Is the Hotel GDS & Wholesalers getting EOL (End of Life)?

Is it all really fit for purpose in 2021? Can they change into something better?

What do GDS and Wholesalers do exactly?

Essentially they allow a Travel Agent or an Online Travel Agent(OTA) to sell hotels rooms without a direct contract with the hotel.

It also allows the hotel to sell its rooms to thousands of travel agents and websites without needing a contract and paying each one separately.

Sounds like it solves a big problem for hotels and travel agents? it does!

Well it does solve big problems but it also they have expensive fees, commissions and ageing tech.

New Entrants into “Distribution 2.0”

So we can all agree that the idea is great to allow hotels to sign one contract and sell its rooms in thousands of places, and also agree that the current way it all works is a little technically outdated.

Now we have a few new entrants to try and simplify all this stuff so you can start your own travel agent business fast!

Startups include Impala, Hyperguest & Katanox. These have a similar idea to do the same business model but make the whole thing just easier for both sides. Mostly by making a modern API, simple contracts and simple payments without need for invoicing and deposits.

However these new entrants lack properties right now! and thats the whole point right?

Alternatives also come from the big OTA players directly. Agoda and Expedia are the main players and offer all of their hotels like a wholesaler (in a way). They share margins and can provide up to 12% of the commission to the Online Travel Agent and keep 5% themselves.

Revolut is a banking app in the UK and decided to go this way and use Expedia Affiliate Network and skip the whole GDS & Wholesalers thing all-together.

Should small OTA just rely on big ones like Expedia and Agoda?

To start this is an amazing option, you can connect to Agoda or Expedia and get access to millions of properties and get up to 12% instead of the usual 15–18% for direct but without issues of contracting hotels direct and having a large sales team.

There could be a conflict of interest but this model has worked for years and these large players are always investing into tech to make it better and better. After all they still make money on each booking!

A better question is why when you can connect million of properties from large players like Expedia would you connect to the wholesalers or GDS?

I have heard that some properties can have a better price on wholesalers, so its good to connect a few sources and then book the one that gives the best margin.

What i see as the future?

I would expect in 5–10 years (Travel industry moves slowly!) that wholesaler and GDS type businesses would have consolidated down to 2–3 major players.

And on top of that they would go “invisible”.

We can see a big trend in the last few years with companies like Siteminder doing the “Demand Plus” and Travelclick with their “Demand Services”.

It is basically a button to: “Get me more bookings at 18% commission”.

Eventually this “Demand Channel” will be in all hotel systems and the hotel will not even know or care what tech lies behind it as long as they get the bookings and it works. The properties on this channel would feed into the wholesalers to then sell onwards

The new style wholesaler will be a pure tech company instead of a sales company.

So it seems an opportunity for the old guard to embrace this trend or possibly one of the new entrants to do it instead. It is not feasible for wholesalers to run sales teams and directly sign up hotels now or in the future.

Let me know if you have any comments, always great to discuss trends.