GDS PREDICTIONS REVISITED, LESSONS LEARNED

The Hotel & Restaurant Technology UPDATE Summer 1998

Predicting the future is foolhardy, but irresistible, at least for some of us. Recently I reread a Hospitality & Automation article I wrote in the Fall of 1994. Its title was “Global Distribution Systems — A Glimpse of the Future.” In this article I attempted to predict the role and impact of these systems.

Three years later it is interesting to go back and compare those predictions with the actual course of events. The process reminded of the remarkable changes we have witnessed. I invite you to join me as I review my predictions.

Prediction: Global Distribution Systems will decrease in number. Fewer systems in which to maintain product data and transaction fee stability. Result: True.

Through consolidation, the six major GDSs active in 1994 have shrunk to four (exit System One, SAHARA has fallen to second tier status). Additionally, according to Travel Distribution Report, Amadeus and Worldspan are today closer than ever to merger. Fewer systems to maintain — yes, but now more data to update in those systems (negotiated rates, expanded descriptions, etc.) than in 1994. Transaction fee stability? Well, the jury is still out on that issue.

Prediction: A strengthened focus by the GDSs on product depth rather than breadth…. permitting single-stop shopping. The electronic marketplace will produce a growing proportion of reservations; reservations by telephone will diminish. Result: True.

Electronic reservations — in total and as a proportion of all centrally booked reservations — have grown dramatically. GDSs delivered 35 million reservations in 1997, up 5 million from 1996. Upscale hotel chains report 65-70% of their central bookings coming through the GDSs (up from about 40%) — all this at a time when CRO reservations are falling. Indeed, one leading reservation executive recently predicted there may be no CROs operated by his hotel company in five years time. As for single-stop shopping, the GDSs have become electronic shopping malls, offering a wide array of travel services ranging from limos and lei greetings to travel insurance and theater tickets.

Prediction: The traditional imbalance in GDS product selection toward business travel will diminish as new features are introduced to facilitate leisure travel bookings. Leisure oriented properties …. will see dramatic increases in their electronic booking revenues. Result: True and False

True, in that resorts are getting more and more of their bookings through electronic channels. False, since GDS leisure sales functions have not been substantially improved. Compared with the display and sales sophistication of other electronic channels, the GDS have, in fact, lost ground.

Prediction: Seamless connectivity will become the industry connectivity standard. Result: True.

Seamless connectivity is now the defacto standard for CRS/GDS links. GDS users benefit from extensive descriptions taken directly from CRS data bases; indeed with the 4K CRS data extracts now being chained together by some GDSs, abundant descriptive data is readily available to travel agents. Further, travel agents have repeatedly expressed their preference for hotel companies using seamless connectivity, feeling that they receive both fuller descriptions and high levels of rate and availability accuracy on seamless connectivity-derived displays.

Prediction: Global systems will be increasingly regionalized. Displays will be multilingual as will computer-based training. Advertising will be region specific and sales support will be locally provided. Result: True.

In their quest for international expansion, some GDSs have established national service organizations (examples: Amadeus’ National Marketing Companies and Galileo International’s National Distribution Companies). Service and support are conveniently available in the local language and time zone. Restrained by their complex and aging technology, on-screen innovations such as local language displays have been relatively slower to materialize.

Prediction: GDS displays will become substantially more sales-oriented. Today’s text intensive listings …. will give way to a myriad of electronic display and promotion opportunities. Result: False.

GDS display capabilities have not evolved at the expected pace. Projects to build new front ends, new user interfaces for the legacy systems — such as Millennium 3 by Galileo International and Planet SABRE by SABRE Travel Information Network — have been beset by delays and have yet to see widespread installation.

Prediction: New competitors will challenge the GDS’ virtual monopoly on electronic databases of travel products. More effort will be required from hoteliers to evaluate the potential of each advertising opportunity; challenges presenting electronic travel options will multiply, becoming even more pervasive in our day-to-day lives. Result: True.

Truer than I ever expected! I, like so many pundits, was unprepared for the speed with which electronic competitors to the GDSs would become an integral component of the travel planning and booking process.

I don’t know a single general manager who has not been inundated with Internet listing and promotion offers. I don’t know a single hotel company executive who isn’t awed by the pace of evolution of the Internet – both in terms of its production (predictions by some hotel executives of 1,000% growth in 1998 in their Internet are not unknown) and the need to frequently rethink and revamp their Web sites.

LESSONS LEARNED

Reviewing one’s predictions can be educational as well as humbling. Lessons I have drawn from this exercise include:

Do not count the GDSs out in the short run; do not assume their survival in the long term. While they benefit from a sophisticated infrastructure and large, professional user base, unprecedented agility and massive R&D expenditures will be called for by them if they are to successfully compete with the emerging distribution channels.
Consumer-accessible, user-friendly technologies will bring personal electronic travel shopping into the mainstream, to the detriment of intermediaries — TAs — and those not embracing these new technologies.
The pace of evolution in electronic distribution technologies, and techniques, is fast and quickening. Managing travel product presentation in the electronic environment is no longer a part-time, occasional pursuit. Electronic distribution — conventional and emerging channels alike — is delivering more and demanding more. To those who keep pace will come rich returns.