Assuming XSLT 3.0 and Saxon 9.6 you can make use of the serialize function to convert a transformed temporary tree to markup:
<xsl:stylesheet
xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
xmlns:p="http://sample.request.com/"
xmlns:tem="http://tempuri.org/"
exclude-result-prefixes="p tem"
version="3.0">
<xsl:output indent="yes" cdata-section-elements="tem:Data" omit-xml-declaration="yes"/>
<xsl:template match="/">
<tem:SendReservation xmlns:tem="http://tempuri.org/">
<!--Optional:-->
<tem:ProviderGuid xmlns:tem="http://tempuri.org/">1111</tem:ProviderGuid>
<!--Optional:-->
<tem:Username xmlns:tem="http://tempuri.org/">usertext</tem:Username>
<!--Optional:-->
<tem:Password xmlns:tem="http://tempuri.org/">passtext</tem:Password>
<!--Optional:-->
<tem:Data>
<xsl:variable name="data">
<DATA>
<xsl:apply-templates select="p:ReservationRequest"/>
</DATA>
</xsl:variable>
<xsl:variable name="ser-params">
<output:serialization-parameters
xmlns:output="http://www.w3.org/2010/xslt-xquery-serialization">
<output:indent value="yes"/>
<output:version value="1.0"/>
<output:method value="xml"/>
<output:omit-xml-declaration value="yes"/>
</output:serialization-parameters>
</xsl:variable>
<xsl:value-of select="serialize($data/*, $ser-params/*)"/>
</tem:Data>
</tem:SendReservation>
</xsl:template>
<xsl:template match="p:*">
<xsl:element name="{local-name()}">
<xsl:apply-templates/>
</xsl:element>
</xsl:template>
</xsl:stylesheet>
That way the result is
<tem:SendReservation xmlns:tem="http://tempuri.org/">
<tem:ProviderGuid>1111</tem:ProviderGuid>
<tem:Username>usertext</tem:Username>
<tem:Password>passtext</tem:Password>
<tem:Data><![CDATA[<DATA>
<ReservationRequest>
<Reservation>
<tktReservationGUID>13579</tktReservationGUID>
<tktState>CA</tktState>
<LocationId>1357</LocationId>
</Reservation>
</ReservationRequest>
</DATA>]]></tem:Data>
</tem:SendReservation>
If you need to do it with XSLT 1.0 then here is a sample making use of a serializer implemented in pure XSLT 1.0 and the exsl:node-set function:
<xsl:stylesheet
xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
xmlns:p="http://sample.request.com/"
xmlns:tem="http://tempuri.org/"
xmlns:exsl="http://exslt.org/common"
exclude-result-prefixes="p tem exsl"
version="1.0">
<xsl:import href="http://lenzconsulting.com/xml-to-string/xml-to-string.xsl"/>
<xsl:output indent="yes" cdata-section-elements="tem:Data" omit-xml-declaration="yes"/>
<xsl:template match="/">
<tem:SendReservation xmlns:tem="http://tempuri.org/">
<!--Optional:-->
<tem:ProviderGuid xmlns:tem="http://tempuri.org/">1111</tem:ProviderGuid>
<!--Optional:-->
<tem:Username xmlns:tem="http://tempuri.org/">usertext</tem:Username>
<!--Optional:-->
<tem:Password xmlns:tem="http://tempuri.org/">passtext</tem:Password>
<!--Optional:-->
<tem:Data>
<xsl:variable name="data">
<DATA>
<xsl:apply-templates select="p:ReservationRequest"/>
</DATA>
</xsl:variable>
<xsl:apply-templates select="exsl:node-set($data)/*" mode="xml-to-string"/>
</tem:Data>
</tem:SendReservation>
</xsl:template>
<xsl:template match="p:*">
<xsl:element name="{local-name()}">
<xsl:apply-templates/>
</xsl:element>
</xsl:template>
</xsl:stylesheet>