How GDS [Global Distribution Systems] Can Propel Your Hotel’s Success

Debiprasad Sarangi -

Did you know that electronic Global Distribution Systems [GDS] have facilitated real-time bookings for hotel rooms, flights, tour operators, and car rentals since the 1960s? Even before OTAs [Online Travel Agencies] emerged, GDS provided travel agents worldwide with instantaneous access to hotel and flight inventories. 

So, here’s the question: Did GDS fade away after the rise of OTAs? Absolutely not!

Although OTAs introduced a new era of direct booking convenience for travelers, GDS still remains a crucial component of the distribution ecosystem. Rather than fading away, GDS has adapted and evolved alongside the evolving travel landscape. 

It has embraced technological advancements and integrated with OTAs and other online platforms, ensuring a harmonious coexistence. By collaborating with OTAs, GDS has expanded its reach and further enhanced the visibility and accessibility of hotel inventory to a global audience.

Moreover, GDS offers unique advantages that differentiate it from OTAs. It remains an indispensable tool for hotels looking to reach a broad range of distribution channels and maintain rate parity.

With that said, let’s understand GDS in detail today. We will tell you how GDS has evolved and still holds a relevant place in today’s dynamic travel distribution sector.

So, let’s get started.

What is a Global Distribution System [GDS]?

A Global Distribution System [GDS] is a comprehensive computerized network that facilitates the distribution and reservation of travel-related services like hotel rooms, flights, car rentals, and more. It is a central platform connecting various travel service providers, such as hotels, airlines, car rental companies, and travel agencies, allowing them to exchange information and conduct real-time transactions.

Simply put, GDS acts as a middleman between your hotel’s CRS [Central Reservation System] and the travel agents to display your property’s room availability and rates. This helps travel agents to book flights and reserve rooms on behalf of their travelers. 

Despite the rise of OTAs [online travel agencies], many corporate bookers and travel agents rely on GDS to foster customer relationships and arrange travel services. 

Through GDS, they access exclusive negotiated prices and room types that are not accessible via OTAs or other distribution channels. This advantage empowers them to efficiently evaluate and book the most suitable and cost-effective options for their clients.

How Do GDS [Global Distribution Systems] Work

It’s no doubt that with the expansion of OTAs, managing databases has become increasingly complex. To leverage this trend and maximize revenue opportunities for your hotel business, you can tap into various GDS platforms, including Amadeus, Sabre, Worldspan, and Galileo. 

But how do GDS work? Let’s understand them. 

GDS services are exclusively available to authorized users who are registered and licensed. These are usually travel agencies and corporate bookers who utilize the GDS hotel booking systems to make travel reservations on behalf of other travelers. 

A GDS can share its inventory with Online Travel Agencies [OTAs]. This feature lets your hotel list the rooms on the GDS, making them available for booking on popular websites like Booking.com or Expedia. 

Within the GDS system, your hotel staff can load two types of rates for bookings: 

  • Public rates: These are visible and bookable to all agencies within the GDS network and incur commissions paid to the booking agency. 
  • Negotiated rates: These are visible only to companies with special agreements. Authorized agencies that can book these rates must enter a specific GDS hotel code, also known as a Rate Access Code. Negotiated rates, based on net rates, are not subject to commissions. Before the negotiated rate can be activated, your hotel and the company must establish an agreement and decide on the sale price together. 

Quick info: A channel manager can easily transmit your hotel’s live rates and availability from your Property Management System [PMS] to the GDS and other online booking websites.

Once a reservation is made on a GDS or online booking website, the channel manager promptly updates inventory across all channels, including your hotel’s website, while automatically transferring the reservation details back into the PMS or Central Reservation System [CRS]. 

It’s important to note that each GDS has its own set of connection fees and specific requirements for independent sign-ups. So, opt for a technology solution provider that can offer a cost-effective way to connect to the GDS. This way, your business can streamline GDS connectivity while accessing a wide range of GDS platforms to attract and manage bookings efficiently.

Advantages and Disadvantages of GDS for Hotels

Advantages

Increased Visibility:
GDS provides your hotel with broader exposure to a vast network of travel agents and corporate bookers. This helps increase brand recognition and attract new guests.

Global Reach:
GDS allows your business to tap into international markets and target diverse travelers by connecting your hotel to a worldwide audience and expanding your reach.

Streamlines the Booking Process:
GDS streamlines the reservation process for travel agents and corporate platforms, ensuring quick and efficient bookings. This leads to higher conversion rates.

Enhances the Marketing Capabilities:
Your hotel can promote exclusive deals and negotiated rates to travel agents, boosting your marketing efforts and enticing potential guests.

Improves Revenue Management:
GDS enables your hotel to manage inventory, rates, and availability effectively, optimizing revenue potential and avoiding overbooking or rate disparities.

Disadvantages

High Costs:
Implementing and maintaining GDS connectivity can be expensive, mainly if your hotel has limited resources. This also impacts the return on investment.

Lack of Direct Communication with Guests:
GDS is an intermediary between your hotel and guests, which limits direct interaction and personalized communication. This may hinder building strong guest relationships.

