Marketing hotels using: global distribution systems: hotel operators can gain room sales via...

Ten years ago, when this article was first published, travel agents still received substantial commission income from airlines and booked hotel rooms primarily via telephone using information from published guides. At that time making hotel reservations electronically via global distribution

systems (GDSs) was a relatively new phenomenon that this article attempted to demystify with these simple suggestions: By creating and maintaining a proper listing on a GDS, hoteliers enable travel agents to make quicker and, in many cases, more-accurate reservations. The hotelier should make certain that the listing has the appropriate key words to indicate the hotel's location (e.g., airport, tourist attractions) and a proper description. A key to making sure the travel agent will rely on the GDS listing is to ensure that the rates offered electronically are complete, accurate, and the lowest available.

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Travel agents are changing the way they make hotel reservations. They are turning away from toll-free telephone numbers to booking hotel rooms directly through their computer systems. Travel agents' computer systems, which were referred to as computer reservation systems (CRSs) for years, are now called global distribution systems (GDSs) because of their "global" marketing reach.

Exhibit 1 shows the dramatic shift away from telephone sales and toward GDS bookings that occurred between 1991 and 1992. The primary benefits of electronic reservations for hotels are the cost and labor efficiencies achieved compared to using the telephone for reservations. Travel agents gain from the convenience and efficiency of "one stop shopping" for all their travel reservations. Guests benefit from the agents' ability to make instant hotel reservations in almost every country in the world.

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As recently as five years ago it was not essential for a hotel to be listed in a GDS. Today, however, computer reservation terminals are a travel agents lifeline, and hotels that want travel-agent business must be listed in a GDS. Understanding the electronic reservation process and using various GDS marketing features will allow hoteliers to market their products more effectively through those systems. This article explains the global distribution network (GDN) and offers specific suggestions that will enable a hotel to increase the marketing effectiveness of its GDS participation.

History and Evolution

In the late 1950s, airlines developed computer systems to manage their reservations. The early 1970s saw airline computer-reservation terminals installed in travel agencies to enable agents to book airline seats without using the telephone. Airlines expanded their reservation systems in the late 1970s to encompass hotel bookings and other travel-related services. During the 1980s that hotel-reservation function improved so dramatically that the system shifted from merely being a distribution channel to being an effective, efficient marketing tool. Today, 96 percent of all travel agencies in the United States have computer reservation terminals. In Europe and Asia the percentage of automated travel agencies varies greatly from country to country (see Exhibit 2).

As shown in Exhibit 3 (on the next page), the number of worldwide hotel reservations booked electronically exceeded 13 million in 1992 and that figure should pass 15.5 million in 1993. This sharp increase in electronic bookings is primarily due to enhancements that allow confirmation numbers to be generated in three to seven seconds. GDSs now reach more than 125 countries.

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For decades the telephone provided hotels with their primary reservations link. The telephone-based reservations model is familiar to generations of hotel operators. Guests either called a hotel directly or dialed a toll-free number at a central reservations office (CRO) to book a room. Travel agents typically called the central reservations office unless immediate confirmation was absolutely necessary; for example, at particularly high-demand locations the agent might have called the hotel directly.

Before a reservation is made, the guest or travel agent goes through a selection process to determine which hotel will best suit the guest's needs and budget. For years travel guides and indexes, such as the Mobil Travel Guide, Fodor's, the AAA TourBook, Hotel and Travel Index, and the OAG, have provided information for leisure guests, travel agencies, and corporate travelers. Such published sources effectively provide considerable information about hotels, but details involving rates and room types are intentionally limited since the guides are published relatively infrequently. (Even with Hotel and Travel Index's quarterly schedule, details on prices and room availability can be out of date.) As a result, a search for a hotel room can be concluded only by calling a property to determine rates, room types, and availability before an actual booking is made. This traditional three-step process of searching, calling, and booking is both time consuming and costly for everyone involved.

As the speed of GDS systems and the accuracy of hotel data have improved, travel agents are less inclined to consult the published guide books and indexes. Instead, they favor the fast search-and-selection process made possible by their computers. The behind-the-scenes electronic reservation path between the travel agent and hotel may be more complex than a telephone conversation, but it also reduces human error and is faster. In only a few seconds, information travels between the travel agency and the hotel via (1) the GDS, (2) an electronic or manual switch, and (3) the hotel's central reservations office.

Travel agents are now accustomed to booking airline and car-rental reservations electronically through sophisticated and accurate electronic reservation systems. Agencies are increasingly dependent on GDS computers to display hotel selections and reserve rooms instantly in any geographic location worldwide. The airline flight information provided by the GDS has been accurate and dependable for years. Now agents need the same accuracy and dependability from hotel descriptions, especially in room types and rate information.

As computerized hotel reservation processing has evolved over the past 20 years, great strides have been made toward perfecting automated reservation links between guests and travel agents on one side and individual hotels on the other. The most important advancement is the ability of each hotel to list all of its different room types, descriptions, rate categories (including negotiated rates, as described later), policies, and special packages in the GDS. The information is then available to hundreds of thousands of travel agents worldwide, as well as to individual consumers, all of whom are connected to one of several global distribution systems. Each GDS competes for its own network of travel-agency subscribers to gain a greater market share. GDS companies continually expand and enhance their travel products and services to make their systems more attractive.

For years hotels struggled to fit their numerous rates, varied room types, and multiple services into the highly standardized computer programs that were designed to process airline reservations. Hoteliers were frustrated that hotel descriptions, rates, and availability took up to 15 days to change and that the response time on a GDS inquiry took 10 to 60 seconds. Hotel marketing managers believed that business travelers were the only market segment reached through GDSs. Moreover, the trust between hotels and travel agents deteriorated as availability and room rates in the GDS differed from those quoted by reservationists answering the 800 line. Travel agents felt obligated to double-check electronic bookings by phone.

Today, GDSs have evolved from narrowly focused airline-distribution channels to generic broad-based travel-reservation systems. In 1990, most of the major GDSs dramatically improved their hotel programs and introduced the ability to carry negotiated rates, limitless rate categories, and multiple room types. GDSs' ability to give travel agents direct access to hotels' inventories has enabled agents to provide their clients with instant confirmation numbers. The response time for cach transaction is normally three to seven seconds for those hotels that are directly connected to a GDS. Interface capabilities are advancing rapidly, and GDSs will soon communicate directly with hotel-reservation systems (i.e., seamless connectivity), which will eliminate much of the rate and availability discrepancies. Some hotel chains already have seamless connectivity with the GDSs, and in the near future those interfaces will be commonplace.

