The partnership Amadeus this week announced with Germany-based hotel portal HRS is its big play to remedy an endemic weakness in all global distribution systems: lack of independent hotel inventory. Amadeus said it currently distributes approximately 100,000 hotels, the overwhelming majority belonging to chains, but beginning in April it will also aggregate rates from the 250,000 properties distributed by HRS via an application programming interface.
The two principal competitors of Amadeus, Sabre and Travelport, also have been working to widen their hotel content. A Sabre spokesman told The Beat that at the end of this month the company will start to aggregate from hotel.de, another German hotel portal. HRS in November 2011 acquired a 61.5 percent stake in its rival to take its total holding to 64.5 percent. HRS and hotel.de both also function as hotel booking agents, managing hotel programs for corporate clients in competition with travel management companies.
Sabre also aggregates hotel inventory from Worldwide Hotels, Travel Pool (mainly in Brazil) and said it will add DerbySoft (Asia) and Best Day (Latin America) later this year.
Travelport works with "close to 30 aggregators" including Expedia and booking.com, said Travelport group vice president for hospitality and advertising Niklas Andreen. Aggregated content is distributed through a metasearch product called Travelport Rooms and More, launched in late 2011 following the 2010 acquisition of hotel metasearch engine Sprice. Travelport intends to add Rooms and More to its Universal Desktop, which aggregates content via API from numerous other travel suppliers.
Amadeus head of hotel distribution Hugo Ehrnreich said the additional content provided by HRS will be extremely important for corporate clients, travel management companies and the hotels themselves. "The only country in the world where hotel chains dominate is the United States," he said. "Outside the U.S., 70 percent of bookings are provided by independent hotels, so it is essential that the long tail is addressed. Travel bookers typically search two to five channels before making a booking. This implies a major loss in productivity, as well as extra work keying non-GDS bookings into the system for reporting purposes. We expect to reduce process costs by 50 percent."
As well as making TMCs more cost-effective, Ehrnreich said the wider choice of hotels should help corporate travelers make fewer noncompliant bookings, thus avoiding loss of corporate negotiating power and compromised employee security tracking. All HRS content, which includes negotiated corporate rates and publicly available rates, also will be available via the Amadeus e-Travel Management corporate self-booking tool.
HRS in April initially will feed Amadeus via an API, delivering full graphical user interface content, including maps and photographs. However, many TMC reservation agents still prefer to book through cryptic "green screens," and both parties said HRS will make its properties available in this format by the end of 2012.
Independent hotels long have had the potential to achieve GDS distribution by connecting through a succession of intermediaries, such as hotel representation companies. The reason few have done so is prohibitive cost. HRS CEO Tobias Ragge claimed that all such intermediaries added together typically cost a hotel 25 percent of its room rate. Using HRS to access Amadeus, Ragge claimed, will cost a flat 15 percent, the same as hotels pay to distribute through HRS.
Asked what he thought of the Amadeus-HRS tie-up, U.K.-based hotel distribution expert Peter Dennis said: "It is a coup for Amadeus and for big corporate clients, especially in Germany. It could be argued Amadeus was falling short of the other GDSs, but HRS does have a fantastic amount of inventory, especially in Europe but also in Asia."
Figuring out which GDS now has the most comprehensive hotel coverage is no easy matter as the three rivals make claims and counterclaims. A Sabre spokesman said, "Right now, Sabre has the largest number of hotels that are live to book and shop. Aggregators sometimes have duplicate hotel properties to what is already available in a GDS. What's relevant to our buyer customers is the number of unique properties they can access through Sabre. Sabre has 100,000 unique hotel properties and continues to expand every day."
For Travelport, Andreen said, "We have 250,000 to 300,000 properties out of 500,000 in the world. The endgame is not to have all 500,000, but to have the properties people want." Andreen added that Travelport considers it important to have several aggregators offering the same hotel, because each has different pricing structures and room allocations and therefore often offer different rates.
Andreen also offered an alternative analysis of how successfully core green-screen GDS inventories cater for corporate customers. "They meet 60 to 70 percent of needs on the corporate side and 20 to 30 percent on the leisure side," he said. However, he questioned the wisdom of adding independent hotels in green-screen format, owing to severe limitations in providing descriptive information about a property. He argued that green screens work well for chain hotels, where the agent and their corporate customer are familiar with the brand, but more information and pictures are needed before having confidence to book an unknown independent.
However, on one topic Andreen agreed firmly with Amadeus: "All the GDSs are trying to find a solution," he said, "because all of us have struggled historically."