At the core of BOOKDirect is a reservations system designed to simplify the reservation process for both the hotel and their guests, and enable hotels to maximize their potential revenue while maintaining the highest standard of customer service. It's not just convenient - it's also the most cost-effective means by which to process reservations. The experiences of actual properties show that a 200 room hotel might increase profits by as much as $114,000 per year .

Let's review how reservations have traditionally been processed. Independent hotel operators, many of whom operate several properties, either independently or as part of a common marketing banner or association (e.g., Best Western), typically receive as much as 25% of their business through travel agents who make the booking through a Global Distribution System (GDS). The independent operator usually gets listed on the GDS through a broker, as they are not large enough to contract directly with each GDS. There are two additional channels through which reservations are most often received: a centralized reservations system (CRS) operated by a common marketing organization or association (e.g., Best Western), or through phone calls received directly by the property. The costs associated with accepting a reservation through each of these three channels vary dramatically, as summarized below.

Reservation Source	Approx. Cost to Handle Reservation (based on an average rate of $85 and a stay of two nights)
Travel Agent (GDS listing via broker)	$25-$41 (1)
Marketing Association Central Reservations	$7-$21 (2)
Property Direct	$11-$15 (3)
BOOKDirect (Platinum Package)	$4

1. Includes 10% commission to broker (on average booking of $85), $10% fee to travel agent and $5US fee to GDS system (eg: Sabre, Galileo, Worldspan, Amadeus)

2. Average charge of $7 per room night booked, ranging from 1 to 3 nights

3. Based on typical cost to operate a reservations desk of $45/hr (agent time and 800 number cost) and average of 15-20 minutes of telephone time to process the reservation (including calls that do not culminate in a booking)

In addition to cost, there are three key disadvantages of third party reservations:

• lack of direct contact and relationship with the end customer;

• special requests that the customer may make through the third party often do not make their way through to the individual property

• no potential to market to callers based on property specific features that may be of special interest to them.

To address these shortcomings, most hotel operators that are part of a common marketing banner incur the costs of establishing their own 800 number, highlighting the value they place on direct customer contact at the reservation stage. The Internet represents a significant opportunity for independent hotel operators, as it provides the opportunity for direct customer contact and on-going communication with repeat customers.

What about the e-mail reservation process? Many independent hotel operators that do have a presence on the Internet often have a simple web site that is not integrated with their back office reservations system. A customer who wants to make a reservation fills out a reservation form and sends it by e-mail to the hotel. The e-mail is typically processed in batch mode and a manual check is performed by the hotel to see if the request can be honored. The hotel responds with an e-mail regarding availability. The potential customer then needs to confirm by e-mail that they want to accept the available reservation and possibly hold it by providing a credit card number. Finally, the hotel e-mails out a confirmation. You can see that the flurry of e-mail required in this process significantly detracts from the potential cost efficiencies and customer convenience. If one calculates the time spent by hotel staff reading and responding to e-mail, a cost per reservation can also be estimated. An employee being paid $18 per hour can conceivably spend half an hour or more in total time reading, checking, responding, and then re-responding to a particular customer's enquiries. The cost for such a booking would be at least $9.

BOOKDirect is the best alternative. As a hosted, packaged service, BOOKDirect is the most cost effective choice for independent hotel operators. Our service package choices are designed with all types of properties in mind, with per-transaction fees ranging from 2.5% to 10% depending on the value package most appropriate for the hotel, and the distribution channel. These percentages work out to be a fraction of the cost of a reservation processed by any of the traditional methods, and hoteliers can choose the scale of service that is most economical for their property. Most importantly, our per-transaction pricing means that in order for BOOKDirect to be successful, our member properties must be successful first!

BOOKDirect processes reservations for pennies instead of the $7 - $20 required for third party processed reservations. Some operators find the savings so significant that they encourage use by offering "Internet rates" that are cheaper or more than regular room rates, or by providing free room upgrades for Internet reservations. A number of hotels that use the BOOKDirect system are currently handling between 5% and 15% of their reservation volume through the Internet - and this is believed to be a starting point for future growth. Hotel experience shows that 40% or more of registered users actually perform bookings through the system, with many using the system on an on-going basis. Guests who use the system repeatedly are in regular direct communication with the hotel and are more loyal customers.

BOOKDirect provides higher yields. Witness another benefit of BOOKDirect: most hotels utilizing the system are generating rates 25% - 40% higher than their average daily rate. The reason for this is simple - when calling a hotel directly the customer feels obliged to haggle for a better rate and more often than not, hotel staff will provide one. With BOOKDirect, the customer cannot haggle; if the rate is acceptable to them, they will book it online. This saves the hotel staff time and money. The hotel must also be committed to a policy of ensuring that their Internet rates provide the customer with the best possible rate at the time of booking - otherwise their credibility is at stake.

To summarize: BOOKDirect is unquestionably the most cost-effective system available to independent hotel operators. It saves hotels money and staff time, provides better customer service, and drives higher yields. Think about this: a 200 room hotel that averages 70% occupancy, has an average length of stay of 2 nights, and receives 5% of reservations through the system saves between $25,000 to $50,000 per year compared to receiving those same reservations through a travel agent booked through a GDS. Furthermore, if those 5% hotel bookings average 25% higher rates (as most BOOKDirect hotels do), then that also represents at least $64,000 in additional revenue. In total, BOOKDirect can put over $89,000 to $114,000 directly to the hotel's bottom line. That's quite a return on an investment of $6,000 a year!

Based on "E-Business for Small Business" by The McKenna Group, 2000.

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