Other integral parts of GDS evolution are visual-imaging programs and GDS applications in personal computers. The current visual imaging programs are Spectrum (Galileo/Apollo) and Jaguar (SabreVision). Those user-friendly programs allow hotels to market themselves to travel agents through the display of images and maps on the computer screen. The leisure market is gradually being addressed by global distribution networks. GDS applications in personal computers are enabling consumers to plan their travel and make reservations from their homes and offices, expanding the GDSs' marketing reach directly to the consumer.

How It Works

For a hotel to be available to all travel agents, it must be linked to every GDS. To simplify and speed the process, automatic switching methods such as WizCom's "ResAccess" and THISCO's (The Hotel Industry Switching Company) "Ultraswitch" were developed to connect hotels' central reservation offices directly to the GDSs. Travel agents benefit greatly from these switches because they give the agent access to updated availability information and instant confirmation numbers.

CROs and hotel reps. Central reservation offices and hotel representative companies provide the same basic services for hotels. Generally, they provide a central toll-free reservation service, GDS services, and other marketing services. If a guest calls the hotel directly, the hotel reservations office typically processes the reservation in-house. Otherwise the reservation comes through the CRO or hotel rep. By maintaining a comprehensive database of rates, availability, special packages, negotiated rates, and descriptions of each property, these reservation centers are able to confirm bookings instantly.

Exhibit 4 depicts the entire global distribution network, beginning with the guest who asks the travel agent to make travel arrangements. The reservation then passes through a GDS and on to the CRO (either directly or through a switching company), and then finally the reservation is passed to the property.

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Step by Step

Travel agents and hoteliers see hotels from very different perspectives. To market effectively to travel agents through computer systems, hoteliers must know how the agent sees their hotel.

1: Display availability. The travel agent first determines the location, date(s), and rate category (including negotiated rates) desired by the client. Frequently the request is for a specific chain or property. The travel agent uses additional qualifiers such as landmarks or nearby attractions to find hotels that meet the guest's needs. The use of qualifiers limits the number of hotels that appear on the travel agent's screen, making it extremely important for hotels to be as accurate and detailed in their indexing as possible. In some systems travel agents may use services and facilities as additional qualifiers for guests who have specific needs, such as a modern connection for a laptop computer.

The system then displays a list of hotels that match the agent's criteria and includes basic information about each property (see Exhibit 5). That stage is of critical importance for the hotel since agents determine which hotel(s) on the list to investigate further based only on the limited information displayed in that first inquiry. Location and rate are usually the most important criteria established by travel agents and their clients. A client may specifically require a corporate, government, or promotional rate, for example. If such a rate is displayed at this stage, a travel agent will be more likely to choose the hotel that displays the requested rate over another that doesn't. Special rates can attract the attention of travel agents and prompt them to look further into the hotel's detailed description. Some systems display rack rates in the initial availability listing and others display the lowest rate. It is important that hotels know which rates are displayed in which system at this initial stage so that they position themselves properly against their competition.

2: Hotel description. After the initial selection, the agent calls up a more-detailed description of the selected hotels and discusses the options with the client. The second screen shows exact rates, room types, facilities available, services offered, and reservation policies. The GDS allows the travel agent to choose other hotels if the detailed description does not meet the client's needs. The quality of information provided by the hotel will determine how "good" the hotel looks to the agent and the client. Like a paid advertisement or a listing in a published guidebook, this electronic brochure should be as clear and pleasing as possible to the travel agent.

3: Rate descriptions. In most systems, travel agents can display rate descriptions to determine any amenities that may be included in the rate as well as any special requirements. Actual rate codes (rack, corporate, weekend, convention, government, packages, etc.) are unique to the individual hotel and can be modified at any time. With the hotel rate description, the travel agent and the client have all the necessary information visible on the computer. That is in contrast to a telephone reservation during which details are described orally, allowing the possibility for errors and misunderstandings to occur.

4: The room sale. After the choice has been made, the travel agent books the room using just a few key strokes. Some hotels are listed as "linked" or "connected" with their CRO, indicating what is called a "Type A" link that provides an immediate confirmation number--a feature that is highly desirable to travel agents. Hotel CROs not directly connected with the GDS communicate via a series of manual requests and responses commonly referred to as queues, and confirmation can take from a few minutes to several hours. In many cases, the GDS provides the information necessary for the entire transaction, from search to selection to booking.

Working in Concert

The degree of trust among travel agents, hotels, GDSs, hotel representatives, and central reservations offices is a major concern. Travel agents want to take advantage of the convenience of the GDS to book hotel rooms but find it difficult to maintain the same level of confidence in the hotel portion of the GDS as they have in the airline function. The following typical situations are primary sources of distrust.

* A hotel appears unavailable in the system but rooms are actually available when the hotel is contacted directly;

* Lower rates than are shown on the GDS are quoted through the toll-free number or directly by the property;

* A reservation goes askew and no single reservationist can be held accountable;

* A computer booking is changed at check-in or over the telephone, interfering with payment of the agent's commission;

* Special requests made through the GDS are not honored; and

* It is difficult to identify the quality or "rating" of a hotel through the information given in the GDS.

Hotels that value travel agents' business can do much to build agents' trust and maximize their investment in global distribution networks. While a number of specific strategies are described later, the most important action hotels can take is to ensure that rates and availability shown on the GDS are complete, current, and accurate. Hotels that have historically provided complete and accurate information have reaped the benefit of travel agents' reliance and have profited from increased bookings.

A hotel must focus on three aspects to make the most of its investment in a GDS: awareness, commitment, and maintenance and enhancement.

(1) Awareness. Determine the number of bookings and revenues generated by travel agents. The role that travel agents play in selling hotel rooms varies from property to property. How important are travel agents to the economic success of each property? What rank does this source of business have relative to the hotel's other sources (e.g., group, convention, directly marketed transient)? A hotel's managers may determine that travel agents have not previously provided a significant portion of business, but they should recognize that this business could be lost entirely if the hotel is not connected with the global distribution network. Managers should also consider the speed with which electronic distribution is becoming a direct marketing channel for home use through PCs.

(2) Commitment. Foster team commitment for using global distribution networks. Thus far, we have focused on developing an awareness and understanding of the global distribution network and the players that make it work. However, commitment to electronic distribution from top management is a critical factor in successfully implementing change. General managers, sales managers, front-office managers, and reservation managers must be committed to the time and effort required to understand electronic distribution. At first, some of the technical elements of the systems and processes may be difficult to comprehend and appear overwhelming, but these systems are a critical link to the travel-agent market.

