How Online Hotel Distribution Works

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Few aspects of the hotel industry are as overwhelming as understanding GDS, OTA, PMS, and online distribution. With a few quick tips, hoteliers can work to take over the market—and maybe even the world. Here is a closer look at distribution.

Hotel. The most important distribution channel hoteliers have is walk-up and drive-by business from the local market. Then, distribution starts at the hotel with the PMS (property management system). All hoteliers need to sell is rooms, rates, and dates, so if a good product exists, along with quality rates and reviews, and the property is prominent in the local market, hoteliers should plan on seeing at least 50 percent via direct local.

PMS. A hotel’s PMS should have the ability to connect to a CRS (central reservation system). Newer web-based PMS platforms such as RoomKey or AutoClerk are low cost and offer remote access, CRS connectivity, and continual system upgrades.

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CRS. A CRS is an online hub that holds data about rooms, rates, dates, and hotel location descriptions (including local corporations, tourist attractions, airports, freeways, government, and educational facilities). The CRS then feeds data back and forth between the PMS and the major distribution channels called GDS, OTA, and metasearch. If a hotel is affiliated with a brand, a chain will have a CRS. If the hotel is independent, a couple of good top CRS platforms are Sceptre Hospitality’s Windsurfer CRS and Sabre’s SynXis CRS.

GDS. GDS stands for Global Distribution Systems. Most CRS platforms connect to all GDS, which are Amadeus, Galileo, Sabre, Apollo, and Worldspan. These are booking channels used by 650,000 worldwide GDS travel agents to sell rooms to corporations, government, and international travelers. About 90 percent of non-leisure travel is generated through GDS channels.

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OTA. A hotel’s CRS should then connect to the OTAs (online travel agencies) such as Expedia, Booking.com, and Hotels.com. While there are thousands of OTAs, 90 percent of the OTA bookings come through Expedia and Booking.com, so hoteliers should stay focused on those. A good CRS will also connect a hotel to major airline websites such as British Airways and Southwest Airlines.

Metasearch. Metasearch sites like Google, Kayak, Skyscanner, and TripAdvisor compare prices across various channels, with Google the most powerful of all—all searches start at Google.

Website and booking engine. Your storefront should be simple, show images, rates, reviews and most importantly—location (proximity to major corporations, government, airports, freeways, schools, tourist attractions, hospitals). You don’t need to spend a lot—just keep it basic.

The perfect distribution mix would be: Hotel, 50 percent; GDS, 15 percent; OTA, 25 percent; and website, 10 percent. Want to know how people like Winston Churchill or Rupert Murdoch change the world? It comes from the ability to stand above the noise and see the path clearly through a million moving parts of chaos. When you understand this basic landscape, your cool command will take you where you want to go, and beyond.

About the Author
Tom Magnuson is cofounder and CEO of Magnuson Hotels.

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