GDSs Ramp Up Drive to Dominate Hotel Distribution

The GDSs, long travel agents’ preferred method for booking air, are making a big play to position themselves as the dominant channel for hotel bookings.

Enhanced visuals, the addition of browser-based content and improved access to independent hotels are among changes aimed at persuading leisure and corporate agents to concentrate their hotel bookings in the GDS channel.

Among the GDSs, Travelport is arguably the most aggressive in the hotel sector, having invested heavily in the Rooms and More booking engine it launched in 2011.

Big potential for GDSs
Travelport’s goal is to boost its hotel business enough to generate revenue on “the same scale” as its air revenue, chief executive Gordon Wilson told Travel Market Report in 2012. The potential is huge, he suggested, noting that “the global spend on hotels is bigger than air.” (See: Amadeus, Travelport: Weathering The Global Slowdown.)

Travelport’s competitors also are keen on the lodging sector, and all the GDS companies indicated they are making significant investments in enhancing their hotel product.

“Hospitality is a focus for all GDSs. While the airlines’ business continues to be consolidated, hotels offer an ever-broader range of product,” said Michael O’Connell, senior vice president, distribution and demand sales, at Pegasus Solutions Inc., which provides comprehensive IT and distribution solutions to hotels.

While travel agents’ use of GDSs is declining overall (see sidebar), GDS hotel bookings grew from 49 million in 2010 to 52 million in 2011, and they were expected to reach more than 55 million in 2012, according to John Hach, senior vice president of global travel management at TravelClick, which provides hotels with booking, marketing and business intelligence tools.

Benefits for agents
GDS providers tout multiple advantages to agents of booking hotels through their systems. Among their claims:
•    GDSs remain the most aggregated source of information for agents.
•    GDSs tie into back-office accounting and commission payments for agents.
•    GDSs incorporate all the rates agents need – negotiated, leisure, wholesale, corporate.
•    GDSs make it easy to make travel compliant with travel policies.

Of those advantages, aggregation is pivotal, as it gives agents a centralized shopping hub in an increasingly fragmented marketplace.

“The key benefit of a GDS for both the hotelier and the agent is essentially the reach of the marketplace and the aggregation of the widest selection of content into a single marketplace,” said Shelly Terry, Sabre’s vice president of land, sea and airline merchandising.

“From an agent perspective – and that of their corporate customers – they are looking for the widest selection of hotel content that they can access efficiently through a single environment that’s fully integrated into their business operation.”

Aggregation has assumed greater importance in recent years. “The hotel marketplace is one which has been phenomenally fragmented – even more so in the last 10 to 15 years,” with the growth of web intermediaries,” said Peter Waters, director of hotel distribution for Amadeus worldwide.

Enhanced hotel content
Providing expanded hotel content that is both more user-friendly and richer, eventually including visual elements such as virtual tours, is a key focus of the GDSs’ hotel strategy.

According to TravelClick’s Hach, change is on the horizon. “In the coming months, functionality will significantly improve. The next wave will be the visual piece, whether it be virtual tours or other visual elements placed in front of agents.”

Web-like experience
At Travelport, “Rooms and More now has more of an OTA look and feel,” according to Niklas Andreen, Travelport’s global vice president, global hospitality and partner marketing.

“You can get images, reviews and mapping – and can compare across multiple suppliers. Our Hotel Content Plus database brings much richer descriptive and visual hotel content to agents – providing a web-like experience.”

Sabre too has been “focusing on enhancing the content to make it more valuable to the agent and the corporate customer,” Terry said, and the GDS also plans to broaden its merchandising tools for hoteliers.

Point of sale solutions
For its part, Amadeus is working on expanding the hotel content available through its point of sale solutions, including Amadeus Hotels Plus and Amadeus e-travel Management, Waters said.  

“Amadeus has various hotel content efforts underway in response to subscriber requests to integrate the content of preferred hotel aggregators, independent and small chain properties or private hotel inventories,” he told Travel Market Report.

“We will continue to invest in our two content aggregation solutions, Amadeus LinkHotel and Amadeus Multisource. Adding more content to them will be a significant focus in the coming year.”

Point and click
All the GDS companies tout the benefits of their point and click graphical alternatives to the traditional “green screen” environment that requires the use of cryptic commands.
 
The point and click environment makes the GDS “a fantastic tool for the multinationals and the big TMCs, which are all about speed and efficiency,” Andreen noted.

The right rate
A significant obstacle for GDSs in the hotel sector has been negotiated rates.

“One key issue is that up to 30% of negotiated rates would not show up in GDSs, and agents wouldn’t book it,” Travelport’s Andreen said.

Travelport sought to address that problem last year when it introduced what Andreen called the first rate-loading compliance program. Results? “The compliance rate shot up from 80% to 95%.”

Sabre too has its eyes on this issue. “We focus on products and processes that make it easier and more efficient to ensure that all negotiated rates are in the system,” Terry said. “Some of that is technology; some of that is pure process – updating thousands of rates.

Sabre also has a Rate Assured Program.“That gives agencies the assurance that the rates in Sabre are the best the hotel would offer through their direct channels,” Terry said.

Back-office integration
For corporate travel agents especially, a key benefit of booking hotels through GDSs is their tie-in to agencies’ back-office systems.

“GDS integration of hotel bookings means seamless transfer of booking information to mid-and back-office systems,” said Waters of Amadeus. This ensures “accurate and efficient business processes, invoicing and reconciliation, reporting to clients, monitoring of supplier contracts, etc.”

This integration is especially advantageous for those agencies in the global marketplace, he suggested.

“Importantly, active PNR interaction allows for efficient international multichannel servicing, as travel agents can retrieve and manage hotel bookings through their preferred GDS environment, rather than having to go back out each time to the individual third party systems that have been used.”

Tracking commissions
Another benefit for agents touted by the GDSs is a higher rate of commission payments, thanks to the tracking capabilities and centralized nature of GDSs.

“There are things we can do to facilitate tracking and payment,” said Sabre’s Terry. “The commercial agreement is between the hotel and the agent. As a distribution provider, we help in tracking that information so the hotelier is properly communicating and insuring payment.”
 
Similarly, for bookings of any of the more than 250,000 hotels distributed via Amadeus, commission guarantees and payments are handled by the hotel providers themselves. “Amadeus is not directly involved, however, we do work to facilitate the consolidation and processing of commission payments via specialized third parties,” a spokeswoman said.

But when agents book hotels via Amadeus LinkHotel, their commission payments are guaranteed via LinkHotel’s commission handling services. (Some 6,000 independent and small-chain member hotels currently participate in LinkHotel.)

Travelport’s Rooms and More acts as intermediary when it comes to agency commission payments. “We collect commissions from all of the [hotel] aggregators that participate in Travelport Rooms and More and make a single consolidated payment to travel agents,” Andreen said.