* Develop GDS policies and procedures. One department should have the responsibility of ensuring that descriptions, indexes, rates, and availability information are accurate and complete. Some hotels have developed policies to ensure that the rate in the GDS is the lowest rate available for the hotel.

* Incorporate a GDS plan into the overall marketing plan for the hotel. Target a desired percentage of electronic reservations among all reservations. Estimate increases in the number of corporations with negotiated rates. Set training plans so that the sales, marketing, front-desk, and reservations staffs can fully use electronic systems.

(3) Enhancing GDS data. Understand how travel agents use the GDS to book howl rooms. To maintain and enhance the information, hotel management must know how it is used.

* List all attractions, businesses, points of interest, and landmarks that attract business and leisure guests to the area as "qualifiers" in the GDS. One of the most important elements of the hotel description is the index of demand generators in the geographic location of the hotel. That index is a listing of nearby attractions, landmarks, and companies that travel agents use to locate the hotel. For example, an audit of Cornell University's teaching hotel, the Statler Hotel, revealed that the property is indexed under "Ithaca" but not "Cornell University." Not only should Cornell be included, but nearby corporations such as Borg Warner and NCR should be listed, as well as such attractions as Watkins Glen and Corning (both the company and the glass museum), which are no more than an hour away. Careful consideration of the actual reasons guests are attracted to the region is the key to successful indexing.

* Use availability options (status options) to maximize yield. If a hotel closes out availability for a particular date, it often is unwittingly closing out availability several days before and several days after the actual sell-out date. If one date is closed out during the period requested by a potential guest, the hotel will not appear on the initial availability screen at all. Therefore hotels should use minimum-stay requirements to maximize yield during peak periods. Say, for instance, that the travel agent is checking availability for July 1-9; if the hotel has closed out availability for July 5th the hotel will not be displayed.

On the other hand, if the hotel implements a minimum-stay requirement of, say, three nights starting on July 4, then occupancy on the fourth, fifth, and sixth should even out, and space would likely be available for the guests requesting an entire week.

* Effectively list rate categories and room types. List those room rates and types that are most commonly booked in the hotel, keeping in mind the steps that travel agents use to book a hotel room. Agents do nor spend a great deal of time searching unless the customer's requests are unusual. Agents commonly look for rack, corporate, government, senior-citizen, negotiated, promotional, contract, or weekend rates.

* Use negotiated rates. Negotiated rates can give hotels a competitive edge by allowing professionals instant and convenient access to contracted rates. Hotels using this feature get a higher priority from participating agencies, and such rates can be extremely effective in keeping a hotel or chain in the travel agent's mind. Loading negotiated rates can be as simple as calling the CRO or hotel rep with the rate along with the agency's unique identifying code (an ID code that allows a specific agency sole access to classified rates). For some systems this code is called a "pseudo city code," others use an agency identifier, and still others use an Arc/IATA number. Negotiated rates are carefully secured to the geographic location of the agency so that only agents at that particular location can use the contracted rates.

* Keep your hotel description (HOD) current. As described earlier, the hotel description provides the travel agent with vital information about the hotel, including location, facilities, services offered, amenities, booking and cancellation policies, distance from the airport, and points of interest (see Exhibit 6). Like a description in a published guidebook, the HOD is written in detail just once, then modified occasionally as changes occur in the hotel and in the GDS. A travel agent finds all the information needed to book a room at the hotel after a quick review of the hotel description. Some agents have suggested that including a third-party rating, such as stars, diamonds, or affiliations, would bolster their confidence in the selection.

The same basic information is contained in most hotel descriptions regardless of the GDS. However, the terminology used by each GDS may differ.

* Know your two-letter access code and include it on all promotional material.

* Know the "chain information" listed about your chain or representative company. The chain-information feature (known in different systems as DRS, HOD [keywords], GRS, AIS, or HOI) provides a detailed description about the hotel chain or the hotel-representative company contracted by the hotel. Occasionally this space is used to describe the properties in more detail. The CRO or representative company usually writes the "chain information" section, but individual hotels should be aware of its contents and provide feedback to the CRO or hotel representative.

* Get the hotel in the "system news. "Most GDSs offer a free daily marketplace-news listing. The likelihood of a hotel's being mentioned in the news system greatly increases if the hotel informs the GDS of major changes, special events, and other salient factors. Therefore, the hotel should communicate to its CRO or rep any news items it wishes to promote in the GDS, such as major changes, special events, and promotional rates.

* Consider using "sign-on" and point-of-sale advertising. Paid advertising is available on all domestic GDSs. When a travel agent signs-on to the computer for the first time each day, short ads are displayed on the screen. The names of these services differ from system to system, such as Front Page News, Sine On Message, PrimeSINE, Sine In Message, or Tag Lines. Hotels can use this opportunity to promote changes, special rates, and packages or to run contests encouraging travel agents to find out more about their chain. Point-of-sale advertising is a new development that allows the hotel to advertise when a particular destination is queried. The supplier is charged on a per-query basis.

Call to Action

No matter how beneficial global distribution is for all parties involved, reliable and complete information must be accessible to travel agents for GDSs to maintain their integrity. Maintaining accurate rates and current availability are key factors in making the entire system work properly. Seamless connectivity will one day give GDSs direct access to a hotel's PMS, ensuring complete and accurate "real time" information for travel agents. It will be several years before connectivity with PMSs is a widespread reality; however, the trend today is seamless connectivity between the CRO and the GDS. To maximize the GDSs' marketing effectiveness, hoteliers will want to update and enhance their electronic brochures just as they would other written collateral.

The following are some ways hotels can maximize bookings from the global distribution network:

* ensure that hotels are indexed by all possible reference points;

* use the availability (status) options to maximize yield;

* keep the hotel description (electronic brochure) current;

* keep packages simple for uncomplicated booking;

* put the hotel's two-letter access code on all advertising;

* use messaging and marketplace news to advertise;

* use the negotiated-rate feature for high-volume agencies and corporations; and

* keep in touch with and work with the CRO or hotel rep.

Hoteliers must always remember that much of the effectiveness of electronic distribution lies in the hotel's ability to use its GDS as a marketing tool.

