Bringing together buyers and sellers
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It should be a simple equation. 'X' is a hotelier with rooms to fill, 'Y 'is a traveller in a search of a place to stay and 'I' is the Internet, the electronic matchmaker that brings the two together. In theory, an on-line reservation system should result in higher revenues for 'X', while providing 'Y' with an easy and convenient means to find and secure a room. In practice, however, the hotel industry still has a long way to go if it is to catch up with the seamless reservation experience offered by airlines. Cambridgeshire-based Active Hotels is attempting to help hoteliers to narrow this gap.
Travel is one of the success stories of the internet. According to Active Hotels CEO Andrew Phillipps, the market as a whole is set to grow to a value of £10bn over the next three years, with hotel booking systems accounting for a quarter of that.
However, unlike the airline industry - where internet booking is facilitated through a relatively small number of portals, such as Expedia, Opodo and Travelocity - there are literally thousands of websites acting as on-line booking agents for hotels. This is confusing for the public and potentially time consuming for the hotelier. For instance, if an owner advertises rooms on, say, 20 relevant third party internet sites, it means administering 20 relationships and paying the same number of commission checks every month. For their part, the agents potentially have a booking and billing relationship with thousands of clients, each with their own reservation systems. Some of these will be manual - sometimes little more than a book in reception - while others will be tied in to databases that allow real time booking. The result for the weary traveller is that booking a hotel online is nowhere near as straightforward as booking an airline ticket.
Active Hotels (Activehotels.com) was founded in 1999 with the intention of making life easier for hoteliers and agents by rationalising the booking technology. "We thought there was an opportunity for a middleman," says CEO and founder Andrew Phillipps, CEO
To this end, Active Hotels has spent close to £2m developing a database and booking system designed to sit in between individual hotels and chains and the various third party agents. The idea is this. Hotels and agents link to the system via an 'extranet' basically a private internet channel. On a given day, inquiries on room availability that once might have arrived independently from a half a dozen agents are channeled to the hotelier through a single system. Replies are then channeled through the same system, making the administration process much simpler.
Phillipps says Active Hotels will tailor its service to fit any booking process operated by an hotelier or agent. Unless there is any bespoke systems integration work to do, setup costs are zero and hotels pay 15% commission on all bookings, which is split between Active Hotels and the agents. "It's much simpler for the hotel," says Phillipps. "They pay us just one cheque every month rather than having to deal with a lot of agents.
Phillipps argues that Active Hotels has made it more cost effective for independent hotels to offer online booking facilities, a contention that is underlined by the companies market share profile. "In the big cities we have about 20% of the market. There is a lot of competition there from sites such as Expedia that have relationships with the big hotel chains. Outside the capital cities - where there are a lot of independents - we have very little competition."
Active hotels are currently clocking up a growth rate of 10% a month. The last annual turnover figure came in at euro 140m, but Phillipps stresses, this is a moving figure.
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