Bolstered by dramatic increases in the number of Internet users, this season ski resorts are spicing up their Websites with online transactions that give customers instant, real-time confirmations on everything from a room at the inn to equipment rentals. But just how soon all of this will yield significant incremental income is anybody’s guess.
During the summer, three ski conglomerates—Vail Resorts, American Skiing Company and Booth Creek—cut deals with WorldRes of San Mateo, Calif., one of the leading providers of online reservation services for the hospitality industry. Other ski entities including Intrawest, Park City and Snowbird, were expected to follow suit.
But while many ski areas believe that e-commerce is the wave of the future, they are still struggling with a host of challenges, among them:
- How to manage inventories, especially from a variety of third-party providers such as independently-owned hotels, condominiums and lodging properties.
- How to set up and market Internet packages that contain other components such as lift tickets, lessons, gear rentals, child care, branded merchandise, optional tours and restaurant reservations.
- How to sell air tickets, a process that is complicated by technical difficulties in linking to airline central reservation systems (CRS), such as Apollo, Sabre, Worldspan and Amadeus, and by the delicate issue of whether those services are comfortable with ceding any control over seat allocations.
- How to staff up for what will become a daily maintenance task.
While the early adopters are taking a deep breath and leaping into electronic commerce, many resorts are waiting on the sidelines, knowing full well that technology is still evolving. Indeed, other software providers, including Digital Frontier of Stowe, Vt., are poised to launch online reservations systems that reportedly will have more options, more functionality and more financial incentives for ski areas to sign up ancillary businesses. And companies such as IBM and Lucent Technologies are pitching resorts on what they say is the ultimate solution—a systems integration that can feed directly into database inventories.
The problem with that, and the reason why ski areas have not been jumping on this particular bandwagon, is that retooling is expensive and time-consuming. Many areas are still limping along with aging central reservations systems or with incompatible database systems.
Since only a handful of resorts experimented with online commerce last season, no one knows what kind of traffic to expect this winter.
Skiers typically are more savvy about the Internet than other groups of users, but it’s still uncertain how many will feel comfortable with spending what could amount to thousands of dollars online. Last season, the volume of Internet transactions at areas contacted by SAM barely nudged the meter past one or two percent of all bookings. Northstar-at-Tahoe, Calif., which has had online bookings since September 1997, reported about 100 room nights. “I can’t say that it made a huge difference, but I’m a believer in where this is going,” says Julie Maurer, vice-president of marketing for Booth Creek, owners of Northstar. “The transactions that we got were seamless and easy for us to deal with.”
Thus far, there’s a feeling among ski area operators that the skiers most likely to use online booking, at least initially, are the weekend drive-ups who are familiar with resorts and lodging providers. Such a trend, if born out, would favor regional markets and the middle tier of ski areas that thrive on repeat business. By contrast, the major destination resorts are not likely to entice first-time visitors without fielding telephone inquiries. Just how much time is saved by pre-educating consumers on the Internet is hard to gauge, since it depends on how much information is provided. There is concern about overwhelming users with too much, as well as too little, material.
The ski areas that signed with WorldRes and Digital Frontier claimed to have done so for several reasons. First, the initial investment was small or nothing. Second, the commission rate (five to ten percent) was comparable to travel-agent commissions. Finally, the programs consist of software that is based on easy-to-learn allocation methods. In addition, they require no reconfiguring or purchasing of hardware. In short, any resort with one or more e-mail sockets can provide online commerce.
WorldRes launched its quest for ski industry business during the NSAA convention in Florida last May. It has spent $10 million on research and development, boasts a staff of 50 at its Silicon Valley headquarters and has a steady stream of venture capital. The company’s client list includes hotels (among them Choice Hotels), small inns, resort associations, state tourism offices and visitors’ bureaus. Apart from its own site, called Places to Stay, WorldRes has nearly 20 partners such as the Yahoo and Lycos search engines, thus giving ski areas additional distribution channels to millions of Internet users. Of course, each resort can use the WorldRes technology on its own site, usually through a private-label front end that provides Web customers easy access to the invisible back end.
Under the WorldRes system, when a booking is made, the lodging property or central reservations office gets an automatic e-mail or fax notification. Using a password to get into the site, a manager or designated employee can add or subtract units based on the flow of traffic. WorldRes provides on-site training for all clients as part of a start-up fee (a figure that starts at about $7,000 for individual resorts, but is more for corporate groups). Ongoing commissions to WorldRes are highest when other middlemen such as Travelocity or Yahoo sell inventory and get a percentage of the deal.
On the Internet, consumers search for a property by entering the destination (if on a site other than the resort’s own), dates of arrival and departure, number of guests in the party and preferred price range. All properties meeting the criteria are displayed, and the user can call up additional pages that describe each property. A listing, in template form, is provided at no charge for each resort client. In some cases, consumers can check add-ons, such as lift tickets, and these are automatically factored into the final quote. Transactions are made with a credit card and the online companies insist that these are secure.
