Global Distribution System for hotels is an essential tool for the hospitality industry, connecting hotels with travel agents and travel websites globally.
These systems increase bookings and visibility. GDS software is a giant database that stores information about flights, hotels, and other travel services.
Nearly 60% of hotel bookings worldwide are made online through Global Distribution Systems (GDS).
These systems allow travel agents and online booking websites to access live prices and availability, making the booking process quick and efficient. For hotels, being on a GDS means reaching more customers and significantly boosting bookings.
This guide will explain GDS, how it works, and why hotels must use it to stay competitive in the hospitality industry.
What is a Global Distribution System (GDS)?
A Global Distribution System (GDS) is an extensive, computerized network that connects travel agents, online booking websites, and service providers like hotels, airlines, and car rental companies.
These B2B travel systems provide real-time access to inventory and prices, facilitating instant bookings and reservations.
GDS systems are essential in the hospitality industry as they help hotels increase their visibility and bookings by connecting them to a global network of travel agents and online platforms.
The concept of GDS dates back to the 1960s when American Airlines and IBM developed the first Computer Reservation System (CRS) to streamline the booking process.
This system evolved over the decades to include various travel services beyond flights, becoming the comprehensive GDS we know today.
Characteristics of a Global Distribution System
Global Distribution Systems (GDS) are essential for hotels to manage bookings efficiently and increase visibility. Critical characteristics of GDS include real-time inventory updates, broad reach, centralized management, and data analytics.
1. Real-time Inventory Updates
Real-time inventory updates are a crucial feature of a Global Distribution System (GDS) in the hotel industry. These systems ensure your hotel’s availability and rates are constantly updated across all connected platforms.
When a room is booked or canceled, the GDS automatically updates the inventory, preventing overbooking and ensuring that all travel agents and booking websites have the latest information. This automatic synchronization makes the booking process smoother and more efficient.
Hotels can confidently manage their inventory, knowing that changes are immediately reflected across all channels. This level of accuracy is vital for maintaining a good hotel reputation and providing a reliable service to guests and travel partners alike.
2. Wide Reach
One of the most significant advantages of GDS systems is their broad reach. Hoteliers can access a vast network of travel agents and booking platforms using a GDS. This means your hotel can be seen by more potential guests, maximizing your customer base.
Whether someone is booking a flight, a car rental, or a hotel room, the GDS makes your hotel visible to millions of travelers around the globe.
This extensive reach is particularly beneficial for attracting international travelers who might not otherwise find your property. Leveraging a GDS’s wide reach can significantly enhance a hotel’s revenue management and occupancy rates.
3. Centralized Management
Another critical feature is centralized management. With a hotel GDS, hoteliers can manage their rates and inventory from a single platform, simplifying distribution and saving time.
You can make changes in one place instead of updating multiple systems, and the GDS will ensure that these updates are reflected across all connected platforms.
This centralized approach reduces the risk of errors and streamlines operations, allowing hotel staff to focus on other essential tasks. Efficient rate and availability management is crucial for optimizing revenue and maintaining competitive pricing.
4. Data and Analytics
GDS travel systems also provide valuable data and analytics. Hotel owners and managers can gain insights into booking trends and guest behavior. This information can help optimize marketing strategies and improve business decisions.
For example, you can see which times of the year are busiest, what types of rooms are most popular, and where most of your guests come from. Using this data, you can adjust your marketing efforts to attract more guests and increase bookings.
Data analytics provided by GDS can lead to better-targeted marketing campaigns and more strategic business decisions, ultimately improving a hotel’s profitability.
Major GDS Players
Global Distribution Systems (GDS) are crucial for connecting hotels with travel agents and booking platforms. Among the significant GDS players are Amadeus, Sabre, and Travelport, each offering unique advantages and extensive networks.
1. Amadeus
Amadeus is a leading global provider of GDS for the travel industry, with a strong presence in Southeast Asia.
Established in 1987, Amadeus has become one of the largest GDS providers worldwide. It offers a comprehensive range of services, including hotel reservations, flight bookings, car rentals, and more.
Amadeus is particularly well-regarded for its innovative technology solutions, which help travel agents and hoteliers streamline their operations and improve efficiency.
Amadeus operates in over 190 countries, with its headquarters in Spain. It provides access to a vast network of travel agents and booking platforms.
This extensive reach allows hotels to increase visibility and attract more guests worldwide.
2. Sabre
Sabre is another prominent GDS provider for the hospitality industry. It is known for its comprehensive travel solutions and strong presence in North America. Founded in 1960 by American Airlines, Sabre has become a key player in the global travel industry.
