Introduction
As info-communication technology (ICT) progresses rapidly over the past ten years, the use of it has fast becoming a necessity, more than a convenient tool. This is especially true and crucial for business organizations where business development and ICT innovation are intertwined and work best hand in hand. It is popularly believed that organizations must constantly change and adapt to ongoing environmental changes, in order to improve the performance of the organization by reducing costs and increasing capabilities. Most businesses or industries nowadays are embracing ICT by making the most out of the benefits attached and working around and improving on its drawbacks. For the travel sector such as air ticketing and accomodation reservation processes, the focus has shifted to the emergence of new ways of doing business through transaction brokers online.
Basically, brokers bring buyers and sellers together and facilitate online transactions. They play a common role in business-to-business (B2B), business-to-consumer (B2C) or consumer-to-consumer (C2C) markets. Usually a broker charges a fee or commission for each transaction it makes possible. Fees or commission vary according to the type of transaction or what has been agreed between the broker and principle. Various brokerage models are used by different business organizations. A transaction broker is one such model that provides a third-party payment mechanism for buyers and sellers to settle a transaction. This form of brokerage model has been gaining popularity in the tourism-accommodation sector because it improves efficiencies, reduce administrative and commission costs paid to intermediaries such as travel agencies by going ‘direct’ to customers. Customers today get to enjoy more options and benefits from revolutionized hotel room reservation processes made effortless by transaction brokers such as http://www.accomline.com/, http://www.booking.com/, and http://www.parkroyalhotels.com/.
Main Limitations of Traditional Methods for Hotel Room Reservation
Hotel sales offices or intermediaries such as travel agencies do not operate on a 24hr basis.
Confirmation response time is slower because of the time difference between countries and cities and multiple layers of communication.
Deposit payment must be made in person at the hotel or agency or off-site via credit card through credit card authorization form. Payment through credit card authorization form also pose security issues as full credit card holder details are disclosed to a third party.
Features of Transaction Brokers for Hotel Room Reservation
1. 24 x 7 Real time solution
With internet, hotel room reservation can be confirmed within seconds from anywhere in the world and at anytime of the day.
2. Cheaper prices
Service fees charged by intermediaries are removed.
3. Higher transparency in the market
Customers are able to easily and conveniently make comparisons across various brokerage websites before making their decision.
4. Direct inventory access
Besides providing customers direct access to hotels’ inventory, hotels can also decide on the inventory allocation and customized rates to account for seasonal variations. Hotels can implement online strategies such as festive promotions and limited online offers to generate more sales at minimal marketing or advertising costs.
5. Enhance customer booking experience
Create better access for customers to hotel information for customers such as hotel description, amenities, location, photos etc. Value-added services such as availability calendar which enables customers to check for room vacancies for selected dates, book a car hire or land package, purchase of travel insurance and provide rate break down so customers are aware of how much they are paying for each service at the time of reservation. Also enables customers to register an account for ease or speed up future reservation process and receive regular updates of various hotel promotions from the transaction broker.
6. Multi-lingual and multi-currency solution
Prevent loss of sales due to currency conversion issues or language barriers by displaying website information, reservation pages in major international languages and allow multi-currency payment processing (e.g. customers can reserve rooms in their local language and pay in their local currency).
7. Real time and secured online payment solution through credit cards
This mode of payment is constantly improving in terms of security which gives consumers the peace of mind.
