Home > Blogs > What is a Global Distribution System (GDS)? How does it work?

What is a Global Distribution System (GDS)? How does it work?

Inner Image

A Global Distribution System (GDS) is a central reservation system that acts as a distributor between the hotel’s or airline’s central reservation system (CRS) and travel agent service providers. It provides live information on inventory, pricing and availability of airlines & hotels to travel intermediaries such as travel agents, booking engines, online travel agencies (OTAs) and corporate travel managers.

GDS was conceptualised by the airline industry in the 1960s to automate reservations for travel agents. This revolutionised the entire process of tracking reservations and made travel intermediaries an extension of an organisation’s sales force.

How does a GDS work?

A GDS in the travel industry helps travel agents to tap into the property management system (PMS), CRS, channel manager or a system that is manually maintained by the hotel to view available room types, rates and restrictions. Similarly for airlines, a GDS is a window into the airlines’ CRS that provides information on pricing, inventory and flight schedules. When the agent makes a reservation, the GDS will communicate this information with the hotel or airline through the same manner it is integrated with the hotel, and the respective reservation is then removed from the inventory across all distribution channels. This communication can also be done via email; and previously by fax.

The major players in this travel technology space are Amadeus, Sabre, Travelport GDS (which owns Galileo, Worldspan, Apollo), Travelsky (state-run by China) and Pegasus. Each of them have their own set of pricing fees and requirements if your hotel wishes to integrate with them.

Should your hotel opt for a GDS?

A hotel should opt for a GDS only if it believes the channel can produce bookings. We have observed that only listing on a GDS may or may not produce bookings for hotels. They would need to leverage marketing modules on the respective GDS to participate in Request for Proposals (RFP), which are generally group bids. For instance, if Phocuswright is hosting an event, it would provide an RFP on the GDS requesting hotels to submit their bids for the best rates to be offered during the course of the event.

Other factors to consider when opting for a GDS are:

  • A hotel should utilise a GDS if it wishes to tap into the global corporate market. It works well for upscale hotels in cities or near airports that are targeting inbound corporate travellers. It is one of the most preferred platforms used by travel agents to book flights, hotels, car rentals, cruises and destination activities.

  • As each GDS system has its own unique pricing structure & commissions, it becomes vital for your management to understand how it works.