Hotel owners may run into the term “GDS” at some point. This is shorthand for a global distribution system. If you own a hotel and don’t know about this term yet, you should. In this article, we will discuss global distribution systems. We’ll talk about what they are, go over some examples, and then we’ll explain why they’re relevant for hotels.
A GDS, or a global distribution system, is essentially a worldwide reservation system. The simplest way to explain it is to say that it acts as a conduit between a travel booker and supplier, such as a hotel. A supplier might also be some other accommodation provider or other travel-related service in this context.
It is the job of the GDS to communicate live product data to online booking engines to facilitate automated transactions. A GDS may also communicate live data pertaining to pricing and availability.
That is not the only use of a GDS, though. You can also use one to tap into the corporate travel market. This is because such a system has the ability to present not just hotel options, but also additional travel necessities like flights and car rentals.
If a GDS is functioning correctly, it can present all of these options through one simple interface. As one might imagine, this makes it potentially quite convenient for users.
If you want to know about the history of global distribution systems, you must go back to the 1960s. At that time, hotel booking, car rentals, and similar travel options were managed in a much more inefficient way. Manual methods were all that were available for an individual trying to set up a hotel room, flight, car rental, and so forth.
Some companies realized they would immediately be seen as advantageous to travelers if they could utilize a system where all of these options were listed in the same place. Those who dabbled with early versions of global distribution systems were facilitating business to business electronic commerce, which you might see abbreviated these days as B2B. As a hotel owner, you have probably heard of electronic commerce as well. Now it is better known by the abbreviation eCommerce.
Airlines were particularly instrumental in the implementation of GDS options. They understood that if they could automate the reservation process for travel agents, that would improve productivity and time efficiency. These agents would then become an extension of each airline’s salesforce. In the modern world, global distribution systems are common. You can use them to book hotels and airfare, but also tours, rail tickets, cruises, rental cars, etc.
You will not have to look far to find examples of global distribution systems in modern times. There are several major ones in place that process and house most of the data from airlines, hotels, and other travel industry distributors. You should be aware of names like Pegasus, Travelport, Apollo, Worldspan, Galileo, Sabre, and Amadeus.
Travelport comprises Galileo, Worldspan, and Apollo. It is a UK-based company. However, you can consider the US to be its main market.
This GDS is less reliant on its home market compared to some other examples. It is mostly beneficial to hotel owners who would like to distribute their services to travel agencies worldwide.
Sabre is regarded by most hotel owners and other individuals in the travel and service industries as a global leader in data-driven solutions and innovative technology. It helps hotels, travel agencies, and airlines grow their businesses. They are also intent on enhancing and transforming the global traveler experience.
Many travel suppliers of various kinds use this system. 17 cruise lines are among them, as are 40 car rental outlets, 50 rail carriers, 200 tour operators, 200,000 hotels, and approximately 400 airlines.
Online travel agencies regard Sabre as a pioneer. They are viewed the same way by mobile and web itinerary tools, revenue management entities, corporate booking tools, and others.
Sabre has a strong presence within the North American market. That makes them attractive to many hotel owners trying to become better established. Sabre can allocate hotel inventories to travel agents globally. They can also offer many hospitality technology solutions.
Amadeus has been in business for more than 30 years. Their focal point is building critical solutions for tour operators, travel agencies, railways, hotels, and airlines. Their aim is to improve the travel experience for millions of individuals, and also to help the entities that serve these travelers.
Over 190 markets have a connection to Amedeus. However, they have a particularly strong European presence. That is due to the company itself and its database being hosted by European countries.
Hotel owners should not ignore Amadeus, as it has by far the largest global market share of any GDS on this list. That means if you associate yourself with it, you can potentially reach millions of would-be guests. Many bookings that go through Amadeus are specific to airlines. However, hotel owners can still benefit from an association with it.
At this point, you might be wondering precisely how you would use a GDS as a hotel owner. To understand this, it first helps to realize that databases pertaining to hotel booking and the travel industry in general have become labyrinthian with the popularity of online travel agencies. You are probably familiar with some of the most prominent names in this area, such as Wotif, Expedia, and Booking.com.
The owners of hotels and other travel-related entities, if they’re clever, can use technology solutions to stay relevant in this market. Part of that could mean tapping into global distribution systems, such as Worldspan by Travelport, Sabre, Galileo, and Amadeus.
