For hotel industry business leaders, a global distribution system (GDS) functions as one of the main distribution channels, allowing travel agents to sell hotel rooms to their clients on your behalf. This has the potential to increase the total number of room bookings generated and to improve financial results. Here, you will find out more about what a GDS system is and the various ways using one can be of benefit to hotel owners.
What is a GDS System?
A GDS sytem stands for “global distribution system” and is a network, which facilitates transactions between companies in the travel industry. These networks are then used by travel agencies, who are provided with real-time inventory and pricing information for hotel rooms, as well as airline tickets, car rental services and other products.
This then allows travel agents to sell a hotel, airline or rental service’s products to travel agency customers.
Why is a GDS System Useful for a Hotel?
For hotels, the number one advantage of using a GDS is the increased demand that can be generated. This is because a global distribution systems represents a single entry point for a huge number of travel agents globally. Allowing these agents to book your hotel rooms for their clients can significantly boost total bookings and revenue.
A GDS system can be especially beneficial for any hotel that is targeting business travellers. This is because a large proportion of businesses still turn to travel agents, rather than booking travel directly.
What Are the Costs of Using a GDS System?
While a global distribution system can be extremely advantageous for those in hotel management, it is not without its costs. Generally speaking, a hotel will need to pay a small initial setup fee, along with transaction fees, which are applicable to each booking on an individual basis. In some cases, an agency fee may also apply.
The precise fees involved can vary significantly, depending on the travel agency, GDS and type of booking, but fees of around 10 percent are not uncommon. This creates a balancing act for hotels, where you need to try to set room rates so that they are low enough to generate sales through travel agents, but high enough to contend with the fees.
Which GDS Systems Are Available?
There are a number of global distribution systems out there, each catering to slightly different market segments, or offering slightly different services. However, by far the biggest three of these systems are the following:
The Sabre GDS is the second largest global distribution systems by market share, as it is used for around 35 percent of all travel agency bookings. It provides travel agents with access to services and products offered by hotels, airlines, railway providers and others within the travel industry.
Sabre itself is based in Southlake, Texas and is attractive to many hotels, due to its strength within the North American market. In total, it is estimated that 220,000 hotels use the GDS system. More detailed information about Sabre GDS system, you can read in the article “What is Sabre GDS?”.
When looking at pure market share, Amadeus is actually the largest GDS system, and is responsible for around 40 percent of all travel agency bookings. However, the vast majority of these bookings are actually for airline tickets, rather than hotel rooms. Nevertheless, Amadeus remains a key GDS for hotel owners too.
The company itself is based in Madrid, Spain, and its main database is hosted in Erding, Germany. This gives it an especially strong foothold in Europe, where it is stronger than Sabre and Travelport. More detailed information about Amadeus GDS system, you can read in the article “What is Amadeus GDS?”.
Travelport is a UK-based company, which owns the Apollo, Worldspan and Galileo GDS systems, making it the third of the ‘big three’ global distribution systems. While the company itself is based in the UK, its home market is generally considered to be the US, where the data centres for Galileo and Worldspan can be found. More detailed information about Travelport GDS system, you can read in the article “What is Travelport GDS?”.
Although it has a lower share of the market than Amadeus and Sabre, the system appeals to hotels, because it is has a lot of market diversity. Indeed, it has a significant presence in Europe, the Americas and Asia.
Connecting to a GDS System
Usually, hotels reach out to a GDS provider to help connect them to a GDS system. There are a number of different providers that offer these services, and they will usually connect the hotel to all major GDS systems simultaneously. This then allows hotels to manage their listing information, inventory and pricing from a single touchpoint.
Furthermore, a GDS provider will usually have connections with the major property management systems, and with hotel channel managers. This provides hotels with the capacity to fully automate GDS usage.
While hotel owners may prefer direct bookings, the reality is that global distribution systems continue to serve as a vital distribution channel. Through the use of a GDS system, a hotel has the capacity to reach travel agents and a much wider customer base, resulting in increased demand, more bookings and greater revenue.
More Distribution Tips to Optimise Revenue
The distribution mix that hotels choose to use have a significant impact on their revenue management strategy, and on their overall success. In the following articles you find more distribution strategies to optimise your revenue:
- List of Online Travel Agents (OTAs) to Increase Your Hotel Bookings
- The Most Important Online Distribution Channels for Hotels
- Tips To Gain More Bookings With Your Hotel Website
- Essential Hotel Marketing Strategies
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