Reservation Software
BuyerView | 2015

Every year, hundreds of businesses contact Software Advice to find the best reservation software to fit their needs. These interactions with prospective buyers provide us with considerable insight into the broader reservation software market and the trends that surface there.

We recently analyzed a random sample of these interactions to better understand the factors that influence reservation software buyers’ purchasing decisions. These findings will help guide the decisions of other buyers in the market for such a solution.

Key Findings:

  1. Forty percent of prospective buyers already use some type of property management system, while 17 percent currently use nothing.
  2.  
  3. Of those using a property management system, 29 percent say it lacks the functionality to help boost their hotel’s online presence.
  4.  
  5. One-quarter of prospective buyers have a property management system that is outdated or no longer supported by the vendor.
  6.  
  7. Fourteen percent of respondents need a reservation-specific system, while 12 percent need to update from slow or unsupported software.
  8.  
  9. Web-oriented features are requested most often, including central reservations (75 percent) and an online booking engine (63 percent).

Introduction

Using hotel management software can help hoteliers to run a more efficient, cost-effective and simplified hospitality business. These systems can reduce manual work and maximize time spent addressing guests’ needs.

Reservation software is a specific type of hotel management system hotels use not only to streamline the booking process and manage reservations, but also to manage the increasingly important task of distributing a hotel’s information online.

Given that online bookings made up 43 percent of all U.S. travel sales in 2014, it is more important than ever for hotels to increase their “online presence”—the collective existence of a brand or entity online—across multiple websites.

With travelers using myriad ways to research and book rooms on the Internet, it’s essential that hotels use reservation software to display their property’s information in front of potential guests. To learn more, we analyzed a random sample of interactions with reservation software buyers to discover their biggest needs, pain points and most desired functionality when evaluating a new solution.

40 Percent of Buyers Currently Use Property Management Software

The highest percentage of prospective buyers (40 percent) in our sample are currently using some kind of property management system. Manual methods, such as pen and paper or spreadsheets, rank close behind with 16 percent; another 17 percent say they have no formal system in place.

Prospective Buyers’ Current Methods

Prospective Buyers’ Current Methods

Most of the buyers in our sample represent small and midsize hotels (more on this below). Staff at smaller hotels often use a combination of systems to operate their business, as 5 percent of our sample indicates. For example, several buyers report using Google Calendar and Docs along with accounting software, such as QuickBooks, to create and track reservations and manage other aspects of the business.

Using a combination of systems can create issues when migrating data or switching back and forth between programs. In a calculation not shown in the chart, 70 percent of buyers in our sample who use a combination of software also request an integrated software suite, which houses multiple, related functions in one package and increases usability across different platforms.

“With the newer reservation systems, you can access the system from anywhere and [control] inventory and other things from one location,” says Nathan Mayfield, president of ResNexus, a vendor that offers an online reservation system.

Major hotel chains typically require each property to use the same mandated or proprietary software. But Mayfield says smaller hotel owners must shop around and find a solution that fits their needs—and they now have more reservation software products than ever to choose from, thanks to increasing demand for cloud-based systems sold under monthly subscription licenses.

Monthly subscriptions, which are often priced based on the size of the organization, tend to be more affordable than traditional, on-premise software licenses. Many vendors also offer their systems in several different versions that are tailored for different property types and sizes, which can further reduce costs even further.

Small, Independent Hotels Seek Online Booking and Distribution Capabilities

The most popular systems among buyers in our sample—including RezOvation, Check-Inn, roomMaster and innRoad—are all designed for (or offer versions for) small to midsize properties. This aligns with our demographic information, which shows that the majority of buyers are from independent hotels with 49 or fewer rooms.

In fact, about one-third of the buyers we spoke with work for or own a smaller, independent hotel. Indeed, there are several major developments in the hospitality industry driving the growth of such hotels.

  • Prospective Buyer Size by Number of Rooms

    Prospective Buyer Size by Number of Rooms
  • Prospective Buyers by Company Type

    Prospective Buyers by Company Type

We’ve mentioned the impact of millennials in previous reports, and it’s clear at this point that they are the most important age demographic for the entire travel industry today, and will continue to be so in the future. Overall, this group typically seeks authentic, location-specific experiences—which independent and boutique hotels are in a position to offer.

This desire for unique travel experiences is driving the growth of independent hotels, a trend that is expected to continue. Managers of these hotels are now realizing that the best way to reach these travelers is to have their rooms and rates featured on as many online travel websites as possible. In fact, studies show that millennials typically to start their search for a hotel on Google or TripAdvisor.

