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Full Project – Examining the impact of online reservation system on the profitability of the hotel

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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Online hotel reservations are a popular method for booking hotel rooms. Travelers can book rooms on a computer by using online security to protect their privacy and financial information and by using several online travel agents to compare prices and facilities at different hotels. Prior to the Internet, travelers could write, telephone the hotel directly, or use a travel agent to make a reservation. Nowadays, online travel agents have pictures of hotels and rooms, information on prices and deals, and even information on local resorts. Many also allow reviews of the traveler to be recorded with the online travel agent. Online hotel reservations are also helpful for making last minute travel arrangements. Hotels may drop the price of a room if some rooms are still available. There are several websites that specialize in searches for deals on rooms. A hotel reservation system is a technology suite that allows you to accept direct bookings through your website and through your various distribution channels. It is often known as an online booking engine or booking systems more generally. It should integrate easily with your existing infrastructure, and allow you to automate most of the hotel booking administrative tasks at your property.

A hotel reservation system is a software application that is implemented by hotels to allow guests to create secure online reservations. The hotel reservation system can be synced, not only with your current website, but also with Facebook. This allows guests to reserve rooms in a way that is convenient for them via social media. A hotel reservation system allows a guest to plan their own trip at their convenience. It is a software tool that displays your live rates and inventory in real time, across all of your channels, and allows guests to select the dates for their trip and finalize their reservation.

The travel sector is rated among the top three product or service categories purchased via the Internet (Eric et.al, 2006). According to research carried out by Jupiter Research, the number of people who have bought travel product over the Internet is likely to double from 18.6 million in 2001 to 38.6 million by 2007. One sector within the travel industry that has been transformed by the ICT developments is the hospitality section. It is said that to compete effectively in the current business environment, hoteliers need to adopt the electronic distribution channels. In addition, research results indicate that a growing trend in rooms booked via the Internet is not emerging from existing customer bases, thereby implying that the Internet is able to attract new market segments (Connolly et al.,1998).

In response to this e-business opportunity, most hotels have already established their own websites to facilitate promotion and reservations on the web Starkov and Price (2007) predicted that at least one-third of all hotel bookings will be completed online in 2010. With respect to Malaysia, in 2005 45% of online purchases in Malaysia were related to travel related items such as flight tickets and hotel bookings. With the Internet users currently at 14.9 million which is 60 per cent of the country’s population; an increase of 302.8 per cent increase compared to the year 2000 (Internet World Stats,2008), this represents an attractive market potential. Nevertheless, while the proportion of online reservations is increasing, only 64% of hospitality firms currently handle such transactions (Client and Warner,2001). According to Cobanoglu (2001), travellers still use travel agents as their favourite reservation resource followed by toll-free reservation numbers, and then calling the hotel directly Peterson et. al (1997) find that consumers are able to gather information about products and services on the Internet; however, the actual distribution of goods and services is likely to be affected by the Internet. Although ICT experts predict that within several years the Internet will be one of the most important sources for hotel reservations and services (Cline and Warner, 2001), it is intriguing that the current customers still prefer using traditional methods which are more costly and inefficient. In the Malaysian hotel sector for instance, the Malaysia Association of Hotel (MAH) is facing problems of insufficient fund to support the online reservation system due to lack of respond from many other hotels. This is despite the system is said to cuts costs, attracts affluent customers and lessens the dependency on more traditional and expensive channels.

The lukewarm response from hoteliers could be due to the current sluggish online bookings from travelers. Although travelers are increasingly sophisticated in their technological interactions, they may avoid the online reservation system if they feel uncomfortable, even when the benefits are obvious (Meuter et al., 2003). Hence, despite the growing online market, hotels are still searching for an efficient way to persuade travellers to reserve rooms directly through the hotel online reservations. To add salt to injury, progress in related research has been somewhat lagging (Pernsteiner and Rauseo, 2000). Earlier review of existing literature indicated that too little is known of the drivers of online consumer behavioural intentions (e.g. Grewal et al., 2004). While earlier researchers have focused on online service quality (e.g. Zeithaml et al., 2002), a number of commentators have observed that online behavioural intentions while central, have somewhat been neglected (Goode and Harris, 2007). The gap in knowledge is further compounded by the dearth of research into factors that may moderate the linkage between such antecedents and behavioural intentions (Jones et al., 2000).

Although there have been efforts to study hotel customers’ online purchase intention, much of the research has focused on Western customers and cultures. Empirical studies pertaining to e- commerce across the Asia-Pacific Rim remain rare (Wu, Zhu and Xu, 2000). In response to these gaps, this paper identifies and analyses the important factors that affect hotel customers’ online reservation intention in relation with their profiles and Internet behaviour usage patterns.

1.2 Statement of the Problem

This study aims to assess problems commonly encountered by the hotel reservation system which can affect the profitability of hotel. Double booking reservation is one of the problems that hotel reservation system encounters. It is a big factor both for the customer and the hotel administration because two customers are longing to avail a limited service of a certain hotel. Some hotel finds a solution to this problem by finding another available room for the one customer and let the other customer avail the room inclusive in the double-booking reservation system. But this solution has limitations because what if there are no available rooms in the hotel affected by the double-booking reservation? An assessment to the system is highly recommended to avoid this update your property management system or central reservations system when your rooms are booked.

1.3 Research Questions

The following are some of the questions which this study intends to answer:

What is the difference between traditional and online reservation system for promoting hotels performance in Ikorodu Metropolis?
To what extent does traditional reservation system affect the Performance of Hotels in Ikorodu Metropolis?
To what extent does online reservation system enhance Performance of Hotels in Ikorodu Metropolis?

1.4 Objective of the Study

The aim of this study is to examine the impact online reservation system on hotel profitability.

The specific objectives are to:

Ascertain the difference between traditional and online reservation system for promoting hotels performance in Ikorodu Metropolis.
Determine the extent to which traditional reservation system affect the Performance of Hotels in Ikorodu Metropolis.
Determine the extent to which online reservation system enhance Performance of Hotels in Ikorodu Metropolis.

1.5 Statement of Hypotheses

From the research questions rated above, the following research hypotheses being a tentative answer to one of the research questions is hereby stated below in the null form.

H₀₁: There is no comparative difference between traditional and online reservation system for promoting hotels performance in Ikorodu Metropolis.

H₀₂: Traditional reservation system does not have significant effect on Performance of Hotels in Ikorodu Metropolis.

H₀₃: Online reservation system does not significantly enhance Performance of Hotels in Ikorodu Metropolis.

1.6 Significance of the Study

The study would give more light into the effectiveness of online reservation on profitability. Hotels will benefit from this study since the results can be used to improve their profitability through online reservation, in order to deliver a better and more effective service to guests, this study will also serve as a useful tool for future researcher who would like to carry out further research in this area

1.7 SCOPE OF THE STUDY

Since it’s impracticable to carry out the study in all the hotels in the hospitality industry in Nigeria therefore, the scope of the research was centeredTransville hotel in Oke-eletu Ijede in Ikorodu, Lagos state.

1.8 Limitation of the Study

The study will be faced with a lot of challenges and one it the problem of finance. There is not going to be enough funds to print questionnaires and to also transport the researcher to meet the desired respondents. Another one is time; the researcher is currently busy with the demand of his academics. A lot of assignments are available for the researcher to do and coupled with his desire to read and learn at the same time. These are the major challenges of this study.

1.8 Definitions of Terms

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