Exhibit 2

Percentage of travel agencies using computer
reservation terminals, 1992

USA                   96%
France                85%
Italy                 85%
Scandinavia           61%
Spain                 53%
Germany               48%
United Kingdom        23%
Greece                16%
Korea                 98%
Australia             91%
Japan                 85%
Hong Kong             65%
Singapore             56%
Taiwan                50%
Malaysia              32%
Philippines           32%

Source: The Graycon Group, Inc.

EXHIBIT 6

Example of a hotel description as it appeared in
Amadeus Hotel listings in August 1993

GB LON    SX LONAWH AUDLEYS WOOD THISTLE BASINGSTOKE
    LOC   --ALTON ROAD
          BASINGSTOKE, HAMPS, RG25 2JT GREAT BRITAIN
          --PHONE 44 256 817555   FAX 44 256 817500
          --LHR 35/56KM LGW/104KM TAXI: GBP 40
          --CATEGORY: SUPERIOR FIRST
          --M3 JUNCTION 6 1.5 MILES FROM PROPERTY
          --** A MEMBER OF SUPRANATIONAL HOTELS **
    EXT   --EX/RA/RC   CRO
          --MAXIMUM 3 PERSONS PER ROOM
    POL   --CHECK IN 1200   CHECK OUT 1200
          --PETS ACCEPTED
          --CHILDREN 14 YEARS AND UNDER FREE IN PARENTS ROOM
          MAX 1 CHILD
          --CREDIT CARDS AMERICAN EXPRESS/DINERS CLUB/
          MASTERCARD/VISA/EN ROUTE/EUROCARD
    FAC   --LAUNDRY/LOUNGE/MEETING ROOMS/NON SMOKING ROOMS/
          RESTAURANT/SAFE DEPOSIT BOXES/TV/HANDICAP FAC-REQ/
          BABYSITTING REQUEST/ROOM SERVICE/CONCIERGE
          ROOMS 71  BUILT 1889  RENOVATED 1989
    DEP   --NO DEPOSIT
          --CREDIT CARD USED FOR GUARANTEE
          --IF GUARANTEED - CANCEL BY 1800 HRS DAY OF ARRIVAL
    GNT   --ARRIVALS AFTER 1800 HRS - CREDIT CARD OF TO AGENCY
    STA   --NO MINIMUM STAY REQUIRED
    OTH   --RATES BASED ON CURRENT CURRENCY EXCHANGE FACTOR
          CURRENCY FLUCTUATION MAY OCCUR
          --RATES DO NOT INCLUDE MEALS/TAXES ARE INCLUDED
    COR   --MUST SHOW CORPORATE ID AT CHECK IN
END OF DISPLAY

Glossary of Abbreviations and Terms

Global Distribution System (GDS)--The computer systems that travel agents use to book airline seats, rental cars, hotel rooms, and other travel reservations and services. The U.S. systems are: Apollo (COVIA), SABRE, System One, WORLDSPAN PARS, and WORLDSPAN Datas II. The Canadian system is Gemini; European systems are Amadeus and Galileo; and Asian systems include AXESS, Fantasia, and Abacus.

Central Reservation Office (CRO)--Chain hotels operate central reservation offices, which process both toll-free telephone reservations and electronic reservations. The CRO is the individual chain hotel's connection to the global distribution system.

Hotel Representative Company (Hotel Rep)--Firms that provide reservation and marketing services for independent hotels and hotel chains that do not operate their own CRO. The hotel rep is the hotel's link to die travel-agent computer systems.

Global Distribution Network (GDN)--The entire electronic travel network; it includes the travel agent, the GDS, the switching company, the CRO, and the individual hotel. Global distribution and electronic distribution are interchangeable.

Travel Agent--in addition to the well-known retail travel counselor, this designation also embraces a commercial travel agent or a corporate on-site travel department (in-plant).

About HEDNA

The Hotel Electronic Distribution Network Association (HEDNA) emerged in 1991 as the result of the hotel industry's need to represent itself within the computerized travel network. Its purpose is to promote and improve the use of travel-agent computer systems (e.g., Apollo and SABRE) as a means of increasing hotel reservations though automation. It is accomplishing this goal through educating its membership, developing new ideas, exchanging information, and providing support on operational issues. HEDNA's current membership represents hotels, global distribution systems (GDSs), hotel representative companies, switching companies, travel-agency consortia, and other players in the electronic distribution network.

HEDNA has emerged not only as a lobbying organization for the hotel industry but has also created an arena in which the major players cooperate in resolving issues and promoting electronic distribution systems.

HEDNA recognized that hotel personnel have, until now, been left out of the mainstream of GDS education. To remedy this situation, HEDNA, in conjunction with Cornell University, developed the Hotelier's GDS Educational Kit, which comprises a training manual, handouts, worksheets, and quizzes. The purpose of the kit is to provide an educational resource for hotel operations and sales personnel to better understand and use this valuable marketing tool and distribution channel. Hospitality educators, trade associations, travel-agency and other travel-industry audiences may also benefit from the information provided in the kit. The manual provides a general overview of the global distribution network, cost-benefit information, an explanation of the travel-agent booking process, suggestions for maintaining and modifying hotel information, and ways the front desk can successfully resolve any GDS booking discrepancies. The accompanying article covers some of the points explained in the detail in the manual.

Six Ways to Commit GDS Suicide

(1) Allocate only a limited number of rooms to the GDS inventory.

(2) Load only the highest rates into your GDS to cover the cost of electronic booking.

(3) Never revise your hotel's description.

(4) Depend on only one person to be completely responsible for the maintenance and updating of the GDS without teaching a second person.

(5) Never ask the CRO or rep company to assist you in your efforts to use the system fully.

(6) Avoid using status-availability options to maximize yield.

When this article was originally published in 1993, Rita Marie Emmer, who holds the M.P.S. degree from the Cornell University School of Hotel Administration, was global distribution system project coordinator at the Cornell hotel school; Chuck Tauck was a candidate for the M.P.S. degree at the Cornell University School of Hotel Administration; Richard G. Moore, M.B.A., was professor of management information systems; and Scott Wilkinson was with Micros Systems.

"Marketing Hotels Using Global Distribution Systems"

Revisited

A prescient 1993 article foresaw the issues underlying the revolution in electronic distribution, just before the internet took hold.

