GDS System
GDS System, or Global Distribution System, is a vital network connecting travel service providers, such as airlines, hotels, and car rental companies, with travel agencies worldwide. It’s crucial for facilitating real-time transactions, increasing visibility, and providing access to a broader customer base in the travel industry.
Key Takeaways
- Increased Demand: GDS Systems boost hotel bookings by providing access to a vast network of travel agents, significantly enhancing demand.
- Corporate Traveler Appeal: They are particularly beneficial for hotels targeting corporate travelers, as many businesses still book through travel agents.
- Balancing Costs: While advantageous, GDS Systems involve costs such as setup and transaction fees, requiring hotels to balance room rates and fees for optimal revenue.
- Targeted Marketing: GDS helps hotels reach specific market segments, enhancing targeted marketing efforts.
- Global Exposure: It provides global exposure, enabling hotels to be seen by a wider audience, including international travelers.
Introduction
For hotel industry business leaders, a global distribution system (GDS) is one of the main distribution channels, allowing travel agents to sell hotel rooms to their clients on your behalf. This can potentially increase the total number of room bookings generated and improve financial results. Here, you will learn more about what a GDS system is and the various ways using one can benefit hotel owners.
What is a GDS System?
A GDS sytem stands for “global distribution system” and is a network that facilitates transactions between travel companies. Travel agencies then use these networks, providing real-time inventory and pricing information for hotel rooms, 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 system represents a single entry point for many 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 targeting corporate travelers. This is because many 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 and transaction fees, which apply to each booking individually. 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 must try to set room rates low enough to generate sales through travel agents but high enough to contend with the fees.
Which GDS Systems Are Available?
Many global distribution systems are 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:
1) Sabre
The Sabre GDS is the second largest global distribution system by market share, 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 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?”.
2) Amadeus
When looking at pure market share, Amadeus is the largest GDS system, responsible for around 40 percent of all travel agency bookings. However, most of these bookings are for airline tickets, rather than hotel rooms. Nevertheless, Amadeus remains a key GDS for hotel owners too.
The company is based in Madrid, Spain, and its main database is hosted in Erding, Germany. This gives it a stronger foothold in Europe than Sabre and Travelport. More detailed information about Amadeus GDS system, you can read in the article “What is Amadeus GDS?”.
3) Travelport
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 is based in the UK, its home market is generally considered the US, where the data centers 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 contact a GDS provider to help connect them to a GDS system. Many different providers offer these services and will usually connect the hotel to all major GDS systems simultaneously. This allows hotels to manage their listing information, inventory, and pricing from a single touchpoint.
Furthermore, a GDS provider will usually have connections with major property management systems and 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. Using a GDS system, a hotel can reach travel agents and a much wider customer base, resulting in increased demand, more bookings, and greater revenue.
More Distribution Tips to Optimize Revenue
The distribution mix that hotels choose to use has a significant impact on their revenue management strategy, and their overall success. In the following articles, you will find more distribution strategies to optimize 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
- Click here for More Marketing Tips…
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