It appears that speculation surrounding the future shape & role of the traditional GDS within the business travel sector continues on an almost daily basis. Most recently this speculation has been fuelled by the news that American Airlines (AA) are apparently attempting to persuade travel agencies to use direct connects, bypassing the traditional GDS route. The airline wants to cut costs and get closer to customers by tailoring offers, which they feel isn’t possible with existing GDS technology.

But industry experts believe that AA is just the first airline, and there are others including Delta Airlines, ready to announce their own direct connect plans.

When and if other airlines follow this path, the main GDS providers could soon see millions wiped off their revenues and consequently their stock market valuations. The irony here of course is that the GDS technology was originally created for airlines! However, the perception is that the GDS providers have been slow to respond to changing market conditions and it wasn’t until the recent recession shook the market, that they thought of lowering their reliance on air revenues. Now it seems that they are seriously looking at other segments to continue their growth and spread their risk.

It appears at the moment, that hotels seem the best bet, and several of the main GDS providers are working hard to develop their business model to maximise the opportunity presented by hotels.

The reasons for this move to hotels are clear – market forces! According to The Pegasus View Oct 2010, hotel reservations are growing at a healthy pace of +20.7% year-over-year. The growth in ADR at +6.5%, combined with a growing ‘length of stay’ has contributed to the +32.3% revenue growth for the month.

Corporate travel drives a major share on the GDS, and the growth points towards a recovery. Pegasus’ Forward Looking GDS booking forecast for November till March 2011 also paint a picture of growth. Net reservation would grow to 34% y-o-y by March 2011, while ADR is expected to grow by 14% for the same period. This would all lead to net revenue growth of 62%.

Several major GDS providers have introduced their new technology offering for hotels this year. Amadeus’s recently introduced Hotel Platform, Travelport’s new mobile booking solution, and Sabre’s Red platform slated for launch in Q2 of 2011, are all geared to increase hotel participation.

Corporate travel demand is expected to be stronger in the next 6 months, and that has the potential to significantly drive forward the hotel numbers for the GDS providers – if they can succeed in their strategic drive toward Hotels. Further current efforts by GDS to grow the hotel count on their systems would help them grow these numbers further and provide an increasing buffer against the seemingly inexorable rise of online Hotel Reservation Systems.

Now, if only the economy remains stable across US & Europe!

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Aug 2, 2010

HotelHub has been designed to enable our clients to manage their Hotel operations more effectively – delivering benefits both in terms of increased revenues streams from their Hotel activities and in terms of reducing the operational costs to deliver these activities.

An End-to-end commercial value proposition

With large volumes of hotel bookings traditionally being made outside of the travel agency
channel, for TMCs the potential to capture a greater share of Hotel expenditure from existing
customers is substantial. For Travel Managers, ensuring an increased proportion of Hotel
nights are booked through approved channels not only delivers increased compliance with
Travel Policies, it also strengthens the negotiating position on rates with key suppliers.

Growing and managing hotel volumes in turn supports stronger supplier relationships, and
HotelHub does not conflict in any way with other hotel or distribution channel commercial
models. Through being able to control the point of sale display and promote preferred
suppliers, HotelHub allows users to manage the channels used to book hotels and drive down
costs.

Operational Efficiencies
HotelHub provides a large quantity of relevant, high quality and rich content. Acting as a meta
search engine, HotelHub provides more hotels than any other system whilst integrating with
existing booking channels. In addition, any new hotel content sources will be readily
integrated, growing the relevancy of the content while maintaining integrity and pricing.

HotelHub reduces operating costs through efficiency and ease of use of the system,
eliminating most manual tasks involved with hotel bookings.

Managing negotiated allotments, rates and various merchant models as well as streamlined
bill-back processes are also made easy using HotelHub.

HotelHub also provides better management information than any other system, both for
TMCs and for their clients. This helps deliver compliance with travel policies and reduction
of hotel expenditure. Additionally, HotelHub provides booking activity and productivity
measures to enable you to manage your resources in the most optimal manner.

Find out more about the benefits of HotelHub for your organisation please Contact Us