BY PETER O'CONNOR AND GABRIELE PICCOLI

Even though the authors of a 1993 Cornell Quarterly article did not know that the internet was about to become a factor in hotel distribution, they correctly foresaw the underlying trends of electronic distribution for hotel companies. Among their correct forecasts: the decline in transaction costs for hotel-room sales and the diminishing role of travel agents. What the authors could not have known was that web-based mega-agencies would themselves become a force in hotel distribution, rather than just conduits for the type! chains. The present-day distribution environment is far more complex than the situation just ten years ago. In particular, the web-based mega-agencies (such as Travelocity and Expedia) offer far more than just hotel rooms, thus encouraging customers to use their facilities to book the requisite services for an entire trite-and in the process bypass the hotels' own consumer orientated websites. In addition, the mega-agencies' rates are usually lower than those offered by the hotels on their own sites. The lessons today are the same as those ten years ago--that is, understand the distribution environment, develop a logical strategy to address that environment, and attract business with a clear pricing strategy and by knowing the customer.

Nominating our favorite article from the last ten years of the Cornell Quarterly required no hesitation. It was clearly Emmer, Tauck, Wilkinson, and Moore's December 1993 article entitled "Marketing Hotels Using Global Distribution Systems" (CHRAQ, Vol. 34, No. 6, pp. 80-89). That paper, which is reprinted on pages 94-104 in this issue, was far ahead of its time, correctly forecasting the effect that electronic distribution systems would have on our industry, explaining the implications of the developing technology for practicing managers, identifying the core issues that would encourage technology's adoption (and those that would limit that adoption), and presenting a call to action to the industry as to how to use global distribution systems (GDSs) for maximum benefit. Both of us still use the article as part of our classroom teaching despite its age, because it presents a clear overview of early hotel electronic distribution that is unparalleled elsewhere. In this commentary, we would like to revisit the ideas presented in the original article, update them to reflect the realities of a web-enabled hotel electronic-distribution environment, highlight some of the critical issues currently being Faced as to how the hotel product is being distributed, and speculate a little about the future of electronic distribution. Because electronic distribution continues to evolve, our commentary finishes with some concrete suggestions as how best to take advantage of its outstanding potential.

The Era of the GDS

The Emmer et al. article was written at an opportune time--the precise moment when GDSs were starting to become a mainstream channel of distribution for U.S. hoteliers (see Exhibit 1). The article introduced readers to the components of the developing technology (the GDSs themselves, hotel-representation companies, central reservation systems, and switch companies), as well as identified practical steps that hoteliers needed to take to get a higher number of bookings from the developing systems. Distribution using GDSs' promised benefits in terms of cost, efficiency, and market reach relative to traditional print- and telephone-based methods. Using a GDS, hoteliers could have access to a worldwide market of travel agents, all clamouring to sell hoteliers' products with little extra transaction cost beyond what the hotels would normally pay in commission charges. In addition to highlighting these benefits, the 1993 authors also presented strategies for getting the most out of the developing technology. As can be seen from the sidebar at the top of this page, much of this advice still holds true today.

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The authors were also on point when highlighting the limitations of the developing systems and the implications that these would have for hoteliers. Naturally, as technology has developed in the intervening period, many of these problems have been resolved. Database-structure problems that limited property descriptions and the number of rates that could be displayed have been corrected, the time delay between updating information and its appearance on the system has been shortened, and GDS to CRS connectivity has progressed substantially, so that today what appears on a travel agent's terminal is identical to what can be seen at the hotel chain's central reservations office. As a result, travel agents have developed much more trust in what is displayed on their terminals, and GDSs have evolved into a major source of business, particularly for hotels with primarily a business clientele. As can be seen from Exhibit 1, the number of bookings processed over the GDS systems has grown to unprecedented levels, and recent studies have highlighted how such systems are likely to remain important in the near future. (1)

Reminiscent of the accuracy with which Gordon Moore predicted the improvement in integrated-circuit technology (i.e., Moore's law) Emmer et al. were remarkably accurate in their forecasts. In addition to predicting the future importance of GDS channels, they also foresaw how travel agents would decline in importance as consumers started to use technology-based systems to make bookings for themselves from their home or office. However, as accurate as they were, the Emmer group's predictions were not perfect. One example is their forecast that visual-image software such as Spectrum or Jaguar (CD-ROM-based databases that allowed travel agents to see pictures, maps, and detailed marketing information about hotel properties) would become commonplace. Today few travel agents actually use such systems. However Emmer et al.'s prediction was wrong only in terms of the medium because it is now the web (and not a CD) that allows a potential customer to see detailed, rich, graphical information to improve the chances of purchase. What the authors did not foresee was the effect of the network revolution that started a few months after their article was published with the opening of the web for commercial transactions at the beginning of 1994.

The travel industry pioneered electronic commerce long before ecommerce, business to customer (B2C), and business to business (B2B) became popular buzzwords. The travel product has always been the ideal product for electronic sales--whether online or by telephone or (much earlier) telegraph. As an information-based item, travel bookings are intangible, heterogeneous, and fixed geographically, making the sale of travel highly dependent on getting the right information to potential customers at the appropriate stage in their purchase decision. Luckily, providing detailed, timely, and accurate information is precisely what computer networks and the internet were designed to do!

The long tradition of hospitality ecommerce notwithstanding, many incumbents in the travel-distribution landscape stumbled while trying to figure out how to react to this new technological, social, and commercial phenomenon. In doing so, they left the door open for fast-moving start-ups to enter the marketplace and revolutionize the way travel is being sold. In 2001 travel became the highest-grossing product sold online. (2) To update the comment made by Emmer et al.: "If a hotel wants to sell its rooms, then it has to take advantage of the opportunities presented by the growing range of online web-based channels."

The Dawn of the Net

in the late 1990s the word "disintermediation" was on everyone's lips. Because of the web, hotel companies had the potential to distribute directly to their customers, reducing or even eliminating the commission payments and transaction fees traditionally paid to intermediaries such as travel agents and the GDSs. This ability to interact directly gave hotel chains the opportunity to gather detailed data about their customers, potentially facilitating both database marketing and the development of sophisticated customer-relationship-management strategies. To take advantage of such opportunities, the majority of the hotel chains developed websites to try to sell directly to customers. For example, a 2000 study showed that over 95 percent of the major hotel brands operated consumer-oriented websites, providing facilities for potential customers to find information and make reservations online. (3) In general, the major chains have been successful at encouraging consumers to book on such sites, with figures of over 60 percent of online sales being achieved by the major chains, (4) although figures for independents and small chains are much lower. The increasing number of customers booking for themselves is placing increasing pressure on travel agents. Figures from the Travel Industry Association of America (TIAA) show that U.S. agents are finding it increasingly difficult to compete, with many going out of business as a result of displacement by online channels. (5) Simply put, as the web has "allowed every customer with an internet connection the ability to book her own hotel rooms, those travel agents whose only value add is access to availability information and booking tools have lost their raison d'etre. Those travel agents that will thrive in the internet age are those who provide value based on consultation and specialized knowledge of complex travel products.

