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Central Reservation Systems & Contact Center Solutions *

Market Summary – Central Reservation Systems

Market Overview

Hotel Central Reservation Systems (CRS) come in many shapes and sizes. The functionality they offer is available from chains, brands, software companies, service providers, and nearly any combination of these. The various solutions are often sold as a grouping of software and services from vendors and hotel companies. As a result, hoteliers have multiple options, which may cause the need to review other vital decisions connected to a chosen Central Reservation Solution.

Affiliating with a brand, signing a contract with a management company, or selecting a CRS vendor will each affect, if not define, a property’s CRS. Therefore, hoteliers may need to choose from or become familiar with a marketplace that covers more than 89 prospective solution providers. Their products and services originate from numerous locations across the globe and have myriad capabilities.

Many years ago, the original design of Central Reservation Systems was to centralize basic reservation functions that may be more expensive or less efficient to operate at the individual hotel level. These solutions handled voice reservations directed at the 800 number and property overflow. They usually centralized GDS connectivity, allowing hotels to reach travel agents more easily. This required the active management of rates, inventory, and availability within the CRS in coordination with the same at the hotel.

As the distribution landscape increased in complexity, the Central Reservation Systems also matured. However, centralized functions are designed to create operational efficiencies at scale. When new, innovative solutions became relevant but only applicable to selected hotels within a portfolio or brand, centralizing this new capability wasn’t always economically viable. This continues to result in the need for a unique footprint of marketing and technology solutions at each property, with certain capabilities managed centrally. Yet others account for the local specifics of the property, such as its staff, location, and resources.

The introduction of Internet distribution eventually created numerous options for potential reservations. This new set of electronic distribution channels increased rapidly in complexity and eventually offered hundreds of distribution opportunities, initially providing low volume potential from each. As the channel matured and consolidated, some sites flourished, generating significant marketing opportunities, advertising solutions, and reservation volume. The result was that these high-volume solutions garnered the attention of those with CRS management responsibilities. However, it took the emergence of Channel Management solutions to effectively reach the smorgasbord of consumers browsing the web for travel.

Marketplace Context

Hotel Central Reservation Systems and the Services that may accompany them can include numerous capabilities in today’s marketplace. This vast software functionality is purchasable from one multifaceted Solution Provider or a combination of solutions interfaced with each other. As a result, it may be packaged as a fully functional service that encompasses a set of capabilities but ultimately requires people to make it all work well. If multiple systems are purchased, the sophistication of integration across these systems is a consideration when determining your organizational needs. Planning for the future is critical regardless of what solutions are selected to be part of a capability roadmap at any point in time.

Capsolve researched 40 United States-based CRS solutions based on marketing information to determine their core features.

Solution Paths

Changing your Central Reservation System can feel like a rather complicated decision. However, understanding your distribution scope and strategy will likely lead you to the best prospective technologies. While it is not required to take this approach, the most common path is to choose a system that will support your most important strategic and tactical technology capabilities and then decide what new or existing technology should complement it. A few standard approaches enabled by today’s technology solutions within this category include:

• Comprehensive Core: a solution with multiple channels of connectivity designed to provide a fully integrated approach to covering most or all central reservation office and distribution needs
• Best Fit Core: a solution with multiple modules covering a minimum set of requirements in combination with critical strategic capabilities
• Minimized Core: a solution typically covering the most crucial strategic and operational needs but proving significant flexibility to connect to other best-of-breed solutions to complement the core
• Best Strategic Fit: a solution providing a balance between comprehensiveness and long-term strategic needs

These solution paths are not necessarily mutually exclusive. Solutions within the marketplace may create the opportunity to combine one or more paths and meet more of your selection criteria. Appropriately formulating an RFP to share with potential vendors will help ensure you ask the best questions specific to your business while allowing you to learn about the depth of each potential vendor partner.

Pricing Information

Numerous pricing models exist in the marketplace, and it is crucial to understand how each one will affect your total cost of ownership. The standard pricing structures are:

• Base Software Price plus a Maintenance Charge: This pricing is usually charged for on-premise software installed on local servers. It is usually charged based on the number of servers, locations, user licenses, or user accounts. There is an ongoing charge for modifications and upgrades based on the percentage of the base software.
• Subscription Price: This pricing is more common today with the adoption of Software-as-a-Service. The price is often charged annually, quarterly, or monthly and is applied to each location or user account.
• Transaction Price: These fees are based on the volume of activity flowing through the software and closely align with its usage. This type of pricing is usually experienced as part of a brand affiliation or from a large vendor. It may be defined by a flat transaction fee or a percentage of revenue. CRS transaction activity is often charged on a gross or net reservation basis.

