Does the GDS Code really Matter?

Over the past few years,  several medium-sized hotel chains have migrated from using the codes of affiliated and often better known marketing groups to their own GDS (Global Distribution System) code.  Some  experienced initial concerns, due mainly to scant information and confusion about the technology.   Several months later,  all are reporting excellent results, and considerable savings to annual global revenue.

Establishing an individual GDS code has not always been financially viable for smaller hotel groups, or even individual hotels.  But technologies on the market today have widened opportunities and removed the barriers that existed in the past.  In addition, there has been the lack of general knowledge of some fundamental principles, notably:

• Travel agent booking patterns, where research has identified that travel agents hardly ever search on code, but rather on the name of a hotel or city, to find some of the best deals available and access a wide range of properties.

• Business coming through a marketing partner’s reservations system was not generated by them, rather through them by the travel agents using one of the GDS systems to book hotels for their clients.

• Hotels already well-known as individual brands would not be disadvantaged by the use of a relatively unknown GDS code, since agents would recognize them by their own brand.

• Past failures of one or two companies that made earlier transitions were due to a downturn in market conditions, changes in market mix, or ineffective loading of rates into the new CRS system.

Paul White, Vice-President Operations for luxury hotel group Orient-Express Hotels, agrees: ‘”There was a lot of conflicting information at the time, and some of our managers were a little concerned about adopting a relatively unknown GDS code, OE.  They felt that it may not be as easily recognised by agents in the GDS, and could result in a drop in bookings.  However the reverse was true.  We have saved approximately half a million dollars per annum since the cutover, reservations increased by 3%, and revpar by 5%.  We now view the operation as a resounding success.”

“We chose Pegasus’ CRS, the same platform used by Leading Hotels of the World - from which we migrated - because they were a good fit for our needs and provided the greatest ease of transition,” he continues. 

Maybourne Hotel Group, formerly known as The Savoy Group, cut over to its own GDS code also with Pegasus in October 1999 and subsequently achieved a substantial increase in revenues from GDS bookings.   

Chief Executive Officer of Maybourne Hotel Group, Geraldine McKenna, says: “We were always confident that our approach was going to be the right one. We stayed focused on our objective and the immediate results proved that we had made the right decision.   The rapid increase in bookings and the associated lower costs were responsible for a considerable increase in profitability.”

“Another major advantage,” Ms McKenna continues, “was the introduction of a single image inventory throughout all channels of distribution.  This offered us a real time availability of rooms,  a gain in efficiency when loading rates and consequently, better financial performance through improved revenue management.”

Rosewood Hotels and Resorts was one of the most recent companies to launch their GDS code, using SynXis as a provider, in December 2004. Commenting on the transition, Robert Boulogne, Vice President - Sales and Marketing, says:  "Our focus was on the GDS transition. Early on, we identified all of the various activities and programs provided by the affiliate marketing group and determined which of these programs were valuable to the majority of our hotels and resorts.”

“Before the cut over, we focused on sales, annual RFP solicitation, system training, and operational procedures for negotiating program acceptances and communicating rate loading information,” he continues. “After the cut over, our focus shifted to a very tactical approach related to annual negotiated and consortia rate loading."  

"It is critical to keep the pressure on everyone throughout the organization to visit with their accounts,  check rate access, and verify your code on the Sabre HST tables. Communication between the corporate and agency accounts, property reservations, regional and property sales, corporate and vendor account management, and database services is vital."

Several critical issues emerge as being essential for a successful cutover:

• Appoint a dedicated account manager to help the hotel’s reservations managers to prepare for the transition.  David Grossniklaus, e-Distribution manager at Orient-Express Hotels agrees. “Reservations managers don’t always have the expertise necessary for technological change, and need overall assistance and hand-holding during and after the cutover.”

• General assistance would include CRS management, electronic channel optimisation, help with analysis of  GDS and web reports, ensuring  that voice and web are updated, ensuring corporate accounts are aware and adjust their rate access codes for booking corporate rates, and RFP coordination, resolving rate loading issues and supervising general processes.

• Select the right technology provider to establish the CRS, with an excellent reputation for service and the latest technologies,  established interfaces with the hotel PMS(s), excellent connectivity with all the GDS(s), and aim for a shorter (2-3 year) contract period in the light of fast-changing technologies. 

• Occasionally comfort levels and ease of transition can override technological superiority, in which case use the same outsourced CRS provider as the incumbent marketing group from which the hotel is migrating.

• Choose a quality voice provider, which may not be the same as the CRS provider, and ensure thorough and ongoing training of the reservations teams.

• Choose a robust web booking engine, which has direct connectivity to the CRS, wide access to various ADS/IDS (web) channels, and ideally a single-screen reservation system.

• Order electronic analysis tools such as TravelCLICK or Electrobug reports to monitor GDS and web performance.

• Undertake a solid marketing campaign targeting the top retailers worldwide through email campaigns, GDS advertising, personal letters to agents, visits to top retailers for distribution of ‘reminder’ promotional material with new call centre numbers.

Although several hotel groups have migrated with relative ease to their own GDS code, some prefer to use the code of a well-known representation company to add value to their brand. An example is Langham Hotels International, which recently moved their luxury hotels into Leading Hotels of the World.  Kevin B. Murphy, Senior Vice President Development for Langham Hotels, feels that strong hotel marketing brands can add support to smaller or lesser-known hotel brands.  “We  feel that the link with Leading, in our case for our luxury hotels, adds recognition and demonstrates to the market that the properties reach Leading's strict criteria.  This in turn identifies us more clearly as a quality brand.”

Today, even individual hotels can operate their own GDS code independently of a representation/marketing firm, because of new, low cost, state-of-the-art distribution technology – such as GDS connectivity, web booking engine technology, web-based central reservations systems and 3rd party Internet management tools.   TravelCLICK’s iHotelier, used by approximately 2000 hotels,  is a good example of a distribution platform that allows hotels to conduct business directly with consumers, travel agents, and through 3rd party Internet sites. 

“The platform provides a user interface that can be used by reservation agents to book voice reservations into the same system that houses GDS and website bookings,” says TravelCLICK’s Chairman and Co-CEO Richard Gray.  “This enables much more effective revenue management processes, since all the hotel’s inventory can reside in one system.” 

William Sander III, general manager of Boston hotel XV Beacon, was recently quoted in a New York Times article as saying that iHotelier paid for itself in a month.  “It was phenomenal.  Our online revenues increased from tens of thousands of dollars a year to a couple of hundred thousand.”

This new enabling technology will no doubt cause many hotels and groups of hotels to re-evaluate their distribution strategy.  

New  channels of distribution, most notably the Internet, continue to mature and are shifting large numbers of bookings off the telephone and onto hotel websites and 3^rd party internet sites like Expedia, Hotels.com, Orbitz, Travelocity, and Lastminute.com.  GDS bookings growth has flattened out over the last several years, but GDS still remains the largest source of electronic hotel bookings – particularly in the North American and Western Europe source markets.