Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 1 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly Global Distribution Systems and Channels Chapter 8

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 2 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly INTRODUCTION The area of global distribution is one of the most complex aspects of the hospitality business and an area that has been greatly impacted by technology change with the rise of new channels or sales outlets. –The term global distribution can be defined in this case as attaining the broadest possible reach to the largest available audience meeting a company’s target market segments at the most affordable cost and with the highest potential for winning conversion (i.e., generating bookings).

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 3 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly INTRODUCTION FIGURE 8-1 Common Channels Used When Booking Lodging Accommodations

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 4 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly INTRODUCTION The thrusts of distribution are market reach and penetration, branding, merchandising, and revenue generation. –Supporting the global distribution function is a global distribution system (GDS), that, in effect, has become the circulatory system of the lodging organization

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 5 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly INTRODUCTION FIGURE 8-2 The GDS Ecosystem

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 6 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly IMPORTANCE OF GDS The roles played by a GDS have evolved over time—from one of transaction-based emphasis to one of strategic value—but at any one point in time, a GDS fulfills five important roles. FIGURE 8-3 The Many Roles of a GDS

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 7 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly IMPORTANCE OF GDS FIGURE 8-4 GDS-Related Core Competencies Essential for Competitive Advantage

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 8 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly DEVELOPING A DISTRIBUTION CHANNEL STRATEGY Finding and Competing for Electronic Shelf Space Cost Implications Understanding Share of Distribution Maintaining Inventory Control: A Daunting Challenge Inadequate GDS Technology Infrastructure Inventory and Rate Management Issues

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 9 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly DEVELOPING A DISTRIBUTION CHANNEL STRATEGY FIGURE 8-5 Distribution Channel Evaluation Criteria

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 10 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly DEVELOPING A DISTRIBUTION CHANNEL STRATEGY Commissions and Transaction Fees Erode Profit Margins –Commission-based agency model –Merchant or wholesale model –Opaque pricing model –Auctions –Pay per click

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 11 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly DEVELOPING A DISTRIBUTION CHANNEL STRATEGY Rise in Number of Electronic Intermediaries Shift in Balance of Power from Supplier to Customer New Models of Distribution and Pricing Accelerated Rates of Change Relinquished Control of the Customer Relationship

Copyright ©2012, 2005 by Pearson Education, Inc. Upper Saddle River, New Jersey All rights reserved 12 Technology Strategies for the Hospitality Industry, 2nd ed. Peter D. Nyheim and Daniel J. Connolly TRENDS IN HOTEL AND RESORT GDS Disintermediation and Reintermediation Digital Divide Transparency: A Hope for the Future Bypassing Airline GDSs Leveraging Technology to Reduce Overhead Mobile Apps (Applications) Shopping Bots