However, many of the distribution-related benefits promised by the web are under threat. A large number of online intermediaries have developed and collectively are beginning to dominate the sale of travel online (see Exhibit 2). From the consumer's perspective, the appeal of such sites is clear. Travel products in general (and hotels in particular) are rarely bought in isolation. While supplier sites tend to focus on just a single product, the online mega-agencies offer consumers a one-stop travel-shopping experience, allowing them to book hotel, air, car rentals, and a large variety of other travel-related services in one seamless transaction. Online agencies also provide a wider choice of brands than does any individual supplier site, and research has shown that they tend to be competitive in terms of price. (6) Several have introduced innovative methods of operation (e.g., Priceline.com's name-your-own-price concept, Lastminute.com's sale of distressed inventory, and Ebay's auction of travel packages) that have attracted customers' attention and helped develop their reputation as the place to book travel. In the lucrative arena of business travel, the online mega-agencies provide corporate travel managers with enhanced levels of service in terms of travel-policy enforcement, expense reporting, and control. In both realms, the emergence of the merchant model has sent powerful shockwaves through the electronic-distribution chain. Hotel companies now face the threat of loss of rate control on a large scale. Thus, both leisure and business clients are being driven toward the major online intermediaries, replacing the promise of disintermediation with the threat of re-intermediation.

The result of these developments is a hotel electronic-distribution arena infinitely more complex than that discussed by Emmer et al. As can be seen from Exhibit 3, both the number of routes to the customers and interconnections among these routes have grown substantially. (A good overview of the current situation can be found in the article by Carroll and Siguaw in the previous issue of the Cornell Quarterly. (7)) Understanding how to distribute the hotel product over this complex network has become a challenge--one that must be faced by every hotelier. Particularly when considered together, electronic channels now make up a considerable proportion of the hotel-sales mix. A lack of awareness of how to manage these channels is resulting in lost opportunities, and, as we discuss below, several important issues need to be addressed to ensure that it is the hotel rather than the intermediary that benefits from the current growth in the sale of travel online. No longer can hotels sit back and wait for business to come to them. Active management of the distribution process has now become essential.

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Challenges with Hotel Distribution Today

As the distribution environment has become more complex, several issues have emerged that will affect the nature of the hotel business. Perhaps the most pressing is the growth in the power of the online mega-agencies mentioned above. Companies such as Expedia, Travelocity, Hotels.com, and others make a valuable contribution by providing their hotel partners with substantial numbers of bookings. However, as they have developed, such mega-agencies have gradually captured a considerable share of the hotel rooms sold online. As was discussed earlier, most offer one-stop-shopping services that are highly attractive to customers. For example, Expedia.com has as its objective to become the world's largest retailer of travel services by offering "everything in travel." Already it sells airline seats, car rentals, hotel rooms, condominiums, cruises, corporate travel services, ground transportation, insurance, show tickets, and lots more--and it is constantly expanding its portfolio of products in innovative ways. These online travel supermarkets are also currently experimenting with "dynamic packaging," taking advantage of their product portfolio and technological expertise to allow customers to interactively assemble their own made-to-measure travel packages. Individual supplier sites simply cannot compete in terms of breadth of service and depth of functionality. The mega-agencies are also investing millions in offline and online advertising to build brand awareness, and have to a large extent succeeded in convincing consumers that the best bargains and best service can be had on their sites. Thus, despite recent efforts by hotel companies, the mega-agencies' strategy of combining features, brand, and pricing is accelerating the trend towards re-intermediation, with the big winners in the growth of the sale of travel online likely to be the mega-agencies rather than the travel supplier.

Already there has been evidence of mega-agencies' taking advantage of their dominant market position to change the nature of supplier--intermediary relationship. For example, many have introduced the merchant model--a business process whereby the intermediary negotiates allocations of inventory at net rates with suppliers and subsequently sells these rooms to customers at a mark up, taking as profit the difference between the rate negotiated and the price at which it sells the room online. (8) While this might look like a good deal for the hotel (no commissions or other transaction costs combined with the ability to set net rates to reflect the minimum amount it is prepared to accept for a room on a particular night), the negotiating power of the online merchants means that they can demand net rates lower than what the hotel might freely wish to give. By careful management of their margin, the intermediaries can then sell such rooms at highly competitive prices--in many cases cheaper than the rates being offered on the hotel's own website! (O'Connor's study of online pricing found that the mega-agencies frequently offered the cheapest prices for hotel rooms, particularly at the upper end of the market. (9) Of course, hotels are always free to refuse to participate, but, in classic fashion, nobody wants to be the first to leave the online agencies and thereby risk losing out on large numbers of potential (if low-yield) bookings. Recently, and perhaps belatedly, the industry has started to react to this threat on both an individual and a collective basis. Many of the larger chains have begun to actively discourage their properties and franchisees from giving low rates to the online merchants, and have started to promise consumers the lowest price on their own branded website. (10) In addition, the hotel chains have begun acting together to try to fight the dominant power of the mega-agencies and regain control over electronic distribution. Following a similar strategy to Orbitz in the airline sector, Hilton, Hyatt, InterContinental, Marriott, and Starwood have joined technology provider Pegasus to establish TravelWeb, in a bid to wrest control of online pricing and merchant-model arrangements back from the online intermediaries. (A similar initiative--WorldRes--is underway in Europe.) By facilitating direct connectivity to multiple small online channels at a reasonable cost, the chains hope to reduce the power of the large mega-agencies and help hotels achieve a wider distribution of their product.