One of its notable subsidiaries is Abacus, a dominant GDS player in Asia. Sabre offers a wide range of services, including hotel reservations, flight bookings, and car rentals, making it a versatile platform for travel agents and hoteliers.
Sabre’s technology solutions enhance the booking experience by providing real-time access to inventory and prices. This allows travel agents to offer efficient and reliable services to their clients.
Sabre’s extensive network and innovative solutions make it a valuable tool for hotels looking to increase their bookings and improve their operations.
3. Travelport
Travelport is a primary GDS travel services provider that incorporates Galileo and Apollo, both of which have established Southeast Asian networks.
It was founded in 2001 and is headquartered in the United Kingdom. It operates in over 180 countries and offers a wide range of services, including hotel reservations, flight bookings, and car rentals.
Travelport’s platform is known for its user-friendly interface and advanced technology solutions, which help travel agents and hoteliers manage their bookings more efficiently.
Galileo and Apollo are two critical systems under Travelport, providing extensive reach and connectivity to a global network of travel agents.
This allows hotels to access a broader customer base and increase their visibility in the competitive travel market.
How GDS Works for Hotels
Global Distribution Systems (GDS) are crucial in helping hotels and travel vendors manage bookings and connect with a global network of travel agents and online platforms. Here’s how the connection and booking processes work for hotels.
1. Connection Process
Hotels connect to GDS systems through a technical integration process that involves linking their Property Management System (PMS) with the GDS network. This connection can be made directly or through a GDS connectivity provider.
For example, hotels like Marina Bay Sands and The Fullerton Hotel Singapore use GDS to reach a broader audience.
They integrate their PMS with GDS providers such as Amadeus, Sabre, or Travelport. This integration ensures that the hotel’s inventory, rates, and availability are constantly updated across all connected platforms in real time.
By using GDS, these hotels can manage their room availability and pricing from a single platform, making it easier to handle bookings efficiently.
For a deeper understanding, you can explore channel managers facilitating this process.
2. Booking Process
The booking process for hotels through GDS starts when a customer searches for a hotel using a travel agent or an online booking platform connected to the GDS. For example, a traveler looking to stay in Singapore might use a travel agent to find available rooms at Marina Bay Sands.
The travel agent accesses the GDS to check real-time availability and rates. Once the customer selects a hotel, the travel agent can immediately make the reservation through the global distribution system for hotels. The system then updates the hotel’s inventory across all platforms to reflect the new booking.
The customer receives confirmation, often with a single confirmation number, for all travel-related bookings (e.g., flights, car rentals, and hotel stays). This streamlined process makes it easy for travelers to book multiple services in one go.
Hotels benefit from this efficiency by getting instant bookings and updated inventories, reducing the risk of overbooking.
Benefits of Using GDS for Hotels
Global Distribution Systems (GDS) offer numerous benefits for hotels, significantly enhancing their operations and market reach. Here’s a detailed look at how GDS can benefit hotels.
1. Increased Visibility
One of the primary benefits of hotel GDS is the increased visibility it provides to hotels. By connecting to a GDS, hotels can showcase their availability and rates to a vast network of travel agents and booking platforms worldwide.
This increased exposure is particularly beneficial for hotels in tourist-heavy areas. For instance, hotels in Bali, such as Ayana Resort and Spa, and Phuket, like The Slate Phuket, attract numerous international tourists.
By using GDS, these hotels can ensure that their properties are visible to potential guests worldwide, leading to higher booking rates.
Benefits of increased visibility:
- Hotels appear in searches by thousands of travel agents and booking sites daily.
- Detailed descriptions, high-quality images, and up-to-date availability make hotels more attractive.
- Global visibility helps maintain high occupancy rates and maximize revenue.
2. Expanded Reach
GDS for hotels expands their reach, allowing them to tap into international markets that might otherwise be inaccessible. Using a GDS, hotels can attract tourists from various regions, including Asia-Pacific and Europe.
This is particularly important for hotels in destinations popular with international travelers. For example, the Shangri-La Hotels and Resorts chain, which operates across Southeast Asia, benefits immensely from GDS’s global reach. This system allows them to market their properties to a broad audience, ensuring they attract diverse guests.
Advantages of expanded reach:
- Access to international markets and diverse customer base.
- Reduced reliance on local tourism and more consistent bookings year-round.
- The attraction of tourists during off-peak seasons ensures steady revenue.
