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GDS Technology : Overview, Pros Cons and the Future Ahead

Global Distribution Systems (GDS) are vital for connecting travel agencies with hotel, airline, and car rental services, providing 24/7 access to updated information. While GDSs involve substantial costs, they offer marketing advantages, streamline the booking process, and can help properties reach new customer segments, especially corporate travelers. However, some hotels may opt-out due to high costs and a focus on retaining existing customers rather than acquiring new ones.

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A GDS connects travel agencies : both traditional and online to airlines, hotels, car rental companies and other travel service reservation systems. A seamless connection between a central reservation system and the GDS allows agents to have access to your hotel content 24 hours a day, which ensures that information is up-to-date and reliable.
You wouldn’t buy the cheapest car seat on the market no matter what the quality, so why would you expect other products to be any different? High quality is often synonymous with high price, which can be off- putting to some, but some things you don’t want to gamble with.
A global distribution system can be quite the investment for your growing business, but it is worth the cost. A GDS will protect your property’s bottom line and connect your listings to travel agents around the world. A GDS may not be cheap, but the services included are far-reaching. Costs that go into a GDS include : # Travel agent commissions # Hotel switching fees # GDS pass through fees. # Commission tracking fees # Credit card & bank clearance fees. With all the combined technological costs and outside fees that GDS’s take care of, they are an extremely good investment when you break down the cost. Because GDS’s are so prominent, it has been difficult for airlines and properties that don’t work with them to connect with a large segment of customers. Business travelers typically use corporate travel agencies to book flights and accommodations, so that segment of the market would be lost if your property is not connected to a GDS.
Global distribution systems (GDS) have been a mainstay in the travel industry since travel agents began using the systems in the 1970s. The technology allowed agents to easily compare rates and amenities on one, easy-to- use interface. This connective service links buyers with hotels, airlines, and car rental services all in one system. Not only does this benefit the travel services and the travel agent, but the end-user as well. Having the complete itinerary in one place means easy access to alterations and a no-fuss travel day.
Packages - Properties can offer bundled packages that include a hotel stay, air travel and other travel plans. This gives better rates to guests, which is always an attractive selling point. Marketing - If you want to gain better marketing exposure without shelling out for additional marketing costs, investing in a GDS is a wise decision. The system places your property in front of numerous clients without dipping into your marketing budget. Audience - GDS also reap the benefit of reaching untapped segments for your property. If you typically attract families, broaden your reach to include corporate travelers as well. GDS are a great source for corporate travelers and many businesses use travel agencies to book itineraries through GDS. Reduced Manpower - A GDS is the trustworthy middleman that can seamlessly relay information from point A to point B, so you don’t have to take hours out of your day to do so. Another perk that comes with a GDS is the ability to update product information in real time. As rates change, managers can easily alter price points or make special offers. Agents will immediately see these changes and will be able to suggest the new opportunities to clients without skipping a beat.
There is always a negative side to every positive. A GDS can be an asset, but there are many hotels that chose to seek bookings through other means. With the uncertainty of the travel industry, many properties are looking for ways to cut costs and with a high ticket price, GDS’s are often one of the first to go. Some of the most common reasons hotels chose to opt out of using a GDS are:
Money - The price of GDS’s alone is a deterrent for many properties. As a growing business, your funds may be better invested in other areas of your property. Priorities - Retaining customers is more important than bringing in new ones. Making sure that guests are comfortable with clean rooms, abundant amenities and a welcoming staff should be your first order of business. Industry stagnation - Despite their ability to connect agents with properties, it is ineffective if neither party uses it. A HotelHub bookings report showed that there was no growth in GDS hotel bookings in 2011, while non-GDS bookings saw growth. Declining audience - GDS mostly catches the corporate traveler segment, but business travel growth is slowing. Businesses use travel agencies to book hotels and air travel, which a GDS is good at catching. But after tough economic times, a company would rather solicit one hotel chain to gain leverage in negotiating lower rates. Controversy- Many airlines have rallied against GDS’s, claiming that the fees are unreasonable.
GDSs were originally created as automated booking systems for airlines. Since its conception, the GDS has gone through many changes and has faced some serious threats along the way. In response, GDS firms have evolved through the setbacks and refined their products accordingly. GDS firms are constantly working toward creating better, more practical solutions for their customers. As the industry becomes more collaborative and more inclusive, so does the technology. Some GDS firms are recognizing the need to include non-GDS, independent hotels in their searches in order to offer a better range of choices.
At the start of 2013, GDS hotel bookings surpassed January 2012 rates by 7.9 percent, according to Pegasus data. While the rates leveled off in the following months, there was still growth in the first-quarter of 2.4 percent, according to Pegasus Solutions. In addition to the positive economic outlook, the technology of GDS itself is proving to be a powerfully tool. With greater reach and increased visibility, GDSs make the jobs of agents easier, and in an information- based industry, ease of work is a high selling point. The GDS will have many more obstacles to face in its evolution, but the future looks bright for this inclusive booking software. To know more about GDS, Cloud Technology and Hotel Technology you can read our blog HERE.
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