Global Distribution Systems (GDS) in Hotel Business: Exploring the Pros and Cons
What is a Global Distribution System?
A Global Distribution System (GDS) is a computerized network that enables travel agencies and other travel professionals to access real-time inventory and pricing information for flights, hotels, car rentals, and other travel-related services. GDSs were initially developed in the 1960s and 1970s to automate the booking process for airlines. Over time, GDSs have evolved into complex, web-based platforms that facilitate the booking and distribution of travel-related services.
In the hotel industry, GDSs have become an essential tool for hotels to market and sell their rooms to travel agents and corporate clients. By connecting hotels with travel agents and corporate clients worldwide, GDSs have revolutionized the way hotels market and sell their inventory.
How do GDSs Work in the Hotel Industry?
GDSs enable travel agents and corporate clients to access real-time inventory and pricing information for hotels around the world. Hotels that want to participate in a GDS must sign up with a GDS provider, such as Sabre, Amadeus, or Travelport. Once a hotel is connected to a GDS, its inventory and pricing information is available to travel agents and corporate clients worldwide.
GDSs work by aggregating inventory and pricing information from multiple sources, including hotels, airlines, car rental companies, and other travel-related services. Travel agents and corporate clients can search for and book hotel rooms on a GDS using a variety of search criteria, such as location, price, and availability. GDSs also enable travel agents and corporate clients to compare multiple hotels and rates side-by-side, making it easier to find the best deals and accommodations for their clients.
Benefits of GDSs for Hotels
GDSs offer several benefits for hotels, including increased visibility, wider distribution, and access to a global network of travel agents and corporate clients. Here are some of the key benefits of GDSs for hotels:
Increased Visibility
GDSs provide hotels with a global platform to market and sell their inventory. By connecting hotels with travel agents and corporate clients worldwide, GDSs increase the visibility of hotels to a much broader audience than they could reach on their own. This increased visibility can help hotels attract more bookings and revenue.
Wider Distribution
GDSs enable hotels to distribute their inventory to a much wider audience than they could through their own channels. By connecting hotels with travel agents and corporate clients worldwide, GDSs enable hotels to tap into new markets and customer segments that they may not have been able to reach otherwise.
Access to a Global Network of Travel Agents and Corporate Clients
GDSs provide hotels with access to a global network of travel agents and corporate clients. By connecting hotels with these key players in the travel industry, GDSs enable hotels to build relationships and partnerships that can help them increase bookings and revenue.
Limitations and Challenges of GDSs for Hotels
While GDSs offer many benefits for hotels, there are also some limitations and challenges that hotels need to be aware of. Here are some of the key limitations and challenges of GDSs for hotels:
High Distribution Costs
GDSs can be expensive for hotels to participate in. GDSs typically charge hotels a commission on each booking made through their platform, which can be as high as 20% or more. This high distribution cost can eat into the hotel's profit margins and make it more difficult to generate a return on investment.
Limited Control Over Pricing and Inventory
Hotels that participate in a GDS have limited control over their pricing and inventory. GDSs aggregate pricing and inventory information from multiple sources, which can result in lower prices and limited availability for hotels. Hotels also need to ensure that their pricing and inventory information is accurate and up-to-date on the GDS, which can be a time-consuming and resource-intensive process.
Dependence on GDSs
Hotels that participate in a GDS become dependent on the GDS for a significant portion of their bookings and revenue. This dependence can be risky, as changes in the GDS industry or a downturn in the global travel market can have a significant impact on a hotel's bookings and revenue.
Competition from Other Hotels
GDSs enable travel agents and corporate clients to compare multiple hotels and rates side-by-side, which can make it more difficult for hotels to stand out from their competitors. Hotels that participate in a GDS need to ensure that their pricing and amenities are competitive with other hotels in their market.
Conclusion
Global Distribution Systems (GDSs) have become an essential tool for hotels to market and sell their rooms to travel agents and corporate clients worldwide. While GDSs offer many benefits for hotels, there are also some limitations and challenges that hotels need to be aware of. To maximize the benefits of GDSs and minimize the risks, hotels should carefully evaluate their participation in a GDS and develop a comprehensive distribution strategy that balances the benefits and costs of different distribution channels. By leveraging the power of GDSs, hotels can expand their reach, attract more bookings and revenue, and stay competitive in the global travel market.