The central reservation system (CRS) that hotels know today dates back to the 1950s, following a chance encounter between the CEO of American Airlines and a senior IBM sales representative. The earliest versions of a CRS debuted in the 1960s, and by the following decade, hotels had begun widely using that technology.
In the subsequent decades, the CRS has evolved from a rudimentary system into a complex, interconnected network that can manage rates and reservations and distribute them across a multitude of channels, including OTAs, GDS, metasearch and more
But as the market keeps expanding its distribution channels, hotels have struggled to optimize their most profitable one: their hotel website. With third-party bookings often taking large commissions, profit margins keep getting slimmer and slimmer.
In response, many hotels realized that increasing their share of direct bookings is the key for successful revenue strategy, but where to start?
It starts with rethinking the entire concept of a CRS.
From CRS to dynamic e-commerce platform
The technology that runs hotel websites and booking engines hasn’t changed much since the early 2000s. At present, it’s a disjointed and cumbersome system, functional in its ability to make reservations, but less so in its ability to compete with more advanced technologies.
One of the biggest issues is the isolation between the booking engine and hotel website. The CRS generally speaks only to the booking engine, and this segregation creates a booking experience that is out of sync with how modern travelers book travel.
Today’s traveler visits an average of just 4.4 unique sites before booking. Therefore, if your hotel is part of that search process, you have to offer an optimal user experience, which includes making it easy for travelers to check prices. But CRS systems provide room rates only after a traveler has put dates into the booking engine.
In some cases, the website and booking engine are also visually different, creating a clunky transition between the two. If users click away from the booking engine to browse the website again, their previous date inputs are lost and they have to restart their rate search.
The central reservation system we know today needs to evolve. Hotels must treat the CRS, booking engine, and website as a singular e-commerce entity—a dynamic system designed not just to play the role of the reservationist, but also the role of the salesperson.
In short, the CRS of today must be conversion-driven.
The CRS as a conversion machine
The OTAs have become masters of conversion, largely because they spend huge amounts of time and money to test and optimize their sites.
Booking.com runs in excess of a thousand experiments in parallel, while Expedia ran 1,750 A/B tests back in 2015. The intention of revealing these figures is to demonstrate just how seriously OTAs take their user experience, and that hotels need to get serious too.
This is why a CRS and booking engine must work together so that users can seamlessly go from researching a hotel to completing a booking, without dealing separately with two disjointed systems.
Below, you can see how an integrated CRS, booking engine, and website work in harmony. The CRS talks to the website directly, sending key information to the website to enhance the researching and booking process.
Live rates have also become a core part of the modern CRS. At Travel Tripper, our website platform Travel Tripper Web automatically delivers live rates on the hotel website. This means that a customer can see the rates instantly, rather than having to separately visit the hotel website’s booking engine.
The Mayfair Hotel in Miami is an example of a hotel developed on the TT Web platform. In this model, dynamic live rates and special offers are automatically delivered directly from the CRS to the website. This means that travelers can see tonight’s best available rate without having to navigate to the booking engine.
Travelers are also able to browse various rooms without having to re-enter dates.
In addition, a cutting-edge CRS serves another vital function: it can send important information to both the website and booking engine to help convince a traveler to book. These “conversion drivers” are based on simple marketing psychology principles that can influence consumer behavior in several ways:
1. Create a sense of urgency
OTAs have become masters at using urgency to drive bookings.Taking a page from the OTAs, the CRS should be able to indicate to website visitors that a low number of rooms are remaining or that time is running low on special offers.
2. Show popularity
Travelers look for social proof when they book hotels, and you can build social proof into the heart of your hotel’s website by indicating your recent booking stats. On-site messages such as “xx people booked our hotel in the past 2 days” demonstrate that your hotel is popular and that availability might be limited.
3. Offer complete price transparency
Many travelers already cross-check metasearch sites to compare pricing for hotels. So why not offer it directly on the hotel website? The modern CRS should be able to check prices across all their distribution channels. This also enables the hotel to offer an Automated Best Rate Guarantee whenever prices are lower elsewhere.
4. Streamlined booking process
Much of the success of “on-demand” travel companies such as Uber and HotelTonight stem from their booking processes, which minimize buying friction to help increase conversions.
Easy payment is also important. Hotels should minimize form fields and integrate new forms of payment like Google Wallet or Apple Pay to streamline bookings. In the future, the goal for hotels will likely involve offering one-click booking similar to the model currently used by Amazon.
The CRS and hotel website as an e-commerce platform
The CRS shouldn’t just be regarded as a software for collecting reservations. Hotels can now use modern CRS systems to run a fully integrated e-commerce platform that drives revenue through a number of important ways:
Dynamic pricing and rate match
The CRS can create dynamic prices and set rate plans based on a number of criteria, including a user’s geographical location, length of stay, booking window, date of booking, and the device they’re using (such as desktop or mobile).
Easy-to-update deals and offers
When the CRS and website are integrated and act as one platform, revenue managers can also make quicker decisions and react to fast-changing market conditions.
For example, if a revenue manager sees that a coming weekend is booking slower than expected, he or she can create a special offer for local residents in the CRS, which will then immediately push out this offer to the website and booking engine. This eliminates the hassle and delay of updating two platforms for a sale.
As discussed, the exciting new development of live rates means that hotels can promote their latest rates on their own website. But CRS data can also break out of the booking engine and website and move one step earlier in the booking journey.
With Travel Tripper’s industry-first Real-Time Ads, hotels can dynamically populate their Google search ads with room information from the CRS and booking engine, such as the nightly room rate, number of rooms available, and occupancy rate.
This allows hotels to pre-qualify website visitors and identify those who are most likely to book, thereby increasing conversion rates and driving down customer acquisition costs.
How else is the CRS evolving?
As technology continues to advance, hotels must look ahead and the CRS must continue to evolve to stay relevant. So what’s next for the central reservation system?
Driving loyalty with personalization
Tight integration between loyalty and CRM platforms is going to be crucial in the future. This integration will be driven by enhanced levels of personalization, including the ability for hotels to customize offers for individual guests.
We’re already starting to see the merging of these spaces. For example, Travel Tripper allows casino players to log in to the booking engine with their player number in order to book loyalty offers, such as comped rooms.
AI-powered pricing and recommendations
Like other e-commerce platforms, the CRS will become a central platform where hoteliers can integrate additional tools to create the best distribution and marketing platform.
AI-powered pricing and recommendations is one such area in development. A few years ago, Starwood tested its own AI-powered revenue strategy optimization tool, which led to improved power dynamic pricing and a 20% increase in demand forecasting.
Travel companies are also using AI to monitor each guest’s browsing history to better understand their preferences. Using this data, hotels can deliver personalized recommendations and contextual messaging that improve customer engagement and drive more direct bookings.
The CRS as your best revenue strategy tool
A central reservation system has to serve as more than just a functional tool for collecting reservations. With a smart, feature-rich CRS, hotels have a powerful strategic platform to help them maximize revenue across all their distribution channels.
A smart CRS should be flexible enough to create pricing strategies based on user context, drive loyalty through more personalized offers and recommendations, and allow for an integrated e-commerce platform that delivers live rates and special offers both on its website and in Google search ads.
Choose the right CRS
Considering a new central reservations system for your hotel? Download our CRS Buyer’s Guide to learn invaluable insights, including:
- CRS buying and recommendation advice
- The top CRS providers in the market
- How much to budget and what to expect
- Key questions to ask vendors during your search
- Hotel success stories
Editor’s note: This post was originally published in September 2015 and has been updated to include the latest developments.
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