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Is the GDS Still a Good Investment?

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November 01, 2009

While the online marketplace is gaining ground in channel mix for hotels, especially for established hotel companies, the Global Distribution System (GDS) still contributes significantly to hotel distribution revenue–approximately 27 percent, according to TRAVELCLICK’s latest eTRAK report. Also, GDS hotel promotions–appearing when agents search the air, car and hotel availability screens within their GDS–continue to have a growing influence on bookings, particularly in today’s unsettled economy.

These are the findings of a recent study commissioned by TravelCLICK and conducted by Phoenix Marketing International (PMI), an independent marketing research firm. The biannual, global survey included 474 travel agents from 24 countries.  Agents surveyed represent all four major GDS providers–Amadeus, Galileo, Sabre and Worldspan.  According to the survey, the typical U.S. travel agency employs 5.8 full-time travel agents and has 6.4 GDS terminals, while the typical international agency employs 23.1 full-time travel agents and has 16.6 GDS terminals.  

How often are travel agents using the GDS and promotional messages?  The survey found that about 25 percent of travel agents worldwide–mostly international agents–are using their GDS platform more often than in the past. Of those surveyed, 70 percent recall seeing GDS promotional messages—up 15 percent from 2007.  There was a greater level of awareness among U.S. travel agents than international travel agents (81 percent vs. 55 percent). Of those aware of promotional messages, 64 percent clicked through the screen promotion to request more information. About two-thirds look inside their GDS system for more information. 

According to Greg Diaz, vice president of Phoenix Marketing International Travel Practice, the increase in awareness of GDS messaging from 55 percent to 70 percent is not surprising.  “The increase in message awareness is a result of moving from a text-based message to a visual, compelling format,” Diaz said. 

Globally, three out of four agents are satisfied with the timeliness and accuracy of their GDS promotional messages. In the most prevalent response, two out of five agents surveyed noted that the best time to receive a promotional message for making a hotel booking is at the point of sale.

What details are agents looking for in ads? The survey sheds light on the effectiveness of display ad content.  Survey results also reveal that most travel agents worldwide believe the GDS should offer rate parity: 88 percent of U.S. travel agents and 81 percent of international travel agents said it was very important to see the same rates available on all platforms.

The survey also found that SABRE global travel agents are more likely to book a hotel after viewing a graphical ad than a promotional text message (67 percent).

What rates do agents research and book when interacting with corporate clients? The survey showed that 83 percent of agents offer best available rates (BAR) or promotional rates to customers who have negotiated rates at the time of booking. This shows that agents continue to demonstrate value by identifying and offering clients the lowest available rate.

What incentives appeal to agents—for themselves and for their clients? Survey respondents (76 percent) indicated that the most influential incentive for agents is reward points and loyalty programs, followed by increased commission to them personally (56 percent) and a free night stay (51 percent).  Among those indicating amenities and offers geared toward the traveler are appealing, the most popular amenities are free breakfast meals (86 percent), a special rate (85 percent), and a free upgrade (81 percent), followed by a free night stay (67 percent), free Internet access (65 percent), and a star rating/consumer review rating (48 percent). 

“These findings parallel results we see in other studies,” Diaz said.  “We know that almost two-out-of-three households in the U.S. belong to some sort of consumer loyalty program, so it’s not surprising that three-quarters of travel agents are interested in an agent rewards program.”

How are agents reacting to current economic conditions? Agents were also asked about the down turned economy and its effect on their booking practices.  Most (57 percent) agents noted that they are influencing clients’ hotel selection in favor of better deals more often than before—regardless of whether or not a negotiated rate exists. Overall, in considering the economy, 53 percent are booking lower-category hotels due to client requests, and 34 percent are offering best available rates (BAR) or promotional rates to customers who have negotiated rates at the time of booking.  

 According to the survey, 31 percent of agents are using GDS ads to assist with finding the best deal for clients, and 22 percent indicate that GDS ads are important in their ability to recommend value-added rates.

How valuable are GDS platforms?  Highly valuable, Diaz said.  “This is the fifth time in the last eight years that we have conducted this study for TravelCLICK,” he said.  “During that time, we have seen travel agent use of the GDS to grow significantly.  We anticipate this trend will continue in the future.  The more useful, accurate and visually engaging the information provided by hotel companies in the GDS environment, the more agents will rely on the system to book travel for their clients.”

A copy of the study presentation is available at www.travelclick.net in the Knowledge Center. Click on 2009 Global Travel Agent GDS Study.

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