Limited Control Over Content:
GDS imposes certain content restrictions, making it challenging for your hotel to fully showcase your unique offerings and experiences, leading to potential limitations in attracting specific guest segments.

Rate Parity Concerns:
GDS requires your hotel to maintain rate parity across all distribution channels, which may lead to pricing constraints and challenges in offering exclusive rates or discounts.

Dependency on Third-Party Platforms:
Relying on GDS for bookings means your hotel depends on third-party platforms, subject to their policies, fees, and potential changes in the market landscape.

How to Choose the Right GDS Provider for Your Hotel

In the dynamic travel industry, selecting the right Global Distribution System [GDS] provider is crucial for your hotel’s success. And here’s how you can go about it. 

1. Assess Your Requirements

Identify your specific requirements and objectives. Consider your target market, distribution strategy, budget, desired features, and integration capabilities. This assessment will help you narrow down GDS providers catering to your needs. 

2. Research Provider Reputation

Conduct thorough research on potential GDS providers’ reputations and track records. Look for providers with a proven history of reliable service, strong industry relationships, and a positive reputation among hotels and travel professionals. 

3. Check for Compatibility and Connectivity

Ensure the GDS integrates smoothly with your hotel’s existing systems, such as your Property Management System [PMS] and Central Reservation System [CRS]. Compatibility and seamless connectivity are essential for efficient operations and accurate inventory management. 

4. Pay Attention to the Distribution Network

Evaluate the GDS provider’s distribution network and reach. Determine whether they have a vast network of travel agents, corporate bookers, and online travel agencies [OTAs] to effectively target your desired audience and increase your hotel’s visibility. 

5. Look for Negotiated Rates and Revenue Management

Consider the GDS provider’s ability to offer negotiated rates and practical revenue management tools. Negotiated rates can attract valuable corporate clients, while robust revenue management capabilities help optimize pricing and maximize profitability.

6. Understand the Support and Training Services

Assess the GDS provider’s level of support and training. A reputable provider should offer comprehensive customer support, including technical assistance, training resources, and regular updates to ensure you can maximize your services. 

7. See the Pricing Structure

Understand the pricing structure of the GDS provider, including any setup fees, transaction fees, and ongoing costs. Compare pricing models and evaluate the overall value provided by each provider based on your anticipated usage and ROI. 

8. Know the Contract Terms and Flexibility 

Review the contract terms and conditions, ensuring they align with your business objectives and allow flexibility for growth and changes in the future. Look for providers that offer scalable solutions and adaptable contract terms. 

9. User Experience and Interface

Request demos or trials of the GDS provider’s platform to assess the user experience and interface. An intuitive and user-friendly system will streamline your operations and minimize training requirements. 

10. Seek Recommendations and References

Seek recommendations from industry peers, hotel associations, or trusted advisors. Additionally, ask the GDS provider for references from their existing hotel clients to gain insights into their service quality and performance.

What Features Does a GDS Usually Have?

A good GDS offers various features tailored for your hotel to optimize distribution and attract more bookings. 

Here are some key features that it typically includes:

  • Real-Time Inventory and Rates: GDS allows your hotel to manage and update real-time room inventory, rates, and availability. This ensures that travel agents and corporate bookers can access the latest information, reducing the risk of overbooking and rate discrepancies.
  • Broad Distribution Network: GDS connects your hotel to a vast global network of travel agents, corporate bookers, and online travel agencies [OTAs]. This broad distribution network expands the hotel’s reach to diverse markets and potential guests.
  • Negotiated Rates: Your hotel can offer exclusive negotiated rates to authorized agencies or corporate clients through the GDS. These negotiated rates are only visible to specific partners, fostering direct partnerships with valuable customers.
  • Rate Parity Control: GDS helps your hotel maintain rate parity across all distribution channels, ensuring consistent pricing for all agents and avoiding rate conflicts.
  • Seamless Integration: GDS platforms can seamlessly integrate with hotel Property Management Systems [PMS], Central Reservation Systems [CRS], and online booking engines to streamline inventory and reservation management.
  • Commission Tracking: This feature allows your hotel to accurately manage commission payments to travel agents and agencies.
  • Multilingual and Multi-currency Support: GDS platforms typically support multiple languages and currencies, accommodating international travelers and agencies.
  • Reporting and Analytics: They also have comprehensive reporting and analytics tools, enabling your hotel business to analyze booking trends, monitor performance, and make data-driven decisions to optimize revenue.
  • Group Bookings: You can use GDS to attract and manage group bookings for events, meetings, and conventions too, which makes it easier for travel agents to arrange group reservations.
  • Corporate Travel Policy Compliance: GDS platforms can enforce corporate travel policies for corporate bookings, ensuring adherence to specific guidelines set by companies.
  • Mobile Accessibility: Many GDS providers offer mobile applications or responsive interfaces, allowing travel agents to access the system on their devices for bookings and information.
  • Support and Training: GDS providers often offer customer support and training resources to assist hotels in maximizing the platform’s features and benefits.