3. Efficient Management
GDS systems offer significant advantages in terms of efficient management. By centralizing the management of bookings, rates, and availability, GDS streamlines operations and reduces the risk of errors.
For successful hotel chains like Shangri-La Hotels and Resorts, this efficiency translates into better guest experiences and higher operational productivity.
Hotels can manage their inventory through GDS from a single platform, ensuring all connected booking channels are updated in real time. This real-time synchronization prevents overbooking and accurately reflects room availability across all platforms.
Critical features of efficient management:
- Centralized management simplifies the process of adjusting rates and availability.
- Real-time updates across all platforms prevent overbooking.
- Dynamic hotel pricing strategies optimize revenue and occupancy rates.
- Data and analytics provide insights into booking trends and guest preferences.
Example:
- A hotel chain in Southeast Asia might notice an increased demand for luxury rooms during certain months through GDS analytics.
- They can adjust pricing and marketing efforts accordingly, maximizing revenue during peak periods.
- Efficient management improves operational productivity and guest satisfaction, leading to repeat bookings.
Challenges of Using GDS
While Global Distribution Systems offer numerous benefits for hotels, hoteliers need to be aware of several challenges. Understanding these challenges can help hotels better prepare for and manage their GDS integration effectively.
1. Connection Fees
The connection fee is one of the initial hurdles for hotels looking to use a GDS. These are one-time fees that vary depending on the GDS provider chosen. Connecting to major providers like Amadeus, Sabre, or Travelport can involve significant setup costs.
These fees cover integrating the hotel’s Property Management System (PMS) with the GDS, ensuring seamless data exchange and real-time updates.
While these fees can be a substantial upfront investment, they are necessary to gain access to GDS’s vast network of travel agents and booking platforms. Hotels must consider these costs and plan accordingly to ensure a smooth integration process.
2. Transaction Fees
Another ongoing cost associated with GDS systems is the transaction fee. Hoteliers should expect to pay a commission on bookings generated through the GDS, typically a percentage of the room rate.
This commission can range from 10% to 20%, depending on the provider and the specific agreements in place.
For example, a hotel that frequently books rooms through Sabre may negotiate different rates than one using Amadeus.
These transaction fees can add up quickly, especially for high-volume bookings, so hotels must account for these costs when pricing their rooms and calculating their overall revenue.
Understanding each GDS provider’s fee structure can help hotels make informed decisions about which system best suits their financial strategy.
3. Complexity
Integrating and managing a GDS for hotels can be technically and operationally complex. The initial setup requires significant technical expertise to ensure the hotel’s PMS is correctly linked to the GDS.
This process often involves coordination with GDS connectivity providers and may require changes to hotel IT infrastructure.
Additionally, managing a GDS involves continuously monitoring and updating rates, availability, and other critical data. Hotels must ensure that their staff is adequately trained to handle these tasks, which can add to operational overhead.
The complexity of managing a GDS means hotels must be prepared for a learning curve and potential technical challenges.
4. Competition
Another significant challenge for hotels is the competitive landscape within GDS systems. To attract bookings, hotels need to position themselves effectively within the GDS.
This means competing not only with local competitors like RedDoorz but also with international hotel chains like Marriott.
Hotels must ensure that their listings are attractive and competitive in terms of pricing, amenities, and overall value. This often requires strategic marketing efforts and regular analysis of competitor offerings.
By staying aware of the competitive environment, hotels can adjust their strategies to stand out within the GDS and attract more bookings.
How to Choose the Right GDS for Your Hotel
Choosing the right Global Distribution System (GDS) for your hotel is crucial for maximizing visibility, bookings, and operational efficiency. Here are vital factors to consider when selecting a GDS provider.
1. Cost Structure
One primary consideration when choosing a GDS is the cost structure. Different providers charge varying connection fees, transaction fees, and ongoing maintenance costs.
It’s important to compare these costs across several GDS providers to find the best fit for your hotel’s budget. Connection fees are usually one-time charges for integrating your Property Management System (PMS) and the GDS.
Transaction fees are recurring costs, typically a percentage of each booking made through the GDS. Additionally, consider any ongoing maintenance or service fees that may apply. By carefully analyzing these costs, you can select a GDS that offers the best value for your investment.
2. Commission-free Structure
Some GDS providers offer a commission-free structure, where hotels do not have to pay a percentage of each booking as a commission. Instead, these providers may charge a flat fee or have other pricing models.
Choosing a commission-free GDS can be advantageous as it allows you to retain more booking revenue. However, it’s essential to evaluate the GDS’s overall cost-effectiveness, considering both flat fees and potential hidden costs, to ensure it aligns with your financial goals.
