Electronic booking is ever-evolving. The common thread? Meeting the changing needs and wants of the consumer.
Editor’s note: The following represents the first in a quarterly series of columns about electronic distribution from the members of HEDNA, the Hotel Electronic Distribution Network Association.
In 2011, it’s easy to forget that hotels didn’t always do bookings via electronic distribution. Electronic communication has allowed hotels to reach consumers around the world through hotel brand websites, travel search engines and travel agents.
But did you know that electronic distribution predated the dot-com era by several decades? Yes, it’s true. When mainframe computers were developed in the 1950s, airlines saw the potential in using the technology to create electronic distribution of airfare information.
“The concept of electronic distribution developed from internal systems created by the airlines for inventory control,” according to Cornell University’s Peter O'Connor and Andrew J. Frew in the June 2002 issue of “Entrepreneur.” “Travel agents were subsequently given direct access to these systems, allowing them to see real-time availability and pricing information, and to make instant bookings.”
During the 1950s, a major airline worked with IBM to develop the first global distribution system. That GDS was SABRE, or Semi-Automated Business Research Environment, which was introduced in 1959-1960. SABRE remains one of the major GDS firms today. Other airlines followed suit during the 1960s with United Airlines’ introduction of its Apollo Central Reservation System.
Hotels join the fray
In the late 1960s, hotels began to see the opportunities that electronic distribution provided and started to develop their own systems based on the airlines’ frameworks. Many hotel brands adopted hotel identifiers based on airline city codes. Some of those identifiers still are in use today.
Meanwhile, airlines began to install terminals at travel agencies during the 1970s, electronically connecting the travel agent and the airline. For the most part, automated hotel bookings were still rare, but some hoteliers were testing the waters. Holiday Inn and Marriott built systems based on the airline model. Westin developed Westron, its version of the Apollo CRS.
And, in the emerging world of cyberspace, the first computerized bulletin board was launched in 1978, a predecessor of today’s popular websites such as Facebook and LinkedIn.
There was a monumental shift in technology during the 1980s as computers systems rapidly evolved and businesses saw the benefits those systems provide. This was the decade of the personal computer. This was also the decade that saw more hotels interfacing with airline GDSs as well as developing their own systems. In 1988, 16 hotel companies formed The Hotel Industry Switch Company (THISCO), which lives on today as Pegasus Solutions. Several European airlines—Air France, Lufthansa, Iberia and SAS—joined together to start Amadeus IT Group SA.
The hotel systems were far from sophisticated. Only a limited number of room types were on offer through the systems. Users of electronic distribution also needed to learn a new terminology such as three-character attributes for the room types.
So it’s not surprising that travel agents balked at the technological changes. They were hesitant to use the GDS terminal for hotel bookings, believing that telephone communication was a more efficient method for making hotel reservations. Hotel companies worked to get the travel agents “off the phone” by providing incentives and working to improve electronic distribution. Those tactics proved to be successful in shifting travel agents to the new technology.
As electronic distribution entered the 1990s, there were many issues to confront. Each hotel wanted each GDS to do things “my way,” which resulted in massive inconsistencies. Realizing it was necessary to create uniform information and distribution standards, hoteliers decided to start a trade association to accomplish those goals. HEDNA, the Hotel Electronic Distribution Network Association, was founded in 1991.
With the establishment of HEDNA, hoteliers were well-positioned to take advantage of the dot-com decade. Hotel brand.com sites were launched and TravelWeb was born. Third-party websites such as online travel agencies were opened for business.
Information on hotel websites gradually became more consumer friendly as hoteliers sought to appeal to travelers directly. While hoteliers funneled traffic through TravelWeb initially, the rapidly rising demand from consumers made hoteliers realize that direct connects from their own websites to their CRSs were needed.
In the Noughties, hoteliers concentrated on improving Internet bookings and making brand.com content more attractive to consumers. To do this, hoteliers improved IT operations and system designs. Seamless connectivity became the standard for hotel bookings. Electronic distribution boomed as a result.
Electronic distribution is still evolving. There is a continuing focus on connectivity. New technology channels such as mobile and social media are creating opportunities to expand ways to reach consumers. The dynamics of the hotel business are changing every day to meet the needs of consumers. What will be the next big change in electronic distribution and how will it affect hotel booking? Stay tuned!
Jennifer Riesselman is director, distribution solutions-channel management at Carlson Hotels and chair of the education committee for HEDNA. HEDNA U is a one-day seminar to help educate hotel personnel about electronic distribution. HEDNA U sessions will be held in Madrid and other cities during 2011. For more information on HEDNA U, visit the HEDNA website or e-mail HEDNA at email@example.com.
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