A hotel has the capability, if it opts in, to send availability and live rates from its property management system (PMS) directly to a GDS. What’s more, that availability becomes accessible on online booking websites. The way this is accomplished is through a channel manager.
A channel manager is a type of technology solution. It makes it possible to sell rooms on multiple online booking sites, called channels, at the same time.
Let’s say that a reservation is made on an online booking website or GDS. When that happens, it is the job of the channel manager to instantly reduce that hotel’s inventory across all the connected channels. Those would include the hotel’s own website. At the same time, the reservation details are automatically being delivered back to the central reservation system (CRS).
If this sounds good to you, you can look into what each GDS charges to partner with it. There are various requirements and connection fees that go along with such a partnership.
You can either sign up with a GDS independently or you can do it through a technology solution. These are usually websites that exist to provide this sort of integration.
Sometimes, there is confusion among hotel owners about what the difference is between a GDS and an OTA. They are both potentially useful, but they are not the same thing.
If you have a hotel global distribution system, you can regard that as a vast network of computers. They connect online booking sites and travel agents to service providers.
These include things like hotels, airlines, and car rental agencies. This is useful because the GDS allows for real-time access to prices and inventory. The facilitation of instant reservations and bookings is made possible by such a setup.
Though global distribution systems were originally set up to assist airlines with ticket transactions, they are far more than that now. In the modern era, the entire travel industry is connected to them.
As a hotel owner, plugging yourself into this network means you have access to travel agencies and corporate travelers, and vice versa. We have already mentioned some of the most far-reaching global distribution systems, such as Sabre and Amadeus.
Meanwhile, an OTA is an online travel agency. These are consumer-facing platforms. They aggregate travel services, hotels, flights, and anything else that a traveler might like to book directly.
You can look at one as a digital marketplace. There, a traveler might compare and book many services from a wide range of providers. OTAs usually have a more extensive marketing reach, which is what makes them so valuable to hotel owners, among others.
They are perfect for targeting leisure travelers through various channels. Those might include social media platforms, search engines, and email campaigns. You may already know about ones like Agoda, Expedia, and Booking.com.
The easiest way to understand the difference between a GDS and an OTA is to say that a GDS mostly targets corporate travelers and travel professionals. In marketing parlance, this is known as a B2B business model.
By contrast, an OTA is more geared toward a B2C approach. That involves targeting and trying to sell to individual travelers. Such travelers are probably looking for the best deals and as many options as possible.
However, it would be wrong to say that though these two systems serve different primary audiences, there is no potential overlap between them. It’s not hard to find a modern travel agency that uses both. Using an OTA and multiple global distribution systems can provide a more well-rounded and comprehensive service for some clients.
Some hotel owners have also noticed that as we progress further into this century, some global distribution systems are offering more B2C services. At the same time, some OTAs are exploring avenues that are more in line with a B2B business model as well.
As a hotel owner, you may not want to pick one or the other. Instead, you should study each option and make sure you understand the unique benefits of each before you determine which one you would like to associate yourself with. Leveraging both in a balanced distribution strategy is certainly something you should consider.
Some hotels can find success by diversifying their presence using both global distribution systems and OTAs. By doing so, you may be able to maximize your reach as a hotel owner. This is a way you might cater to both larger corporate clients and individual travelers if you feel that it behooves you to do so.
If you decide you’re going to partner with a GDS, generating more revenue is probably the most crucial aspect of such a partnership. If you partner with a GDS, your hotel’s rates, availability, and any other information are all immediately available in prominent locations where travel agencies can easily find them.
Many hotels can maximize their bookings this way. You will be reaching powerful travel markets where a user might very well be willing to spend more money to ensure they get the best room available.
Coverage is another factor you should think about if you’re considering partnering with a GDS. It’s true that the number of bookings a GDS generates often outpaces those you’ll see through direct bookings.
Direct bookings definitely represent a significant amount of revenue for the average hotel. However, there are still consistently more bookings for hotels coming through global distribution systems if you look at the industry as a whole.
Not every hotel owner might decide that partnering with a GDS is the best idea, but it is certainly something you should look at carefully. Knowing what global distribution systems are and what they might do for you is part of being a responsible hotelier. If you have partners in your hotel or other individuals with whom you share decision-making power, you might want to have a conversation with them about this possibility at some point.
Hotel revenue management is a fascinating topic because even if you think you’re an expert, there’s a good chance you may still be leaving a lot of money on the table.
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