3. PMS Integration
Another critical factor is the ease of integrating your Property Management System (PMS) with the GDS. Seamless integration ensures that your hotel’s availability, rates, and inventory are automatically updated across all platforms connected to the GDS.
This reduces the risk of overbooking and ensures that all booking channels have accurate and up-to-date information. When evaluating GDS providers, check their compatibility with your existing PMS.
Providers with robust integration capabilities can save your hotel time and reduce operational complexities. For more details, you can explore PMS integration guidelines.
4. Market Reach
The market reach of a GDS provider for hotels is crucial, mainly if your hotel targets specific tourist markets. If your hotel is located in Southeast Asia or aims to attract tourists from this region, choosing a GDS with a strong network presence is essential.
Providers like Amadeus, Sabre, and Travelport have extensive networks in Southeast Asia, making them suitable choices for hotels in this area.
A substantial market reach ensures that your hotel is visible to a wide range of travel agents and potential guests, increasing your chances of securing more bookings.
5. Integration Ease
Integrating a GDS with your hotel’s existing systems should be straightforward and minimally disruptive. Look for GDS providers offering user-friendly integration processes and adequate technical support during the setup phase.
Ease of integration speeds up the process and ensures that your staff can quickly adapt to the new system without significant training. Providers offering comprehensive onboarding and ongoing support can help smooth the transition and address any issues.
6. Comprehensive Data Insights
Access to comprehensive data insights is a valuable feature of any GDS. These insights can help you understand booking trends, guest behavior, and market dynamics. Look for GDS providers that offer robust reporting and analytics tools.
Analyzing this data allows you to optimize your marketing strategies, adjust pricing, and improve your overall business operations. Detailed data insights enable you to make informed decisions that enhance your hotel’s performance and profitability.
GDS vs. Other Distribution Channels
GDS vs. OTAs (Online Travel Agencies)
Global Distribution Systems (GDS) and Online Travel Agencies (OTAs) are essential channels for hotel bookings, but they serve different purposes and have distinct advantages and disadvantages.
GDS systems, like Amadeus and Sabre, are primarily used by travel agents to access real-time data on hotel availability and rates, making them ideal for corporate and high-volume bookings.
In contrast, OTAs like Agoda and Traveloka cater directly to consumers, offering a wide range of hotels, flights, and vacation packages.
Pros of GDS:
- An extensive network of travel agents.
- Ideal for corporate and business travel.
- Provides real-time inventory updates.
Cons of GDS:
- Higher transaction fees.
- Complex integration process.
Pros of OTAs:
- Broad consumer reach.
- Lower upfront costs.
- User-friendly interfaces.
Cons of OTAs:
- Higher commission rates (15-20%).
- Intense competition among hotels.
GDS vs. Direct Bookings
Direct bookings are highly valuable for hotels as they eliminate intermediary fees and allow for direct customer relationship management. Singaporean hotels like Raffles Hotel Singapore emphasize direct bookings to maximize profitability and foster stronger guest relationships.
Direct bookings typically come through a hotel’s website or direct contact, providing hotels complete control over the guest experience and data.
Pros of Direct Bookings:
- There are no commission fees.
- Direct interaction with guests.
- Better control over brand experience.
Cons of Direct Bookings:
- Requires significant marketing efforts.
- Lower reach compared to GDS and OTAs.
Frequently Asked Questions (FAQs)
What is the difference between IDS (Internet Distribution Systems) vs. GDS?
IDS refers to internet portals that offer hotel reservations directly to consumers, including OTAs like Expedia. Conversely, GDS connects travel agents with live data on hotel availability and rates, catering more to corporate and business travel needs.
What is the difference between GDS and CRS (Central Reservation System)?
GDS links multiple travel service providers, including airlines and hotels, for broad distribution through travel agents. CRS is a system hotels use to manage their bookings and inventory, which can then be linked to various distribution channels, including GDS.
Conclusion
Choosing the right Global Distribution System for hotels can significantly enhance their visibility, reach, and operational efficiency. By comparing GDS with other distribution channels like OTAs and direct bookings, hoteliers can better understand their unique benefits and challenges.
GDS provides extensive reach and is ideal for corporate bookings, while direct bookings offer higher profitability and better customer relationship management.
Understanding these differences allows hotels to utilize each channel strategically, ensuring a balanced and effective distribution strategy.
Leveraging the strengths of GDS, OTAs, and direct booking channels can help hotels maximize their occupancy and revenue in the competitive hospitality industry.
