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Big Kahuna: Central Reservation System
In 2002 Outrigger's central reservation office in Denver processed more than a million pages in faxes. The majority of the company's bookings came from more than 500 wholesalers offering package tours, which locked up blocks of discounted rooms in advance even if they went unsold and made it extremely difficult for Outrigger to forecast demand. A reservation cost the company $18.
"We were a small hotel company and we were filling up landfills faster than we could dig them," White says. "There was a lot of labor involved. Everything we did was customized for a different vendor. You were absolutely full or empty. You couldn't influence anything."
Outrigger decided to build a new version of its CRS, giving it seamless electronic connections to airlines and direct interfaces with its major wholesalers. The company did the development in-house, dedicating four programmers and a business analyst to the project for more than a year. The environment was built using Microsoft's .NET framework, using secure Internet communications. End users interface with simple Web browsers.
The company adopted industry-standard XML message formats and encouraged its partners to adopt the same message sets, so that they could reuse the interface they built with Outrigger with other hotel chains. The company provided extensive sample message documentation, assisted with data mapping, gave programming assistance and maintained a full test environment, available 24x7, for partners' use. The system runs a property database on a Hewlett-Packard NonStop platform with dual paths and mirrored disks, meaning it's fault-tolerant with no single failure point. Outrigger actually operates two of the platforms in Honolulu with duplicate disk arrays, giving it five-nines uptime, including service periods.
The CRS feeds both an E.piphany datamart and several GuestWare property-level customer relationship management (CRM) systems. The entire guest accounting, credit card processing and statistical data is fed into Outrigger's JD Edwards (now Oracle) back-office system, running on an IBM AS/400 platform. The company also does most of its billing through electronic invoicing and settlement.
The results? Cost per transaction dropped to pennies. Wholesalers went from 45-day lead times to real-time booking. Now more than two-thirds of reservations are done electronically. The CRS proved so efficient that Outrigger went into the application service provider (ASP) business with some of its wholesale partners, hosting their reservations on its platform. While this yields a small additional revenue stream, it is mostly done as a favor to partners.
"To have real-time, online live inventory and reduce the human element cost has been a huge win," says Carey. "The old system was an incredibly manual operation. It didn't make any sense."
In November 2006 the company's own Web site finally handled more bookings than Expedia did for it -- a significant win for margins. "We took a whole percentage off credit card transactions," White says. "That's serious money."
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