GDS Technology: Workhorse or Road Kill?

A debate over the rapidly evolving Internet booking environment was key to ResExpo, the industry's largest travel distribution show. Industry leaders gathered at the Omni CNN Center in Atlanta March 1-3 were so divided on how to do business in the new rate-shopping marketplace that speakers on multi-channel distribution looked ready for a Jerry Springer moment at the opening of their discussion. To their credit, top executives from the Big Four GDS providers, Worldspan, Galileo, Amadeus, and Sabre, restrained themselves from throwing real chairs. But verbal furniture aimed at the presidents of two smaller channel technology companies, ITA Software and G2 Switchworks, began flying when ITA President Jeremy Wertheimer suggested that existing GDS technology is obsolete and that distribution companies failing to adopt a more flexible, Internet-ready business model would be road kill. About 450 people attended the event.

A loaded topic for the Big Four, technology is critical to the health of the travel industry because most legacy GDS reservation-handling computers used today are based on 1960s architecture and code. These systems were never intended for the networked communication between multi-database systems that comprise today's shopper-focused booking environment. Panel members passionately debated whether the big GDS systems, designed 35 years before the Internet, are still the best way to process reservations when online rate shopping is the fastest-growing booking method.

LIPSTICK ON A PIG

Now that most buying decisions are price-driven and travel providers are slashing expenses, it was argued that the legacy GDS systems are expensive to maintain and add cost to the booking process. “And now it's time for the Empire to strike back,” joked panel moderator Kathy Misunas, partner and founder of Essential Ideas, as she passed the microphone to the Big Four GDS panel members for rebuttal. They countered by explaining that they have invested heavily to update their systems to accommodate Internet usage and other emerging booking technologies. When an opposing panelist replied, “That's like putting lipstick on a pig,” the audience chuckled, at the same time checking that the exits were not blocked. The question of whether the legacy GDS systems will be able to adapt to the demands of a growing number of BlackBerry-carrying wireless travelers is not a laughing matter. The travel industry has too much riding on the outcome.

GUEST SEGMENTATION IS DEAD

Two other panels focused on changes in consumer buying that have drastically reshaped hospitality rate management. Experts on both property and vendor sides agreed traditional guest segmentation is dead. Guest types such as leisure, corporate and SMURF are being replaced by distribution channel types such as voice center, website bookings and online wholesalers. Vendors adapt by anal-yzing demand patterns for consistencies around which to create rate strategies. On the supply side, hotel firms are creating best practices for standardizing rates across channels to build brand-site booking loyalty. However, panelists note that such parity does not make financial sense because channel costs vary. Trevor Stuart Hill, vice president of revenue systems for Destination Hotels & Resorts, said even though revenue management is about crunching numbers, it can never accurately calculate the lifetime value of a guest. Ultimately, guest loyalty means more to a property's bottom line than the rate a guest paid the previous night.


Michael Squires is president of Softscribe Inc. Softscribe enables technology companies targeting the US government and hospitality industries to sell products and solidify their brands through public relations and competitive analyses. Reach hm at 404-256-5512 or mbsl@softscribeinc.com.

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