As expected, a combination of these pricing approaches may be applied to any software.

Marketing Considerations

Central Reservation System functionality is crucial to hotels and hotel groups from a marketing perspective. It may provide access to consumers through multiple booking paths, such as Voice, GDS, Website, and OTAs. It serves as a hub for these paths that support consumer marketing channels, such as Voice, Search, Metasearch, Virtual Reality, Social, Display, TV, Radio, and Billboards, among others.

Traditionally, a hotel or vacation rental needs to distribute its rates, inventory, and availability information to these booking channels to reach consumers browsing or researching travel purchases, whether they accomplish this through a CRS or PMS. Consistency and business rule management across channels are essential. Rate parity, for example, is followed by many property groups and individual properties. The business rules defining when certain rooms and rates are available are important in determining what consumers can book. A Central Reservation System or Service may facilitate this consistency while providing controls for specific tactics.

As stated above, Central Reservation System implementations seek operational efficiencies where centralization is appropriate. There is a significant amount of innovation occurring not only in technology but on the marketing front in today’s environment. During recent decades, we have seen the rise of the Internet, Email, ECommerce, IBE, OTA, Search, Mobile, Social, Metasearch, and Virtual Reality. This rapid phase of the proliferation of marketing and technology tools has created opportunities to improve businesses, reach new markets, decrease costs, and increase marketing exposure. It has also dramatically increased the complexity of accommodation marketing since many of these solutions require people to manage and operate them, albeit with significantly increased technological efficiency.

Current Trends

While foretelling the future is entertaining, discussing the potentially crucial happenings in the marketplace is more practical. Here are a few active trends influencing the CRS landscape and the accommodations industry.

1. The majority of CRS software is now available in the cloud. From an industry perspective, this transformation is almost complete, but be aware that not all clouds are the same.
2. Digital channels are proliferating compared to non-digital channels. The Voice channel continues to be balanced by shifts to infrastructure channels like GDS and pure digital channels such as IDS, IBE, Search, and Social.
3. Attribute-based selling (ABS) continues to gain traction across the industry, but not everyone’s definition is the same. This is spawning enhancements to CRS solutions and creating new categories of software that can complement both CRS and PMS technology.
4. Marketing channels are becoming more intricate and melding with eCommerce. Communication techniques are continuing to increase, making it possible to reach marketing prospects through multiple messaging platforms and applications. This, in turn, increases the inbound and outbound messaging channels to manage.
5. Acquisitions create comprehensive capability sets within the largest solution providers.
6. Innovation is still strong, with thousands of applications defining the hospitality landscape and more being launched regularly.
7. Central Reservation Solutions for Vacation Rentals are maturing rapidly, enabling VRs to be distributed through a broader set of channels and even becoming alternatives to the traditional accommodation sector.
8. Privacy continues to be a pressing concern worldwide, with consumer information at the center of deliberation.
9. Partner ecosystems play a more prevalent role during the evaluation and purchasing cycle, especially since property-level distribution has matured to meet the functionality level of many CRS features previously only accessible to brands.
10. AI and ML will continue to mature and meander into today’s offerings. Additional technologies, such as blockchain, may also contribute to the increasing sophistication of the solution ecosystem.

Questions for the Future

As the world of distribution continues to change at a rapid pace, here are a few questions you will want to ensure your company is planning to answer if you haven’t already begun formulating a plan:

1. How will Social channels and the messaging that occurs within them affect your marketing, sales, and service functions at property, regional, and corporate locations?
2. What are the next steps in direct distribution, and what marketing and technology solutions will facilitate results-oriented innovation?
3. Should your hotel locations be marketed within vacation rental channels, and how should the brand and property be positioned for this audience?
4. What advances and innovations in distributing restaurant services and other accommodation amenities are available to the hospitality industry?
5. What new sales, marketing, and distribution functions should be centralized along with CRO Services and CRS software, and how will they affect your roadmap?
6. How will attribute-based selling affect the complexity of your distribution and revenue management functions?
7. What capabilities should your hotel group consider to create a competitive advantage during the next few years?

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About this Report

This document reviews the marketing information and capabilities of this category’s solutions and the surrounding technology ecosystem. It contains original content written by Capsolve to provide a perspective of current trends affecting one or more of the hotel, restaurant, golf course & country club industries. The analysis covers a statistically significant portion of the previously defined category marketplace.