GDS Quest for Hotel Dominance Faces Obstacles
by Harvey Chipkin /This is Part Two in a series on GDSs and hotel bookings.
Travel agents have long faced a dizzying array of hotel booking channels. In the search for best rates and availability, this stew of choices has forced agents to cope with overlapping, conflicting and often incomplete, information.
Now GDSs are angling to position themselves as agents’ preferred channel for hotel bookings with products such as Travelport’s Rooms and More. (See Part One, GDSs Move to Improve Hotel Booking Process)
In addition to the traditional advantages of GDSs for agents, the GDS companies are touting newer hotel booking solutions whose browser-based content features enhanced visuals and reviews, as well as access to more non-chain hotels.
Key issues for agents
For agents, there are several key issues that affect their choice of channel for booking hotels, according to Melissa Teates, ASTA’s director of research.
“It comes down to product availability, ease/time, and finances. If they can’t find the products they need, if it is too hard, and there is a better financial incentive to book directly with the hotels, then they will not use a GDS to book,” Teates told Travel Market Report by email.
“Also, in many cases, agents will take a hotel-sponsored online course and will get upgrades, better commissions, etc., [by] booking with the hotel. This benefit may not be available booking through a GDS.”
John Hach, senior vice president, global product management at TravelClick, said that travel agents want “an interface that is time-sensitive and cost-effective.”
“That is why they have preferred the kind of codes GDSs offered. When you’re on the phone with a customer, it’s easy to just hit a two-letter code to find a brand,” said Hach, whose firm provides hotels with booking, marketing and business intelligence tools.
Two major obstacles
Douglas Quinby, senior direct of research for PhoCusWright, said he sees two major obstacles to the GDS companies’ quest for dominance of agents’ hotel bookings, especially on the leisure side.
The first is the availability of non-chain hotel inventory on GDSs. “While the inventory of big multi-brand hotel chains, such as Marriott and Hilton, is widely available in GDSs, their penetration of the smaller hotel groups, boutique hotels and other independent properties is not as deep,” Quinby said.
All three GDS companies have expanded their inventory of non-chain hotels and continue to do so. But “lots of hotel content is [still] not available to agents via GDS,” Quinby said.
The other issue, according to Quinby, is the changing landscape of travel agents. “As travel agents have shifted from all-purpose travel agents to specialists – moving away from simply writing tickets – their need for a GDS has been reduced. They’re booking more through alternative platforms – including leisure-based platforms like Vax Vacation Access or other types of websites.”
Need for aggregated content
There are three main types of hotel content that agents needs to access easily, according to Joe McClure, president of Montrose (Calif.) Travel – 1) regular retail rates; 2) corporate negotiated rates, and 3) prepaid merchant content, as found at OTAs and other websites.
Depending on the situation, any one of those could represent the best deal for the client. What the agent needs, said McClure, is a single source of aggregated shopping.
Quinby noted that GDSs’ aggregated hotel content is especially important to corporate agents, who rely on the GDSs’ integrated PNRs, which pull together air bookings with other elements of a trip.
“An integrated PNR makes agent lives easier, especially on the corporate side and especially where cost-reduction is key,” Quinby said, adding, “It’s less important on the leisure side where it’s more about service.”
McClure cited the advantage of GDS integration with agencies’ back office accounting systems.
“We need the aggregation of data into our financial systems,” said McClure. “That’s why the solution will be a simplified shopping model – connected to multiple sources on a unique display – and consolidated into the back office accounting system.”
Not always the best rates
One issue with GDSs, McClure said, is they don’t always provide the best prices or last-room availability for non-chain hotels.
“Sometimes when we call a hotel at the last minute we will find a lower special.” That’s partly a reflection of a fragmented hotel industry. As McClure explained, “rate control isn’t as strong at franchised properties.”
“For the most part, we get consistent and competitive pricing and availability for chain properties,” he added. “But there are times when we don’t always get best price for non-chain hotels through the GDS. This is something they are working on.”
Quinby agreed that traditional GDSs don’t necessarily provide the best rate. “What you have in the GDS are rack or published rates,” he said.
Wholesalers play big role
That’s one factor prompting leisure agents to turn to wholesalers’ net hotel rates.
“Wholesalers (and OTAs) typically work on a merchant or net model, where they have lower rates that they can mark up, either for inclusion in a package or to be booked separately,” Quinby said.
Wholesalers also offer more non-chain content than GDSs, he added. “As more leisure agents in the U.S. are more specialized, and seeking out more unique properties and experiences for their clients, wholesalers may become only more important as hotel aggregators for agents.”
Confused channels
McClure said that he sees hotel booking channels “getting more and more confused as the hotel companies try to take back control of their distribution.”
But leisure agents in the U.S. have adapted readily to this plethora of channels, Quinby suggested. “Agents will shop around and then pick up the phone. Agents aren’t shy – if they see different rates, they will call,” Quinby said.
The right direction
The “real challenge” for GDSs, in Quinby’s view, is aggregating the full range of content, including traveler experiences and reviews, and then “enabling agents to use that to serve customers.”
In McClure’s opinion, “GDSs, as they are today, are still a little bit outdated on providing aggregated web-based shopping.”
Travelport’s Rooms and More product is “moving along that trajectory,” McClure said. “It is still not the single source they’re aiming at, but they are directionally correct.
“The other GDSs have comparable products, and that’s certainly where the trend is going,” he said.
Related story: GDSs Move to Improve Hotel Booking Process