The ease with which consumers can find information has also made pricing over multiple channels problematic. There is evidence that customers search several online channels before committing to making a reservation. (11) In addition, a variety of online tools (for example, Sidestep, TravelAxe, and Kelkoo) are also available to help travel buyers comparison shop among multiple sites with practically a single click. Such price transparency places downward pressure on rates, even though research has shown that this type of reactive discounting rarely results in higher volumes of bookings in the long term. (12)

The downward rate spiral is amplified by the business practices of the online intermediaries, who employ "market managers" to encourage hotels to further reduce their negotiated rate in return for better placement on hotel listings. Consumers are also learning that they can often find better prices by waiting until the last minute to make their booking. In fact there is some evidence that this is leading to channel cannibalization. While the web promised incremental business by allowing hotels to reach customers whom they could otherwise not have attracted, in practice many of the customers who book online would have booked the hotel in any case. The difference is, however, that the price that those customers have obtained online results in a far lower yield for the hotel than if the booking had been made in the "normal" fashion. Even worse, some of the more street-smart customers are booking rooms far in advance, monitoring the online channels for better prices, and, when possible, cancelling their original reservation to rebook at a cheaper rate closer to the arrival date. Failure to discourage or prevent such practices could potentially have a drastic effect on profitability. (13)

Ownership of the customer is also an issue that hotelier urgently need to address. As has been discussed above, the online intermediaries are attractive to consumers as a result of their convenience, their rich feature set, and their competitive prices. Consumers booking on these sites are nearly always likely to find a product that meets their needs. In most cases, the mega-agencies offer them choices, in contrast to hotel chains' sites that may not have a property in the desired location or may be booked for the dates requested. Given such a performance, where are customers likely to look the next time they want to make a booking? In addition, many of the online agencies are trying to enhance brand loyalty by developing customer-relationship-management solutions that recognize frequent and high-value customers and use electronic-marketing techniques to develop a closer relationship with those customers. While hotel companies may be investing millions developing and enhancing their brands, is that money well spent if consumers end up using the online intermediary as the solution to their travel booking needs?

Call to Action

The 1993 article presented an important call to action to hotels to start using the developing GDSs to sell rooms lest they be put out of business by those competitors that do so. Today the situation has changed. Not only does a hotelier face competition from other hotels as to which room will be bought by the consumer, hotel brands also face competition from the online intermediaries as to how that room will be sold. Given all the benefits that such sites offer the travel purchaser, hotels urgently need to take action to regain control over the distribution of their product. As interested industry observers, we would suggest that hoteliers concentrate on the following:

* Develop an understanding of the electronic-distribution environment. It is only by being aware of the options available and the implications of using or not using each one that hoteliers can start to develop an effective distribution strategy. Different channels serve different customers and are best suited for use at different times and with different objectives. Which online intermediaries are most important in the geographical markets that you actively target? What type of business model do those intermediaries use? What are the costs (initial, periodic, and transaction) associated with using each channel? Does using the channel tie you into a room allocation or does it operate on a free-sale basis? Does the online intermediary provide an electronic interface with your existing reservation system to obtain inventory and rates, or must you manage them manually using an extranet-based interface? These are just some of the key questions that must be answered. (14)

* Develop a clear and logical electronic-distribution strategy. Currently most hotels use a shelf-space approach to electronic distribution--presuming that being present on as many channels as possible is the best position. However, this tactic largely ignores the issue of complexity. As the number of channels increases, the cost of the infrastructure necessary to support those channels increases, and inventory and rate have to be managed in multiple locations, again leading to higher costs. (15) Instead of trying to be everywhere, select those channels with the most potential for addressing your markets, and work actively and closely with the chosen vendors to try to maximize exposure on these channels. Distribution strategy is as much about deciding where not to be and who not to serve as it is about seeking broad representation and setting prices. Once the strategy has been set, make sure everyone in your company is on board so that everyone speaks with a unified voice and implements the same policies. Finally, re-evaluate your strategy periodically in light of developments in technology and the fast pace of change in the electronic-distribution arena. Set your strategy, but be prepared to change when the environment changes.

* Develop a comprehensive pricing strategy. Two approaches are common. One approach relates the cost of using the channel to the rates shown there--with lower prices in low-cost channels and higher prices on high-cost ones. (Tools such as TravelClick's RateView allow you to monitor multiple channels to ensure that the strategy is being implemented effectively.) The other approach focuses on maintaining price consistency across different channels so that irrespective of where the booking is made, the customer always sees the same price. In either case, the objective is to divert the customer away from the mega-agencies. Take particular care to develop fences in your rates to prevent the channel-cannibalization problem mentioned earlier. Either by placing restrictions or by creating packages you need to limit the comparability of your product. The web is great at efficient comparison of similar things, but breaks down quickly as the product becomes more complex.

* Drive business to your own branded website. Although the mega-agencies can deliver volume in the short run, their price-driven customers are fickle and can be diverted by competitors offering slightly lower rates. Moreover, mega-agencies' adoption of the merchant model means that the cost of distribution over such channels is comparatively high. Instead you should encourage customers to book through your own branded website--a difficult proposition. As we speak, the mega-agencies continue to invest heavily to ensure that any search for travel online ends up on their websites. In fact, it can be quite illuminating to pretend to be a customer and try to find your own hotel online, as invariably you will end up on an online intermediary's site. While simple steps such as listing your website's address on all promotional material and correspondence, developing reciprocal links with selected websites, or bidding on highly specific keywords can be effective in making some customers aware of your site's existence, the biggest potential lies in taking advantage of the key facet of the hospitality business--a closeness with the customer that allows hoteliers to develop a real and lasting relationship. Hospitality operators' ability to know the customer in a way that the online intermediary cannot gives the hoteliers an advantage on which they must not fail to capitalize.

* Know the customer. More than any other medium that has gone before, the internet fosters communication and dialog. Thus, the web provides operators with the potential to develop a personal relationship with each individual customer, a relationship that lasts over multiple transactions and is beneficial for both parties. By adopting sophisticated customer-relationship-management techniques, operators have the opportunity to increase the complexity of the product--through personalization, for example--and combat the ease with which a meaningful web-based comparison can be made. By doing so, operators can lock in loyal customers who are uninterested in shopping and reduce the effectiveness of mega-agencies. A focus on quality, not only quantity, of market share, and the judicious use of loyalty programs, can help in this regard.

In summary, the key success factor for using electronic distribution channels today is active management. The GDSs discussed by the authors of the 1993 article have not gone away. Instead they have become more powerful and have been supplemented by a highly complex series of web-based channels. This network of electronic-distribution channels (shown in Exhibit 3) provides an outstanding opportunity for those who manage it effectively, but also danger for those who fail to recognize its importance or do not invest the time and effort needed to take advantage of its potential. Complacency in the past has resulted in a situation where hotels collectively have come close in losing control over the sale of their product in the online environment. Comprehensive, well designed, and relentlessly implemented strategies will curtail this problem, help operators regain control over inventory and price, and benefit from the potential of direct sales over the web.

EXHIBIT 2

Leading online agencies, 2002

Expedia                          $4,860
Travelocity                      $3,240
Orbitz                           $2,430
Priceline                        $1,080
Hotels.com                         $810
Hotwire                            $810
WorldRes                           $270
Lastminute.com                     $476
Ebookers                           $431

Note: Agencies arrayed by gross booking revenue in millions of U.S.
dollars.

