What is Global Distribution System and how it works
The internet and eCommerce have made our lives extremely easy for us. Contributing even more to our ease are networks like GDS, Global Distribution Systems. Back in the 1960s, there were not many efficient ways to keep track and conduct business with organizations or people with geographical constraints. That is when it was felt that a more efficient method was required. The development and usage of global distribution systems started in the 1970s. That is when B2B commerce started between organizations and travel agencies felt that a better system was required for them to work effectively and fully serve their purpose.
The global distribution system can be defined as a network that helps with the connectivity of different travel agencies to multiple different organizations such as hotels. It also greatly helps with making reservations and booking different flights according to the clients’ requirements. These systems allow the travel agencies to have access to hotel inventories that can greatly help them with making different bookings according to what the client is looking for. For example, Global distribution systems help the airline to keep track of the types of rooms available in different hotels, for example, the number of luxury rooms, suites and regular rooms available in hotels that are situated in different geographical locations. That is because Global Distribution Systems help the travel agencies with being updated with the latest information available about different hotels, airlines, and tours.
Global distribution systems have not only made the lives of travel agencies easier, but it has also helped them to capture more business and reaching out even more to their potential clients. Because of the multiple benefits that are offered by these systems, they are mostly used by travel agencies. These systems have greatly changed the way the travel agencies have started operating, that is because the factor of specificity has been included and the travel agencies know when, where and how to provide their services to a large pool of different clients at once. This also helps them save time. It has also helped to maximize the number of bookings of their clients which also indirectly helps the travel agencies to generate more revenues. These systems are not only beneficial to the travel agencies but also to the hotels. That is because it helps them to attract more customers. Hotels do that because of easy accessibility to the travel agencies. This also helps the hotels to generate more revenues, hence more profits. Another major advantage of using these systems in conducting business activities is that they do not require any lengthy contracts or any major formalities that need to be performed. They also help the travel agencies target extremely specific markets and tap unexplored markets if that is one of their aims or objectives.
Another major change the GDS has brought about in the word of travel agencies is that it helps them capture more corporate level clients and businessmen who are always on the go. That is because people generally find it hard to take care of bookings and their traveling schedules so they seek the help of travel agencies to do that. It is also thought to be easier for the client as they believe that they end up saving money by hiring a travel agency to do all the work for them.
The benefits of using global distribution systems are never-ending, however, there is also some drawback that should be taken into consideration by the organizations employing these systems. The biggest drawback of using these systems is the initial cost. In the case of hotels and travel agencies, hotels usually pay and initial fees and then over a period of time, it pays the agent and the transaction fees depending on the bookings that are being done. The fees can be both high or low however it is important for hotels to make sure that their prices are not too high and that they are balanced rates considering the type of market in which they are operating. Good prices being set by hotels is the key to developing a good relationship with the travel agency. However, it is also important for the hotels to make sure that they don’t set their prices too low in an attempt to capture or attract more customers because that will eventually negatively affect the profits being generated by the hotels to a great extent.
There are three main types of global distributions systems
- Amadues GDS – This type of system is the market leader as it enjoys a good 40 percent of its market shares. It has been operating for more than 30 years in the world of global distribution systems, it operates in more than 190 markets and it has more than 17000 employees working for it. It has an extremely high level of access to the European markets and its headquarters are situated in Germany. This type of system is usually used by travel agencies to book flights.
- Sabre GDS – This type of system is the closest competitor of Amadues GDS. It is mostly used by hotels as it caters to their requirements in aiding the hotels with making reservations and bookings. This system is used by more than 200,000 hotels and it not only helps with the reservations but it also provides multiple hotel tech solutions. Its database is located in US Texas.
- Travelport GDS – This system has three main subdivisions; Apollo, Worldspam and Galileo. This system was developed in 1971 and it caters to very large and very diverse markets of Asia, The United States, and Europe. Along with the basic service, it also provides a variety of travel industry solutions. Galileo was developed for catering to the needs of hotels whereas Worldspam was developed specifically for airlines.
An intermediary is required for the efficient functioning of a GDS. That means that a GDS provider, the intermediary, will provide the GDS system to the organization. The intermediary also has access to the property management system of the organization. For example, in the case of a hotel, the hotel will be able to manage all of its details for example its photos, rates, descriptions, room listings and the services that are offered. This is helpful because it leads to the efficient management of the inventory. As reservations are made, it shows that the inventory has reduced across all channels along with the official website of the hotel itself.
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