One of the early problems with Internet bookings has been that a significant number of properties fail to update their inventories—even two months out. In addition, using the WorldRes protocol, users can get a message that says there is no room available for a particular date even though the property may actually have plenty of vacancies. Digital Frontier has an answer for that: Web surfers get a prompt urging them to email or call the property directly.
Although the task of updating a listing with fresh inventory is important to gain consumer acceptance, many lodging properties have taken a casual approach to this; owing, perhaps, to the paucity of online business. In cases where a ski resort operates a central reservations desk, this becomes the clearinghouse for all participating properties, so the ski area must be diligent in getting lodges to block rooms. With smaller properties, such as bed and breakfast inns, this becomes more difficult.
It seems likely that additional players will enter the booming online travel field and thus provide lively competition for WorldRes. Digital Frontier, which was established in 1994, has pulled in major independently-owned ski areas, including Stowe, Jackson Hole and Winter Park. Ski area inventory is offered through Digital’s Online Reservations site (www.onlinereservations.com), on each resort’s site and through affiliates such as resort associations and visitors’ bureaus. It currently lists 70 hotels and offers additional products such as lift tickets, excursions and seminars. Ski areas have another financial incentive under this program: They can earn commissions by signing up other businesses such as retailers and excursion companies.
Recently, says Digital founder Karl Schroll, a new enterprise called Inntopia.com Inc. has been spun off from the original company and has received an infusion of venture capital to vamp up with new services. At presstime, the renamed and revamped Website of Inntopia.com was scheduled to be launched in time for fall bookings.
Another of the added features will be a novelty: an online auction for excess lodging inventory. “Every night, 1.3 million rooms in the U.S. go unsold,” says Schroll. Web clients will have a chance to bid on the rooms, starting at a minimum rate established by the property.
Bids are taken until a preannounced closing period is reached, when the auction is automatically ended and rooms are awarded to the highest bidders. Schroll said this service will emphasize the ski industry in its rollout.
So far, ski areas haven’t shown much interest in major online travel providers such as Microsoft’s Expedia and Sabre’s Travelocity. The reason probably is that these sites are primarily intended for booking airline seats and business hotel rooms in big cities. Both are really storefronts for airline CRS systems—Worldspan in Expedia’s case and American Airlines’ Sabre in Travelocity’s case. Expedia, however, has been examining ways to beef up its resort offerings, though it has not yet announced whether it will add the type of functionality desired by ski areas.
At Vail Resorts, Susan Rubin, director of reservations and travel, said these systems don’t take the market-basket approach—combining lodging, air and other services—in packaged transactions. Conversely, WorldRes, she says, has promised to integrate air into the second year of operation with Vail’s four resorts and is working closely to customize its software to the wintersport business.
At Park City, Brad McClaws, vice president of marketing and business development for the parent Powdr Corporation, says his resort wants to sell lodging, lift tickets, equipment rentals, lessons and logoed items for the 2002 Winter Olympics on its reworked Website this season. As SAM went to press, the resort was close to a deal with WorldRes, although it was also holding dicussions with Expedia and Travelocity about adding an air component.
“The problem with these airline CRS systems is that they all deal with the exact same inventory that is already available to travel agents and, by its nature, it tends to be chains in big cities,” says McClaws.
“The ski industry is more condo-oriented and resorts don’t have massive Marriotts, Hyatts and Sheratons at their bases,” says McClaw. Air travel, he added, is less important to skiers than lodging, which has so many more variables.
Park City will be a good test of the WorldRes system, because 90 percent of the resort’s guests are fly-in destination clients. “It’s our hope that we can ride the trend of more transactions being done on the Internet,” McClaws adds.
There are several signs that he may be right. In Monterey, a popular tourist destination along the central California coastline, a consortium of visitor attractions that use a site called www.timetocoast.com reports that 12.3 percent of all transactions are coming through the Internet, thanks to a WorldRes set-up established last spring. Interestingly, the Internet customers were spending more on their trips than those who booked through an 800 telephone number. But three-fourths of the customers were regional—the know-it-all repeat visitors who typically drive to Monterey from northern and southern California.
If resorts are concerned that adding booking engines to their Websites will lead to cutthroat discounting among ski areas and bargain-hunting by consumers, travel industry surveys indicate the opposite. The majority of online buyers, according to Karl Schroll, cite convenience as their main reason for buying on the Internet. Getting a cheap price comes in at third place in recent polls, he says, below ease of research.
What kind of staffing commitment is needed to manage an e-commerce site? At Intrawest, Charles Ku, vice-president of sales and lodging, says that a management team has been formed for each resort, with members drawn from all relevant departments. Also, new, dedicated staff positions have been created to operate the program. “We have to make sure that inventory is updated and fulfillment is done,” he says.
“The last thing that we want is to have inaccurate or inadequate information online,” says Ku. Intrawest is taking a phased approach, launching e-commerce for half of its resorts this season and the remainder next season.
Ku says Intrawest intends to be proactive in developing this avenue of business. “Something like 28 percent of the traveling public has already made an online booking, so we think that this trend will carry over to us. But we can’t just take the position of ‘If we build it, they will come.’ We have to understand how to make this new distribution channel work for everybody.”
