DerbySoft CEO talks about evolution of GDN
In the world of fast moving technology, people take for granted how easy it is to plan and book travel itineraries for flights, hotels and more. It’s illuminating to reflect on how far the industry has come in just a few years.
Ted Zhang, DerbySoft’s CEO and co-founder, talked about the evolution of the GDN.
Global Distribution Systems (GDS) were originally developed by the airlines to make it easier for travel agents to book flights, and later they added the big hotel groups via a switch.
GDSs were designed for communication between two classes of clearly segregated groups: suppliers like hotels and airlines on one side, and travel agents on the other.
But Ted thinks that GDSs lack flexibility and require partners to bend or conform to the system’s requirements. Also, these systems cannot easily adapt to new business models or new types of distribution channels, nor can they easily support smaller players at a viable cost structure.
DerbySoft introduced its connectivity service in 2007, providing an alternative to GDSs that was also more flexible and cost-efficient than true direct connections. The focus was on making it easier for large hotel chains to have very flexible, high performance connections with each of their distributors.
These were custom solutions for large hotel groups like Hilton and Marriott and online travel agencies (OTAs) like booking.com and Expedia.com. Each of these hotels and OTAs needed just one connection to reach multiple business partners, and the volumes of bookings were high enough to justify such customization.
The company gradually expanded its list of supplier partners, and now has all of the top 10 global hotel groups and many others integrated with a total of over 100,000 properties. It also works with major OTAs, wholesalers, and other distributors worldwide that provide the booking traffic for all these properties.
Ted said that supporting large and global suppliers with growing booking traffic requires the connectivity service to be global and able to accommodate any interested player. Meanwhile these companies also worked with some partners directly or through other means.
The traffic at the time was still focused on rates, availability, and booking data between suppliers and distributors, and hence this could be best described as an open Global Distribution Network (GDN), a big contrast to the closed Global Distribution Systems created decades ago. This GDN was not (and could not be) owned any single company.
In recent years, other types of travel players have become part of the ecosystem. Travel metasearch sites that enable consumers to compare prices continue to grow in importance and are now prevalent in most markets.
Mobile apps like HotelTonight serve niche markets, regionally-focused OTAs have appeared, and other providers that offer various B2B services such as payments, or B2C services such as guest reviews, now partner with suppliers or distributors or, in some cases, both. As these companies connect, the network expands.
Even social media is becoming more prominent in travel, with WeChat offering booking capabilities and Facebook’s Dynamic Ads for Travel displaying highly accurate, dynamic rates.
While at first glance it may seem like the large global hotel groups represent, in aggregate, the bulk of properties around the world, in reality they represent less than 10% of the world’s hotels.
The same principle applies to the large OTAs—they may seem like they dominate distribution, but between smaller OTAs, destination marketing organizations, wholesalers, mobile apps, and other emerging channels, the big OTAs generate only a fraction of demand for most hotels.
However, the lower booking volumes of these long-tail suppliers and distributors has meant that building costly, custom connectivity was not justified or commercially viable. DerbySoft recognized this conundrum and has recently developed a line of products that cater to players of all sizes.
The company’s product “One” provides an all-in-one capability for independent hoteliers to join the GDN. Another product “Go” is DerbySoft’s answer for smaller distributors or smaller hotel groups to get connected quickly to many of their counterparts. And “Click” is its vehicle for suppliers of all sizes to manage working with metasearch engines and other dynamic data marketing ventures.
With the adoption of Big Data and associated data science in the hospitality industry as well as various new players that are neither suppliers nor strictly distributors but are those that offer specialized services, the GDN continues to extend beyond just rates and availability.
As providers of content services, ARI data caching services, billing and settlement services, and others join the GDN and expand the types of data that fly across the network, its utility and value to all participants’ increases. In this context, the company continues to embrace the acronym GDN, but it now considers the acronym to be the shorthand for Global Data Network.
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