What is the True Need for a Reservation System?

Feb 18, 2005
The hotel industry is based on selling rooms. In fact, room revenue is the number one profit contributor. To maximize such revenue, a hotelier should be able to understand the characteristics of his product (the room itself) and its markets (for instance, travel agents and corporate clients).

A hotel reservation management system can indeed help tremendously in managing room supply and demand. Nevertheless, many hoteliers have in the past decided not to use any reservation system, for reasons that should now be reconsidered, because of market dynamics, products and future trends.

The Market. As far as travelers are concerned, the hotel room market can be differentiated into two principal groups:

1. Leisure travelers; in general, these have adjustable traveling times and are price-sensitive.

2. Business travelers; they in general manifest the opposite characteristic from those of the leisure traveler, as well as others, such as making last-minute reservations, staying mostly on weekdays, and others.

However, reservations can be made both directly by the guest and through intermediaries. As a result, a hotel's market types would fall into categories of direct guests, travel agents and corporate clients.

The Product. The hotel room, as a product, has unique characteristics:

1. It may be conceived as a perishable product, meaning, a hotel room cannot be stored, unlike merchandise such as pens or cars. A room that is not sold today is revenue lost forever. The simple solution to acquire revenue is: offer a discounted rate just to keep the room occupied every day.

2. Fixed supply (relatively); room supply is not flexible enough to adjust to high demand. During a period of excess demand, a hotelier cannot simply add hotel rooms for a few days or weeks. The simple solution to acquire revenue: set higher rates for existing demand; or instead of turning over guests, hoteliers could encourage them to stay longer periods of time, when the hotel is not overbooked.

In short, nothing much can be done with the quantity of supply; outstanding hoteliers should however be able adjust the fixed supply to fit potential demand. Thus, the simple solution mentioned above has to be tailored to fit specific market segment behavior, meaning sell the room to the right market at the right time at the right rate. This implies that hoteliers have to be flexible (right time) in setting rates (the right rate) to fit a specific market (the right market). The fact is that a reservation system can allow a hotel to set its rates and allotment, adjusting it whenever necessary. This is the key answer to why hotels need a reservation management system.

Particularly applicable to the needs of travel agents and corporate clients, Pelican Hotel Reservation Management System has premiered Online Contracting, through which hotels may set room rates to specific target markets, anytime. Without a reservation system/online contracting, a hotel is constrained by a paper contract that has no flexibility for changing rates or control of room inventory. Since a hotel has to deal with a large volume of paper contracts, only several highly productive travel agents/corporate clients will be noticed by the hotel, whereas many other, smaller, potentially profitable one will be ignored (these could probably produce more!).

Moreover, with Pelican reservation system, all bookings are served on first come-first served basis. Not only does a hotelier gain control over room allotments, first come-first served means that a given room is actually sold. Pelican system has introduced instant confirmation for every reservation made online. As long as there are reservation requests, no rooms will be left empty. This is another reason why the reservation system is so powerful. There will be no more reservation requests waiting for confirmation stuck in the fax machine or stuffed in the mailbox!

Seize the opportunity of this newly attractive trend - another reason to embrace the reservation system. Many studies and major hotel chains have proved that travelers online bookings have in fact grown noticeably. Consider adopting this reservation system now, and bring your hotel on stream with the next trend in doing business!

With all the considerations detailed above, and others not yet mentioned here, Pelican Reservation management system is committed to bringing benefits of information technology to the hotel industry without any technology hassle. Pelican system is absolutely user-friendly!