Comparison
(Reference: Accomline.com)
PAST | PRESENT | |
1 – Booking | To make a hotel room reservation, one would have to make a phone call (long-distance), write (via snail mail), visit the hotel (personally), or through a travel agency. Cons Long-distance (or international) phone calls were relatively expensive as technology was scarce and undeveloped. It would also be impractical to take a trip down to the hotel personally and book a room over the counter as room availability may be a problem. Moreover, if one were to go on an overseas trip, it would be more logical to make a reservation in advance, rather than booking over the counter. Booking hotel rooms through a travel agency may incur a middle-man fee as well. | To make a hotel room reservation, one can easily reserve a room (based on room availability information provided on the website) at a click of the mouse. Pros Time and money is not wasted on making phone calls to the hotel to check on room availability. Online service is 24/7 round the clock. |
2 - Hotel Details | To compare the facilities and amenities of various hotels, one would have to call up the respective and individual hotels to inquire. One could also collect brochures/magazines to get feedbacks. Cons Again, time is wasted on doing physical comparisons. Pros One has deeper impression of the hotel judging by its promotional flyers – design, style, wordings, colours, etc. | To compare the facilities and amenities of various hotels, one could easily do the comparison via search engines (I.e Google, Yahoo!) and the existence of transaction brokers (see definition below) also provide greater help in comparing hotel room rates and the standards of the hotels (I.e rated by stars. E.g 5-star). Pros Wider scope of comparison is available and given the many choices, consumers are spoilt for choices. Cons It can get over-powering as too much information is being fed to the consumers. |
3 - Payment | In order to secure reservations, consumers have to pay a sum of fixed deposit – either over the phone or the counter. Given that the consumer chooses the former, credit card will be the main paying platform. Hence fraudulent acts may occur as the operators/hotel staffs may have the tendency to misuse clients’ credit cards. Cons Insecurities result from the method of payment and hence create paranoia and distrust between the business and consumers. | In order to secure reservations, consumers have to make the full payment – either over the phone, counter, or hotel’s virtual store front or transaction brokers if the booking is made via the internet. Fraud may be reduced as security is enhanced when making credit card payment.  |
4 – Cancellation | For cancellations, consumers would need to phone, write or visit the hotel (or travel agency). It is extremely time consuming as all the above-mentioned methods are slow and not cost-efficient. By phone: During peak hours, operators may not answer your calls. By snail mail: It takes approximately few working days, depending on the location. By visit: Not practical and time consuming. | Cancellation is made as easy as abc, hassle-free steps to cancel your reservations.  Cons The downside of this convenience is that anyone who has the booking number will be able to make amendments. |
5 – Member points (Accomline) | NA | Able to collect member dollars each time you book from the same transaction broker. It allows you to redeem the dollars with monetary value. In a nutshell, it means you are able to use that amount the next time you book a hotel via the same source – sort of an accumulated discount. (Concept is the same as SIA's Krisflyer points.)  Internet rates are also relatively cheaper as compared to the rates when you book over the counter as it requires lower administrative costs when transactions are made over the internet. |
Case Study 1
Booking.com is one of the world's leading online hotel reservations agencies factoring by number of rooms per night sold. It attracts over 30 million visitors each month via the Internet from both leisure and business markets worldwide. The Booking.com website is available in 37 languages and offers over 100,000 hotels in 89 countries. The website uses secure reservation system such that the credit card and personal information are encrypted.
It provides an online platform where hotels (including all types of temporary accommodation) can advertise their rooms for reservation, and visitors can make reservations through the website. By making a reservation through Booking.com, consumer is actually booking with the hotel. From the point at which consumer make reservation, Booking.com act solely as an intermediary between the consumer and the hotel, transmitting the details of the consumer’s reservation to the relevant hotel and sending his/her a confirmation email for and on behalf of the hotel. Hotels require credit card details in order to guarantee consumer’s reservation. As such, Booking.com will send consumer’s credit card information directly to the hotel at which the consumer booking is made and Booking.com may verify (i.e. pre-authorize) consumer’s credit card as well. In order to safeguard and encrypt consumer’s credit card information when in transit to Booking.com, they use the "Secure Socket Layer (SSL)" technology for their services.
Besides making reservation through the online system with Booking.com, Booking.com has liaised with Apple Inc and provide a service to users of iPhone, iPod Touch and iPad. Consumers can make reservations through this application and book hotel room using this application downloaded through the App store of Apple Inc or through Booking.com itself. In addition, Booking.com is a business partner with Google providing panoramic views from various positions along many streets around the hotels through Google Maps.
Case Study 2
Large hotel chains typically have direct connections to the Global Distribution Systems (GDS) which provide hotel information directly to the hundreds of thousands of travel agents that align themselves with one of these systems. Individual hotels and small hotel chains often cannot afford the expense of these direct connections and turn to other companies to provide the connections. For example, Park Royal Hotels is currently operating under Global Distribution System (GDS) Chain.
Virtual Storefront like Park Royal Hotels launched a new central reservations and distribution system named PANTHER. This system allows a high level of data flow, which provide a single and efficient point of inventory control across all Park Royal hotel properties. This also enable them to gain direct business at a lower transaction cost and prevent transaction duplication across all reservation channels and ensure equal rates and inventory. The system will also streamline the database of the relationship management between consumers and the hotel to enable more personal touches towards consumer's hotel experience.
Conclusion
In a nutshell, as technology emerges, drawbacks and disadvantages are sure to arise, but the ever-changing world of technology pushes things forward and solutions are developed. For the consumer, it is a convenient way to make hotel room reservation without leaving the house. For hotels, it provides a global channel, letting everyone with an Internet connection access to make reservation from their website. Although security is a big issue and is continuing to evolve. As security features continue to get better, people are getting more comfortable with e-commerce. E-commerce is continuing to experience a substantial growth and has virtually changed the way hotel rooms reservation is traditionally conducted. It has brought both convenience and opportunity to both the consumer and hotel businesses.
References
http://www.etravelblackboard.com/showarticle.asp?id=89001&nav=11
http://info.ssl.com/article.aspx?id=10241
http://www.hotel-online.com/News/PR2002_4th/Oct02_GDS.html