Tips to Optimize Your GDS Usage 

To get the most out of your GDS platform, choosing the right provider that offers a comprehensive range of GDS services is essential. 

Here’s a checklist to ensure you harness the full power of GDS:

  • Pooled Inventory: Opt for a GDS connection that supports pooled inventory, allowing you to simultaneously market all your hotel rooms to multiple distribution channels. This ensures maximum bookings and revenue without separating inventory for different channels.
  • Commission-Free Structure: Select a GDS partner that doesn’t impose commission fees for delivering bookings to your hotel’s Property Management System [PMS]. Avoid unnecessary revenue deductions to focus on boosting bookings.
  • Integration Capabilities: Pick a GDS that seamlessly integrates with your existing PMS, online booking engine, and channel manager. This simplifies the process of implementing and managing your distribution strategy.
  • Comprehensive Reporting: Choose a GDS software that provides robust reporting tools for data analysis, aiding you in making informed decisions regarding your marketing and distribution plan.
  • Target Specific Markets: Leverage the GDS’s ability to tap into influential market segments by filtering access based on geographical location and specific traveler types.
  • Affordable Connection: Partner with a provider that streamlines the GDS connection process, eliminating the need to sign up with each platform. Access all major providers like Sabre, Travelport, and Amadeus with ease.

When representing your hotel on the GDS, optimize your hotel description. Ensure it acts as your hotel’s electronic brochure, providing essential information to travel agents, including property descriptions, amenities, and local attractions. 

Optimize your hotel description with a bulleted format and condensed information, making it easily accessible for travel agents to source your hotel for their clients.

Key Performance Indicators [KPIs] for Measuring GDS Performance

Mastering the art of data-driven decision-making is the key to your hotel’s success. But what KPIs to measure to see if the decision to implement GDS was successful? 

Here are the factors to measure GDS success:

1. Booking Conversion Rate

This KPI shows how effectively your GDS converts searches into actual bookings. It calculates the percentage of GDS searches that result in confirmed reservations. A higher booking conversion rate indicates that your GDS listings are compelling and enticing to travel agents and potential guests. 

How to boost your booking conversion rates: Craft engaging content, competitive rates, and irresistible promotions that inspire action.

2. Room Night Booked

This KPI measures the total number of room nights booked through the GDS over a specific period. It provides an overall snapshot of the GDS’s effectiveness in generating bookings for your hotel. A consistent upward trend in room nights signals that your hotel’s GDS strategy is hitting the mark. 

How to elevate this KPI: Consider offering exclusive negotiated rates or special packages to attract more bookings.

3. Average Daily Rate [ADR]

ADR tracks the average daily rate received for rooms booked through the GDS. It’s a vital KPI to ensure your hotel’s pricing strategy aligns with market demand and maintains rate parity across all distribution channels. 

How to optimize ADR: Regularly monitor and adjust your rates to remain competitive and drive higher revenue.

4. Length of Stay [LOS]

This metric reveals the average number of nights guests stay at your hotel when booked through the GDS. Optimizing LOS can help you manage demand fluctuations, maximize room utilization, and enhance the guest experience. 

How to improve LOS: Offer enticing stay packages or promotional rates for longer stays to influence this KPI positively.

5. Revenue from GDS Bookings

This KPI clearly indicates the GDS’s contribution to your overall revenue. Track the total revenue generated from bookings made through the GDS to understand its impact on your bottom line.

How to increase revenue from this KPI: As you analyze this data, consider refining your GDS strategy to attract higher-yield bookings and drive revenue growth.

6. Market Share

Market Share reflects your hotel’s presence and performance relative to your competitors within the GDS channel. Analyze your hotel’s market share regularly to identify opportunities to gain a larger slice of the GDS pie. 

How to improve this KPI: Offer unique promotions, collaborate with strategic partners, and optimize your content to boost your market share.

How to Access Top GDSs with a GDS Software

Many technology providers offer a seamless single point of entry to help your hotel access thousands of travel agents worldwide. Most top-tier GDS software providers offer direct connections to the most prominent GDSs, eliminating the need for your hotel to sign up with each one individually. 

The integration also extends to your central reservation and property management systems, effectively eliminating the hassle of manual data entry through the channel manager. Your hotel can save money and time by opting for a good software provider. 

Not just that, you get to access an extensive network of retail and traditional travel agents with a single connection. Once you sign up and integrate, you typically pay a transaction fee only for confirmed bookings. This helps you avoid unnecessary commission charges from providers. 

Here’s how a GDS connects vendors’ inventory to the service providers for efficient bookings: 

  • Your hotel links the inventory directly to the GDS after signing up. 
  • Customers can then book rooms through various channels and portals associated with the GDS, including traditional travel agents. 
  • The entity that sells the room earns a standard commission, which is payable upon successful transaction completion. 
  • The hospitality company continuously updates service providers with real-time inventory information to prevent overbooking. 
  • Guests make payments directly to the hotel; subsequently, the hotel pays the agent involved in the booking process.