Sources: Compiled from multiple sources, including: C. Marcussen,
"Trends in the U.S. Online-travel Market 2000-2002," Centre for
Regional and Tourism Research, Bornholm, Denmark, 2003; and O. Jager,
"European Online Travel Marketplace: Focus on France," PhoCusWright,
2003.

(1) Peter O'Connor and Andrew J. Frew, "The Future of Hotel Electronic Distribution: Expert-Industry Perspectives," Cornell Hotel and Restaurant Administration Quarterly, Vol. 43, No. 3 (2002), pp. 33-45.

(2) D. Buhalis, eTourism: Information Technology for Strategic Tourism Management (Harlow, UK: Prentice Hall, 2003).

(3) P. O'Connor, "On-line Pricing: An Analysis of Hotel Company Practices," Cornell Hotel and Restaurant Administration Quarterly, Vol. 44, No. 1 (2003), pp. 88-96.

(4) Market Wire, "Brand Sites Produce 67% of All Major Hotel Chain Internet Reservations," Market Wire, Incorporated, October 9, 2003.

(5) Travel Industry Association of America, "Travel Agencies Still Preferred Source for Travel Information" (press release viewed in 1998), www.tia.org/research/summinternet 97.asp.

(6) O'Connor, op. cit.

(7) See: B. Carroll and J. Siguaw, "The Evolution of Electronic Distribution: Effects of Hotels and Intermediaries," Cornell Hotel and Restaurant Administration Quarterly, Vol. 44, No. 4 (August 2003), pp. 38-50.

(8) P. O'Connor, "Online Intermediaries--Revolutionizing Travel Distribution," Travel & Tourism Analyst, Vol. 1 (2003), pp. 54-78.

(9) O'Connor, pp. 88-96.

(10) The structure of the hotel industry though makes concerted action difficult. See: G. Piccoli, P. O'Connor, C. Capaccioli, and R. Alvarez, "Customer-relationship Management--A Driver for Change in the Structure of the U.S. Lodging Industry," Cornell Hotel and Restaurant Administration Quarterly Vol. 44, No. 4 (August 2003), pp. 61-74.

(11) See: Forrester Research, "Travel North America Consumer Technographics Survey & Data" (Cambridge, MA: Forrester Research, August 2000).

(12) C. Enz, "Hotel Pricing in a Networked World," Cornell Hotel and Restaurant Administration Quarterly, Vol. 44, No. 1 (February 2003), pp. 4 5.

(13) Ibid.

(14) O'Connor & Frew, op. cit.

(15) D. Connolly, "Understanding Information Technology Investment Decision Making in the Context of Hotel Global Distribution Systems: A Multiple-Case Study," Hotel and Tourism Management, Blacksburg, Virginia, 1999.

GDSs: Still in the Picture

As discussed in the accompanying article, GDSs remain an important source of business for many hotels. Many of the points that Emmer et al. stressed are worth revisiting, as they still hold true.

(1) Understand how travel agents use the GDSs to book hotel rooms. Having a good knowledge of how travel agents work helps hoteliers to include the right type of information and rates on their GDS listing. Yet many hotels continue to use a standard, one-size-fits-all approach on all of their electronic-distribution channels. Travel professionals need different information in a different format than do consumers. Remember one simple fact: Making the travel agent's job easier has just one effect--more bookings!

(2) List all attractions, points of interest, and landmarks that attract business and leisure guests as "qualifiers." This point seems self evident, yet our distribution audits consistently find obvious items missing. In many cases, the problem is caused by hotel staff members' being too close to the situation and thinking that something important is too well known to be included. A flesh pair of eyes is often helpful. The key question here is, "What causes customers to book my hotel?"

(3) Use availability options to maximize yield. The advice given in the 1993 article about closing out the GDS is particularly relevant in this era of automated revenue-management systems. Unlike voice channels, the GDSs do not provide the opportunity to explain to the customer that just a single night of a proposed five-night stay is unavailable. Your hotel is simply not displayed if just one night of the dates requested is closed out. Thus, offering availability options has an effect on days before and afterwards. Using a minimum length of stay, or simply presenting a higher rate for the busy night, will have a better effect on both occupancy and profitability.

(4) Effectively list rate categories and room types. Restrictions on both the number of rates displayed and the content of rare description have been almost eliminated. Yet many properties continue to use cryptic rare codes and truncated textual descriptions, out of habit rather than necessity. Rewriting your descriptions in clear, concise, sales-oriented language can have a positive effect on sales, as it is greatly appreciated by travel agents.

(5) Use negotiated rates. Many hoteliers resist offering negotiated rates, citing the loss of revenue that results from the cheaper prices. Yet, when the yield from a negotiated rate is compared with that from a room sold using the merchant model (as discussed in the accompanying article) or through a discount website, it can look positively attractive. Consider expanding your use of negotiated rates to reward agencies that deliver consistent business, monitoring their performance using services such as TravelClick's HotelIntelligence reports.

(6) Keep your hotel description current. While old rates and descriptions are continuously replaced by new rates, many hotels forget about their HOD data. Once again, distribution audits often reveal these data to be incomplete, inaccurate, and out of dare. Remember this is your main opportunity to convince the travel agent that yours is the right hotel for their client. When was the last time you revised your HOD to take changes in your product into account?

(7) Include your two-letter code on all promotional material. Any material destined for the travel trade needs to list the hotel's GDS code prominently. Remember the easier you make it for travel agents, the more likely they are to book your property.

(8) Consider GDS advertising. Paid advertising such as sign-on messages, PUS messages, and broadcast messages have been shown to be effective at generating business. For example, a recent study by NFO Hog Research shows that over 50 percent of all travel agents who received GDS advertising made a booking at a hotel in the three subsequent months. (1)

Given their ability to be precisely targeted, and noting travel agents' continuing role in influencing the purchase decision, investing in such a campaign can often be an effective way of increasing business from the GDS.--P.O'C. and G.P.

(1) "NFO Plog Report Survey on Travel Agent GDS Usage," EyeForTravel newsdesk, 10/9/2003.

Peter O'Connor, Ph.D., is an associate professor at IMHI (Cornell ESSEC, oconnor@essec.fr).

Gabriele Piccoli, Ph.D., is an assistant professor at the Cornell University School of Hotel Administration (gp45@cornell.edu).