CRS systems just can’t handle this traffic. They weren’t designed for it; hotels just keep throwing hardware at it.”
InterContinental Hotels Group is in the beginning stages of replacing its age-old CRS, Holidex, with a new system that will be better capable of handling the multitude of requests.
Sjolander said the ratio is only going to continue to rise. “We haven’t seen any signs yet that it could be slowing down,” he said.
Further complicating matters is the speed by which Internet users expect things to happen. If a website takes more than a few seconds to serve up results, consumers might move on. Serving up results on mobile devices adds an extra layer of complexity.
Breaking it down
To further illustrate look-to-book ratios, assume a traveler is looking to book a hotel room in Cleveland.
Before the Internet, when the majority of bookings were coming from the global distribution systems, travel agents would use a three-step process to shop hotels. First, they would ask if there is hotel availability for specific dates in Cleveland and the hotel CRS would reply with a range of rates. After the agent picked a hotel (called a single-availability search), the CRS would reply with specific rates and room types. Finally, the agent would perform a “rates rules” transaction and the hotel would get booked at a certain rate.
When the Internet came along, those three transactions were moved online, and online travel agents and travel providers continued the same process. Soon, however, that process wasn’t meeting expectations and OTAs wanted more than just a list of hotels during the first step; they wanted more specific information about rates and room types. Today, with just one “call” to a CRS, OTAs can get rates and availability for up to 200 hotels.
Meanwhile, after that one call is placed, most OTA sites are sending out their own crawlers in the background to offer the consumer comparison shopping. Results are served up with different bed sizes, different views, different breakfast options, etc. Sometimes, computer systems serve up errors or timeout, and the process has to be started all over again.
And that’s how the industry ended up with 4,500 information requests per booking.
“It’s a result of what happens behind the web pages,” Sjolander said. “All the different combinations are creating a challenge for the hotel because their CRS is getting pinged 4,500 times and some are not technically capable of handling that many requests.”
If the CRS can’t handle the amount of requests, it might not serve up all the options, meaning your hotel might not show up in the results.
“We throttle the shopping traffic when we start to see spikes,” Sjolander said. “When a hotel CRS starts to struggle to respond promptly, we slow down the traffic.”
Reducing the ratio
Travelers are increasingly looking for value in their travel experience and continue to do more shopping before booking, meaning the number of information requests is expected to continue rising, said Pegasus’ Julie Parodi, senior director of strategic planning and editor of The Pegasus View.
“Travelers are value searching and wanting to make sure they’re getting the most for their money. They’re not just picking the first thing they come across,” she said. “Shoppers want to know more information than ever and are accessing it from more sites than ever. The third-party sites are enabling this and more efficient systems are displaying this information.”
As a result, the technology providers involved are working to increase efficiencies. Requests can be cached so systems don’t time out as often, but that means providers and booking sites must rely on that cache to be accurate.
Most important, Sjolander said, is that travel suppliers and third-party intermediaries who are selling the rooms work more closely together to enable more efficient communication between systems. Today, many sites work on a “pull model,” where sites pull information from the hotel CRS.
The other end of that spectrum is a “push model,” where suppliers would push out rates and availability to the OTAs. Technology on either side isn’t prepared to handle a full-on push or pull model, Sjolander said. And hoteliers have long argued a push model would mean loss of control—and it would make price yielding more difficult—so they are hesitant to make that move.
There is momentum building around a “hybrid model” that would be beneficial to both sides, Sjolander said. The Hotel Electronic Distribution Network Association has formed a hotel connectivity working group to collaborate on new standards that would suggest all technology providers communicate in a more uniform language.
“The key thing is that the direction we’re heading isn’t sustainable for either hotel companies or distributors,” Sjolander said. “As we get better and more efficient at providing information, the look-to-book ratio doesn’t have to keep growing so quickly.”