The availability of affordable, scalable reservation software is contributing to the creation of an advantageous market for independent hotels. This, along with the ever-increasing need for hotels to bolster their online presence through websites and social media profiles, seems to be leading many buyers to seek new reservation software capable of distributing rates and inventory to online travel agencies.

Looking at those respondents who are currently using some kind of property management system, we find that many complain specifically about poor or non-existent online booking capabilities (such as an online booking engine).

Top Reasons for Replacing Existing Software

Top Reasons for Replacing Existing Software

Many independent hotels tend to have trouble optimizing their websites or automating their booking processes. Buyers often seek systems with central reservations capabilities in order to expand their hotel’s reach without having to manage each sales channel individually, Mayfield notes.

While some hotel management tasks can technically be handled through manual processes, hoteliers need software to distribute a hotel’s rates and inventory to a Global Distribution System (GDS): a network of rate and inventory information shared by online travel agencies, such as Orbitz, Hotels.com or Priceline.

The GDS ensures consistent pricing and room inventory across all sales channels, and allows customers to book rooms on the websites of these agencies. What’s more, research suggests that hotels must have a diversified Web presence in order to succeed.

Need for Reservation-Specific System Is Top Reason for New Purchase

The reasons that motivate buyers to seek new hotel management software run the gamut—but the highest percentage (14 percent) say they need a more adequate method for creating and managing reservations.

Top Reasons for Software Purchases

Top Reasons for Software Purchases

The main software functions for managing a hotel’s reservations include displaying them in an easy-to-comprehend calendar view, allowing managers to adjust rates and specials for certain time periods and capturing basic information about guests. Many, but not all, systems also include an Internet booking engine and the ability to connect to a GDS.

Another 12 percent of respondents say they need a more modern, updated system, most often because the software has become too sluggish, is missing modern features (such as online capabilities) or is no longer supported by the software vendor.

David Pledger, founder of Full House Marketing, a U.K.-based company that offers marketing services and tools for independent hotels, says he experienced many of the issues cited in the chart above. Unable to find a system that was a good fit for his needs, he eventually decided to build his own reservation system.

“There is a percentage of people working with systems that are outdated,” Pledger says. “They’ve made [them] work for as long as they could, and they now realize there are better options out there on the market.”

Central Reservations and Booking Engine Are Most-Requested Functionalities

Again, many independent hotels want to allow potential customers to book rooms easily and quickly, and the top two requested software capabilities—central reservations and an online booking engine—are two effective ways to make that happen.

Top-Requested Reservation Software Functionality

Top-Requested Reservation Software Functionality

A central reservations system helps manage reservations—most commonly with a “tape chart” (see image below) or a color-coded, calendar-style grid—as well as rates for various room types. This helps avoid double-bookings and can even prevent having to walk a guest.

Hotelogix’s reservation tape chart

Hotelogix’s reservation tape chart

Based on the feedback of buyers in our sample, they are most interested in the functions that allow potential customers to view their hotel’s information and book rooms online.

Central reservations systems often include a connection to the GDS and an online booking engine, which allows guests to book rooms from the hotel’s website and that data to be immediately reflected in the reservations system.

Conclusions

For a hotel to be competitive today, it must provide guests with ways to book from any Web-enabled device—either directly from its website or on online travel agencies. This is especially true for independent hotels, which typically have just one physical location, and where walk-in business is rare. For these properties, drawing guests from across the globe can only really be achieved via the Internet.

The new millennial class of travelers is driving the growing demand for independent hotels, which in turn is emphasizing the need for these hotels to post room rates and availability online, where millennials are most likely to find them. With a variety of scalable and affordable reservations systems available today, hotels can exponentially increase their exposure and their number of potential guests.

Methodology

Our advisors regularly speak with buyers who contact Software Advice seeking new hotel reservation software. The data used to create this report was collected by our advisors during those interactions for business purposes rather than for market research. We randomly selected 200 interactions from the U.S. during 2012 and 2013 to analyze for this report.

These findings exclusively represent those buyers who contacted Software Advice for guidance on software selection, and may not be indicative of the market as a whole. Expert commentary solely represents the views of the individual. Chart values are rounded to the nearest whole number.

If you have comments or would like to obtain access to any of the charts above, please contact taylorshort@softwareadvice.com.


Taylor Short

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