Pegasus To Offer Web-Based PMS

<B>Pegasus To Offer Web-Based PMS</B>

By Bruce Serlen

Pegasus Solutions in the next few months will introduce a Web-based property management system that requires no capital expenditure on the part of the hotel. Rather, the system, which initially will be marketed to lower-end hotels, will be fee-based and tied back to occupancy levels.

"We think of it as the PMS of the future because of the flexibility it will provide at the property level," said John Davis, president and CEO, in an interview with BTN earlier this month.

Davis said hoteliers would access the product using a Web browser that sits at the property. "All you'll need to access it is a PC. Basically, it will be linked to various services through the Internet," he said. "When you get to the property level, PMSs within a chain have trouble speaking to each other. The data stream is inaccurate. Consequently, things that travel managers want, such as electronic full folio data have been very difficult to generate," he said. "With a Web-based product, this kind of information becomes just another data segment you can provide."

The product, as yet unnamed, will link to services as diverse as the hotel PBX, so hotels can issue checks for the telephone system, and to the movie system. "Because it's Web-based, you can make enhancements immediately. You can modify it and it requires no maintenance," he said.

The reservation process for hotels has remained uneven. "We are all looking for the hotel industry to make the reservations process as seamless as it's become with the airlines," said Michael Whitesage, president of The Prism Group, a hospitality technology consulting firm. "Certainly, the hotel business differs from the airlines in crucial ways. There are numerous hotel companies, for example, many of which are franchises, which means the technology in place is very uneven. The promise of the Internet is that it will wire hotels together so that they behave like a single supplier," he said. "Any innovation that is a move in this direction is welcome."

For Pegasus, the Web-based PMS is the next step in its drive to be a major player in all hotel reservations channels. Initially, it was best known for its THISCO switch, which connected hotel inventory to the GDSs on the travel agent's desk. It also was known for its TravelWeb online booking site and its commission tracking service for travel agents. Davis estimated that the GDS channel accounted for 14 percent to 15 percent of hotel reservations.

"But we still sought a more international customer base of hotels," he said. That goal was accomplished in April, when Pegasus completed its acquisition of REZsolutions, which provides reservations through 800 numbers into the CRSs. Included in the deal was Utell, a network of 6,400 independent hotels worldwide, a global sales and a business-to-business Internet portal (BTN, Dec. 6, 1999). Davis estimated that this distribution channel accounted for an additional 36 percent to 40 percent of hotel reservations. The Web-based PMS product will capture the remainder, the voice reservations made directly at the property level.

"More and more, the hotel chains have come to the conclusion that their core competency is not writing software. Rather, it's providing guest satisfaction," he said. "The natural next step for us was going down to the property level itself and processing reservations."

What remains to be seen is whether travelers will want to book hotels as a separate transaction. "Whether they're booking through a travel agent or online, they may prefer to nail down the whole trip--air, hotel, car--at once," said consultant Jeffrey Merritt, president of Ross & Babcock.

By tying the PMS product to occupancy levels, Pegasus plans to charge hotels a minimal flat rate per occupied room. Davis mentioned a projected fee of 70 cents per room. He said hotels would find this preferable to having to make a significant capital investment of $100,000 to $150,000 as often as every three to four years.

Franchise hotels, in particular, are often at a loss when they're told by the franchiser to acquire a new system. "The PMS then has to be installed and there'll be a steep learning curve. Repairing the systems also can be time consuming, so it's a high maintenance aspect of hotel operations," he said.

Initially the Web-based PMS system would be rolled out to limited service hotels because they are, "simpler in their operations," Davis said, "and, given the explosion of growth that's occurred in this sector, there's tremendous inventory." Once the flaws are ironed out, the system would be rolled out to other lodging industry segments.

Separately, Davis was surprised at the slow pace at which business travelers were booking hotels on their companies' online booking engines. Pegasus provides an electronic booking tool for Siemens Corp. through the intranet and is testing a similar tool for the World Bank.

"We thought 2000 would be the year the numbers took off, but now it looks like it will be 2002 at the earliest before the booking tools become a significant market for hotels," he said.

Davis was skeptical that many hotel companies would build direct connections to their clients' intranet sites. "The expense is too great to justify the investment, especially when you consider that the clients provide no guarantee that the hotel company will remain a preferred supplier," he said.

Clients, furthermore, typically have multiple hotel suppliers that they work with, which would require each of them to make the investment in the intranet booking tool in order for them to stay competitive.

Corporations can do more to ensure adoption, Davis added. "If the CFO mandates that travelers use the booking tool--and refuses to reimburse those who don't--we'll start to see it really happen," he said.

The chances of Pegasus introducing a corporate booking tool are slight. "The corporate market isn't something we want to be in because we are only involved in hotels," he said. "Corporations understandably want to work with a tool through which travelers can book air, hotel, car, etc.