Disadvantages of GDS

There is always a negative side to every positive. Flowers need rainy days to grow. Those same flowers need to get cut to appear in a beautiful bouquet. And for the many positives Global distribution systemglobal distributions systems provide, there are drawbacks to consider as well.

A GDS can be an asset, but there are many hotels that chose to seek bookings through other means. With the uncertainty of the travel industry, many properties are looking for ways to cut costs and with a high ticket price, GDS’s are often one of the first to go. Some of the most common reasons hotels chose to opt out of using a GDS are:

  1. Money. The price of GDS’s alone is a deterrent for many properties. As a growing business, your funds may be better invested in other areas of your property.
  2. Priorities. Retaining customers is more important than bringing in new ones. Making sure that guests are comfortable with clean rooms, abundant amenities and a welcoming staff should be your first order of business.
  3. Industry stagnation. Despite their ability to connect agents with properties, it is ineffective if neither party uses it. A HotelHub bookings report showed that there was no growth in GDS hotel bookings in 2011, while non-GDS bookings saw growth. Hotels that don’t use a GDS get bookings through hotel aggregation sites or direct bookings, which are tried and true methods.
  4. Declining audience. One of the benefits of a GDS is that it catches the corporate traveler segment, but business travel growth is slowing. Businesses use travel agencies to book hotels and air travel, which a GDS is good at catching. But after tough economic times, a company would rather solicit one hotel chain to gain leverage in negotiating lower rates.
  5. Controversy. Many airlines have rallied against GDS’s, claiming that the fees are unreasonable. US Airways sued Sabre and American Airlines sued Travelport in 2011 for antitrust violations, claiming that GDS’s were monopolizing the business travel market. Non-GDS platforms have grown after the clash of airlines, opening up availability to properties that do not use a GDS.

There isn’t just one way to do things these days. A GDS isn’t the only answer to managing bookings and some properties are finding that a GDS is not right for them. There are plenty of options – and while none of them may be perfect, one of them will be right for your property.

Read about the advantages of GDS.

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  • Instead of GDS, what would you recommend for the independent unbranded hotel?

  • Maansi Sanghi

    The Blog mentions one aspect of GDS, I am going to be posting a blog tomorrow on the advantages of GDS as well.

    To answer your question, for properties where GDS costs is a significant overhead, it may not be the best choice if used as your main marketing and distribution strategy.

    You have to invest in creating a brand and visibility of your property and encourage more direct bookings ,have OTA presence as well and maintain direct corporate and travel agent relationships if applicable. Does your independent hotel have a good website, does it have the right visual appeal for the kind of traveler you cater to (business traveler, holiday traveler etc), do you have an easy to use option of booking and taking payments directly through your website are some of the questions for which the answer should be yes.

    A balance with all of the above and staying connected with GDS would be a good marketing mix. GDS provides a wider reach, and hotels where GDS costs is a significant overhead should release rooms in case of low season and low occupancy periods. For small and mid size hotels GDS decreases margins of profit, so we have to get more bookings through rest of the channels and use GDS to achieve your balance occupancy goal.

    To conclude for higher ARR’s, profitability and occupancy we have to be present on all possible channels including GDS where getting the right mix is the key

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