February 8, 2008

Were do GDS' fit in? - The strength of the Middle Man

What does a GDS do?
Well to sum up a bloated technological legacy system, they connect travel suppliers with those that want to buy the travel products; an electronic travel product catalog or marketplace if you will. The primary users of GDS' are travel/internal agents (through a CRS) and consumers (through an Internet portal/OTA).

Why are they needed?
GDS' work well with the traditional distribution system thinking, clients or customers can go to one centralized location to find their travel requirements. This relationship is controlled by the GDS and the reservation is processed through their distribution system. This simplifies the booking process for most of the stakeholders.

What are the challenges?
onsumers, resellers and suppliers are charged a premium for using this 'travel catalog'; a premium that is not cheap. As online technology becomes more accessible, suppliers are opting to offer online sales capabilities through their own websites, thus cutting off the GDS completely.

What does the future look like?
Travel Suppliers are finding that they are able to cut out the GDS and Travel agent, offer similar sales functionality to their customers, and increase thier bottom line. That is a danger for the GDS.

One area that holds promise for the GDS' is the amalgmation of online communities with a travel retail component. As online sites develop into niche communities, travel products will find a natural integration. Sabre has recently launched a business travel social network named 'Cubeless' (sounds like a way to order a drink..) that looks to unite business travelers as they globe trot for their company. My friend Norm Rose was interviewed for BTN Online about social networking for business travelers:

"Most corporate travel managers think about broadcasting out," he said. "The idea of getting feedback and having the visibility to that is not yet on the radar of many travel managers, but can serve a valuable purpose of cultivating the natural tendencies of travelers wanting to talk to each other."
Cubless will be launched with American Express travel. I am curious to see if business travelers are the most effective market for this social community as they may already have a number of other programs, meetings and platforms they deal with. What do you think, are GDS' evolving fast enough? What do you see as the next steps?
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