GDS Systems vs Direct Partnership with Hotels and Airlines for Travel Agents

During the initial era of tourism and hospitality, people had to make reservations with hotels and airlines by phone call. The method was not only time-consuming but also had various other setbacks. Fast forward to the modern-day booking scenario, travel agencies make the reservation process fast and simple for travelers.

They do this by partnering with different suppliers and utilizing GDS systems. By the end of 2024, the GDS market is estimated to exceed $14.4 billion. The popularity of tech-friendly systems is because of the convenience they offer to both travel agencies and customers. Since travel businesses work on tight budgets, investing in different tools and resources may not always be an option. The most common dilemma is whether GDS systems offer more benefits or direct partnerships. Let us explore this blog to find the answer.

What are GDS systems for travel agents?

Global Distribution Systems are tools that act as a connecting bridge between travel agents and travel service providers. These systems open a window for travel agencies that aim to reach more people. Popular GDS systems host numerous travel agencies and service suppliers. 

Airlines, hotels, car rental companies, etc. can easily showcase their services on GDS. Travel agencies then fetch the best booking deals and services for their customers directly from the GDS system. Travel agents get real-time and exclusive data about the listings, allowing them to make bookings instantly.

Direct partnership with hotels and airlines for travel agents

In this method, the travel agency directly partners with hotel chains, cruise chains, airlines, and other service providers. This is mostly done with the help of an API that connects the agency’s booking management portal to the service provider’s inventory. 

Direct partnership gets exclusive deals and premium discounts to travel agents, which they can offer to their customers. They also receive updated fares, schedules, and other information directly from the service provider.

GDS systems vs Direct partnership

International audience and visibility

GDS systems bring more visibility to travel agencies and travel suppliers. Since these systems are regularly viewed by millions of online users, the chances of final bookings increase significantly. Travel companies can reach a wider audience by enlisting themselves on popular GDS systems, especially the ones that cater to global audiences. On the other hand, direct partnership only gives travel agents access to a limited audience base. The suppliers usually keep their loyal customers reserved for their business where these users make direct bookings with them without involving travel agencies.

User convenience

GDS systems are easy to use as they provide all the necessary details at one spot. Users can effortlessly compare the prices of different services. For instance, a user searching for a direct flight from Malaysia to Dubai can find all the available flight details for a specific date on the GDS system. This saves their time and gets them the most suitable deal. Travel agencies selling those services become part of this process and gain their share of profit.

Impressive deals

With direct partnerships with hotels and airlines, travel agents enjoy exclusive access to supplier inventories with competitive rates and attractive discounts. These partnerships cut out intermediaries allowing agents to pass on competitively priced packages to customers. Utilizing these compelling offers gives travel agents the opportunity to increase profits, develop customer loyalty, and maintain a competitive edge in the travel sector. Demand Generation: Providing agents and travelers with affordable pricing and quality services.

Better profit rates

In direct partnerships, both parties agree on commission rates profitable for them. Since there is no middle source, the profit margin for travel agencies is higher when compared to the one earned through GDS platforms. Direct partnership with suppliers involves zero participation of third parties, which is the reason behind better profit rates.

Time-efficiency

Agencies operating on GDS platforms get more time to spend on other important tasks compared to the ones involved in direct partnerships. They can enlist multiple properties on GDS platforms, from where the user is directed toward the agency’s portal. This entire process requires minimum effort from travel agents, saving their time. Whereas direct partnerships are time-consuming and travel agencies have to assign at least one employee to stay in touch with the service provider.

The best of both worlds

Nothing seems impossible in modern times, even if it means adopting a hybrid model. Some online travel agents utilize a combination of GDS platforms and direct partnerships. Since both approaches come with unique sets of advantages, travel agents leverage these benefits.

Key takeaways

GDS systems for travel agents are highly popular, and so are direct partnerships. From bringing more profit margin to offering attractive discounts, direct partnerships prove their significance. GDS systems have their benefits as well, they provide better visibility and convenient booking options. Travel agencies aiming to invest in these business models can make their own decisions based on the information provided in this blog. They can also consult TBOHolidays for quick and easy API integration with travel suppliers and GDS platforms.

GDS System for Travel Agents FAQs