Global Distribution System
The Global Distribution System (GDS) is a pivotal network that enables transactions between travel industry service providers, including airlines, hotels, car rental companies, and travel agencies. Its importance lies in streamlining the booking process, enhancing global reach and efficiency for both providers and consumers in the travel industry.
Key Takeaways
- Wider Reach: GDS allows hotels to access a global network of travel agents, expanding their customer reach.
- Attracts Business Travelers: Many corporations use travel agents connected to GDS, benefiting hotels aiming for this market.
- Cost Consideration: Utilizing GDS involves fees, which hotels need to balance with room rates for optimal revenue.
- Real-Time Inventory Management: GDS enables hotels to manage inventory and rates in real time, ensuring accuracy across different booking platforms.
- Enhanced Visibility: Hotels listed on GDS gain increased visibility among travel agents and potential guests worldwide.
Introduction
A global distribution system (GDS) is a network allowing travel agents to access hotel inventories and sell rooms to their clients. For those in the hotel industry, this functions as an important method for distribution, allowing access to a wider customer base. In this article, you will learn more about what a global distribution system is, how it works, and what the benefits are for a hotel using such a system.
Global Distribution Systems Explained
A global distribution system is a computer network, which empowers service providers in the travel industry to carry out seamless transactions. In particular, a GDS is often used by a travel agency, to see real-time information and data about the availability of hotel rooms, flights, and other travel services.
Travel agents can then sell travel products and services to their clients using that information.
What Are the Benefits of Your Hotel Using a GDS?
Although those operating in hotel management aim to maximize the number of direct bookings they attract, using a global distribution system helps reach more customers. This is because the GDS provides a single point of access for thousands of travel agents across the globe, who can then book hotel rooms for their customers.
Furthermore, a GDS can be especially beneficial for a hotel aiming to attract business or corporate travelers. This is because many organizations still turn to a travel agent to book business travel, rather than attempting to book directly, as it can be easier to manage expenses this way.
What Are the Costs of Using a Global Distribution System?
While there are numerous benefits of using a GDS, it comes at a cost too. Standard practice is that a hotel will pay a small initialization fee, followed by transaction and/or agent fees on every booking. These fees can vary significantly, but it is not unusual for them to account for around 10 percent of the amount paid.
For hotel owners, it is important to balance room rates with this in mind. Ideally, to optimize revenue, a hotel should keep room rates low enough to maintain a good relationship with travel agents. Still, it should also ensure they never drop low enough for the payment of transaction or agent fees to become too problematic.
The ‘Big Three’ Global Distribution Systems
Hotels can turn to several different GDS systems around the world, with each one having its own unique features and target markets. However, it is generally accepted that there is a ‘big three’ within this industry, which are responsible for most travel agency bookings.
1. Amadeus GDS
Amadeus GDS ranks as the market leader when looking at market share for global distribution systems. It is estimated that somewhere in the region of, 40 percent of all travel agency bookings using GDS systems go through this network. However, most of these bookings are linked to flights, rather than hotel rooms.
Nonetheless, Amadeus can provide the hotel industry with excellent access to the European market, particularly as its database is hosted in Germany and its company headquarters is situated in Germany. More detailed information about Amadeus GDS system, you can read in the article “What is Amadeus GDS?”.
2. Sabre GDS
The Sabre global distribution system is the closest competitor for Amadeus regarding total market share, and it is more proportionally reliant on the hotel industry than Amadeus is. It is estimated that more than 200,000 hotels use the network to connect with travel agencies.
The company is in the U.S. state of Texas, and is comparatively stronger in the North American market than its rivals. Sabre also offers several hotel technology solutions. More detailed information about the Sabre GDS system, you can read in the article “What is Sabre GDS?”.
3. Travelport GDS
Finally, Travelport is a company that owns the Worldspan, Galileo, and Apollo systems. While the parent company is based in the United Kingdom, the Worldspan, and Galileo GDS databases are in the United States. As an organization, it provides GDS services and various other travel industry solutions.
One thing to note about Travelport is that it offers access to diverse markets, including those in the Americas, Asia, and Europe. Galileo is slightly more popular with hotels, as Worldspan is more closely associated with airlines. More detailed information about Travelport GDS system, you can read in the article “What is Travelport GDS?”.
Connecting Your Hotel to All Global Distribution Networks
Mostly, hotels connect to GDS networks via a GDS provider. Such a provider will function as an intermediary between the hotel and the global distribution system, and in most cases, a GDS provider will connect your hotel to all of the three major GDS systems at once, rather than focusing on a single one.
Moreover, a typical GDS provider will also have links to at least one property management system (PMS) or Hotel Channel Manager. This means that hotels can manage their hotel description, room listings, photos, and other information across different GDS systems from a single place, while usage can also be automated.
When optimizing revenue, a hotel may prefer to attract as many direct bookings as possible. Still, a global distribution system can be essential for increasing demand and reaching a wider audience. While fees will usually need to be paid to the GDS and the travel agent, room rates can usually be adjusted to ensure all parties benefit financially.
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
- List of Corporate Travel Agents for Hotels to Gain More Business Travellers
- The Most Important Online Distribution Channels for Hotels
- Tips To Gain More Bookings With Your Hotel Website
- Essential Hotel Marketing Strategies
- Tips To Increase Your Hotel Bookings Through OTAs
More Tips to Grow Your Business
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