Contributed by Estella Hale, V.P. of Product, SHR
Like you, I try hard to keep up with the latest trends and concepts in our industry. Recently, I came across Serge Chamelian’s article, “Is the Era of the CRS Over?” Considering SHR’s place as a pioneer in the hospitality technology field of CRS, I was of course intrigued by the title alone. I began reading.
“The travel booking world has been undergoing a major transformation due to the technological advancements and digital tools, which enticed the travel consumers’ journey to go online.” Yes, agreed.
“The rise of digital bookings has severely disrupted the industry in terms of the distribution channels used to sell hotel inventory.” Also, agreed.
“In the travel industry, the hotel product can be available for sale on many distribution channels such as: the hotel’s brand website, the hotel’s mobile app, the central reservation office…offline travel agents, and online travel agents (OTAs).” Yes, this is obviously true.
But when I reached the characterization of today’s CRS, the agreement stopped. “With the advent of the channel manager, transactions from OTAs primarily, have exceeded any other distribution channel and is challenging the future existence of CRSs.” While it is unquestionable that OTAs have produced a channel shift, and contribute a major path for consumer booking, it would be risky for hotels to rely mainly on OTAs for their distribution strategy.
More than simply a provocative statement on a popular topic in our industry, I realized that as hoteliers, you too may have debated the value of CRS vs. channel managers in your own business. This prompted me to not only pose a counter-argument to Chamelian’s premise, but to go further into what motivates us today in the distribution arena.
The CRS: Then and Now
Chamelian’s main argument is based on the historical function of a CRS, which was, at one time, to tie the Travel Agent (TA) to Global Distribution Systems (GDS) to the CRS and then to the hotel to handle bookings. He goes on to say though, that the main function of the CRS today is really to connect hotels to OTAs, the replacement for the TA, drawing the conclusion that since the main purpose of channel managers is to do the same thing, perhaps the days of the CRS are numbered? If connecting hotels to OTAs, i.e. to bookings alone, were all the modern CRS was capable of, I would say his argument was solid. But here is where purpose, or motivation, comes in.
A channel manager’s purpose is to connect hotels to OTAs to gather bookings. This is why they put substantial money and effort into connecting to as many OTAs as possible, and make that same recommendation to hotels. In contrast, a CRS’s purpose is to connect the hotel to their guests. This means connecting to not only OTAs and GDS, but also connecting to the Internet Booking Engine (IBE), Revenue Management System (RMS), Consortia, Customer Relationship Management (CRM), Central Reservations Office (CRO), also known as the Call Center, as well as to the hotel’s own website. These multiple connections create and allow for complex distribution strategies and methods, all geared toward creating a strong connection to the guest while increasing bookings and loyalty.
A Guest-Centric Approach
For SHR’s part, we used to put the CRS at the center of the distribution cycle. But where we see it going now, the guest is at the center, with our modules (IBE, CRO, CRM, etc.) placed outside of that cycle to serve and empower the guest. Our mission, after all, is to connect hotels with their guests to create long-term relationships, not just short-term gains.
Considering this, from a direct booking stand point, losing your CRS would severely hamper your direct booking efforts. For instance, OTAs often provide alias emails. A CRS can filter these out before they can get to the hotel CRM, thus saving your hotel from unknowingly collecting unusable data.
Beyond Open Pricing
The scenario of using only a channel manager brings other considerations into focus as well, particularly that of the channel manager/OTA relationship. By their very nature, OTAs tend to concentrate largely on the open-priced leisure market, using only a date/rate/occupancy model of needed data. However, this can provide a very limited view of the entire distribution and booking landscape, leaving out business and group/event travelers, for instance.
In addition, in this limited scenario, you will likely have to ignore the systems that have to do with loyalty or length of stay pricing versus simple open pricing. Remember those complex distribution strategies I mentioned before? They consist of such methods as blended rates, derivation, double derivation, sell limits, loyalty rates, etc., all with the goal of reaching your guests—and capturing more direct bookings in the process.
By making fine-tuned strategies and booking concepts possible, today’s CRS can take on challenges that go far beyond the linear existence that connecting to OTAs alone provides. Guest-focused strategies, after all, need to be controlled by the hotelier, and that kind of reach and control is not going to come from simply connecting to hundreds of channels via channel management only, but by connecting to all the myriad choices and strategies available through today’s guest-centric CRS model.