Is it finally time to list your hotel on the GDS?

In the early 1960s, long before the internet was a spark in human imagination, the GDS was created to serve as an electronic reservations system for airline companies. Not long after, hotels and travel agencies joined the network, and in 1992 the first Global Distribution System (GDS) was formed.

Today, the GDS is used by travel agents around the world to book flights and hotel rooms as well as rental cars, train tickets, tours, cruises, and travel packages. Despite the popularity of OTAs, many travellers prefer to have their trips arranged by an experienced, knowledgeable professional who can step in to help if travel is disrupted. And many companies who want greater control over employee travel outsource the work to a professional travel management company.

For hotels, the GDS is the primary platform for reaching travel agents and can generate a small but significant proportion of total bookings. In 2022, hotel groups reported receiving 8 % of total bookings from the GDS on average, according to h2c’s 2022 Global Hospitality Distribution Study. 

Large chains received the highest proportion, at 9 %, whereas small and medium-sized chains received 4 %. The difference is presumably less related to low demand than to the fact that fewer small groups list properties on the GDS. While the study didn’t include independent hotels, D-EDGE data shows that they are missing out on even more of the action. 

“The GDS gives us access to worldwide agencies and online travel agencies which increase our hotel’s visibility and helps us drive more bookings and generate higher revenue, especially from corporate bookings,” said Piyadol Chantadej, revenue manager at Grand Fortune Hotel Bangkok. “It has also prevented and reduced booking errors, as the GDS is a real-time system.”

While we refer to it as “the GDS,” there are actually several GDS networks. In recent years, mass consolidation has reduced the playing field to the “big three,” which collectively represent about 80 % of the global market.

• Sabre. Founded in 1960 by American Airlines in Texas, USA, Sabre was the first GDS. Today, it’s the second largest GDS network in the world and is particularly popular in North America and Asia.
• Amadeus. Founded in 1987 by a group of European airlines, Amadeus is considered to be the largest GDS today. Based in Madrid, Spain, the company has a large presence in Europe, the Middle East, and Africa. 
• Travelport. Founded in 2001, Travelport is the smallest of the three but has a foothold on all continents. Headquartered in Langley, UK, the company also owns Apollo, Worldspan, and Galileo GDS systems. 

The GDS acts as an intermediary between travel agents and travel suppliers. Whereas some large hotel brands connect directly to the GDS, most independent hotels and smaller groups must connect via a channel manager or central reservation system (CRS). 

The CRS sits at the heart of hotel distribution, connecting a hotel to all distribution channels, including the GDS, OTAs, wholesalers, and the hotel’s internet booking engine (IBE). This allows the hotel to manage inventory, pricing, and listing content from one centralised platform.

When a hotel lists on the GDS, it is assigned a GDS chain code. Independent properties and small groups usually use the CRS provider’s code. Large groups may be assigned a dedicated chain code but can still work with a CRS provider using their own code. 

Once the hotel is live on the GDS, travel agents can view its rates and availability in real-time. When an agent makes a booking, the details are transferred electronically to the hotel’s CRS and PMS, and the CRS automatically updates availability across distribution channels. 

This facilitates the integration of traveller documentation such as the trip itinerary, invoice, and safety and security reporting, as well as simplifying and synchronising modifications and cancellations, which is key in business travel, he said.

Here are some additional advantages to hotels:

• The GDS provides the same visibility opportunities to independent hotels as to chain hotels and big brands, helping to even out the competitive playing field.
• The GDS is particularly valuable as a source of bookings from business travellers. In fact, we estimate that about 80 % of bookings on the GDS are corporate, whereas 20 % are leisure.
• Corporate bookings tend to be stronger in winter and shoulder seasons when leisure bookings slow down, helping to strengthen demand year-round.
• When hotels join travel consortia programs like Internova Leaders Network and Signature Travel Network, their rates appear at the top of search results  in the GDS and the hotel is flagged as a preferred supplier, providing enhanced exposure to worldwide networks of travel professionals. 
• GDS bookings may also generate ancillary revenue for hotels, including group bookings, meetings & events, and food & beverage expenditures. 

Many companies have a managed travel program, which means that travel arrangements are handled by a travel agency or travel management company (TMC). Typically, the company will have a travel policy that outlines the processes employees must follow to book and expense travel, as well as travel rules and preferred suppliers.

Large, international TMCs like CWT, American Express Travel, and ABC Global Services manage travel for some of the largest corporations in the world. Part of a TMC’s services is to source and negotiate a company’s list of preferred vendors by sending out annual requests for proposals (RFPs) to suppliers. 

If a hotel is invited to bid, it must submit a form that provides detailed information about the property, along with preferred rates and booking policies. If the hotel is accepted into the program, its rates are loaded into the GDS but are only viewable by the designated TMC. 

If a hotel isn’t listed on the GDS, it’s at a disadvantage when bidding for corporate business. “Corporate clients often insist that hotels in their hotel program be listed on the GDS and their corporate rates be loaded,” the senior travel executive. “Corporate clients are very focussed on supplier reporting and policy adherence, and the best way to guarantee this is to force hotel reservations through required channels via the TMC.”

Another important consideration is fees. GDS fees can vary by provider ​​but typically include the costs of signup, setup, and integration, transaction fees, travel agency commissions, CRS or channel manager fees, and an annual GDS connection fee. In addition, there may be optional costs of participating in programs with TMCs and consortia and GDS advertising campaigns.

However, GDS bookings are still generally cheaper than OTA bookings, where commissions can range from 15 to 25 %. Additionally, GDS bookings generate a higher ADR on average and have a higher proportion of return guests. Nevertheless, it’s important to track acquisition costs and average booking value by channel to ensure you receive a solid return on investment.

While a number of companies provide GDS connectivity, not all are the same. Here are some of the key qualities to prioritise.

• Direct connectivity. The vendor should provide direct access to all GDS providers, negotiating arrangements on your behalf, with no need to depend on a third party. 
• Central management of rates and inventory. More than GDS connectivity, the partner should provide a central platform for managing your rates, availability, and reservations on all distribution channels, along with integration with your PMS.
• Reliable customer support. Because hotels can’t access the GDS directly, assistance from a knowledgeable partner is essential. According to the h2c study, the level of support is the No. 1 decision-driving factor for hoteliers when purchasing a new distribution system. 
• GDS expertise. The connectivity provider should have in-depth knowledge of how the GDS works and how it fits into the hospitality distribution ecosystem in order to give hotels the insights and advice they need to optimise productivity. 
• Assistance with RFPs. Submitting bids to join corporate and consortia programs can be complex and time-consuming. Your provider can make things easier by streamlining and automating the process, as well as providing advice and guidance on how to improve your chances of being accepted.
• Transparency in fees. The provider should consolidate all GDS fees on your behalf and invoice your hotel directly, providing a detailed breakdown of bookings and fees. 

For hoteliers interested in connecting to the GDS, Dubourg advises to “not hesitate!”