Pegasus vs GDS - what really is the difference?

Question:
In terms of hotels, it appears they both offer access to the same amount of hotel properties and both are highly customizable with API and web services.


Answer:
An interesting question.

From my understanding, there is no majo difference. They are all hotel distribution systems. GDSes have longer histories and is original designed for air ticketing distribution (their investor are all Air lines). But since distribution technology is universal, GDSes also distribute hotel inventories.

There are three major problemes for GDSes. First, they are costly. Second, they are not born for internet. Third, they are not catering for small and medium-sized hotels. (Actually they are costly because they are not born for internet...) For examples, Travel portals like expdia, travelocity, they prefer to use their own distribution technology instead of GDSes.

Pegasus position itself as a "switch soluton", a technical term bearing the saming meaning as distribution system. It is basically a cheaper alternative to distribute hotel rooms rather than GDS. And it agressively leverage on internet technology (e.g. API, webservices, etc..) At that point of time (when online travel is growing very fast), it meets the market demands, espcially for indivisual hotels or small chains, very well.

Subsequently GDSes also invest a lot to improve their internet capability. Now they also have API, XML, Webserivces... So they become very similiar systems. And as technology develops, there are new "lower cost switches" coming out. Derbysoft and Hub1, both from China, are examples.

There are some else interesting development in the area of hotel distribution recently, like hotel wholesales (GTA, Tourico, etc.), hotel direct internet marketing(google) and meta search engnes(kayak). Each distribution channel has its own pros and cons. It's common for a hotel to sell their inventory in different channels concurrently and normally there will be a staff very busy manageing different channels every day.

And that makes yield management, especially for online sales, popular.

Hope this helps :-)

Question:
Tony, thanks for your response. API, XML and web services are key requirements for the project I am involved with.

I have spoken to both types of companies (GDSs and content distribution companies like Pegasus) and I am still not clear when it is best to choose one over the other.

When you need air, car rental and hotel info, a GDS is obviously the right choice since Pegasus does not yet offer that sort of data. But if only hotels are at stake? Also, I heard that Sabre also utilizes Pegasus sometimes to access certain data, do you or anyone reading this thread know if it is true? If so, why do they neeed to? Is it to access data for the small and medium sized companies? And why would a hotel that is currently utilizing Pegasus switch to using Sabre? If API, XML and web services are important is price the only differentiating factor between the two types of companies, assuming we are talking about major hotel brands?

Answer:
Hi Lukas. I dont know exactly whether it's true that Sabre uses Pagaus inventory. But I strongly believe it is.

The truth is that there is no single system (GDS or Pegasus or any other consolidator) that can connect to every single hotel of the world and have optimum allotment. Most often, different systems are inter-connected. In this case, Sabre will use Pegasus inventory. One benefit is that Sabre can have immediate access to pegasus hotels which Sabre doesn't have (e.g. small hotels). Another benefit is that, even both have access to the same hotel, Sabre can distribute pegasus inventory if Sabre's own inventory is sold out (of course, Sabre will get some profit from pegasus). This is the case for other distribution channels.

For Hotels' own benefit, it should use multiple distributin system concurrently (e.g. GDS, Pegasus and Portals). If can only choose one channel, then hotels should consider a few things including pricing, potential bookings and easiness of integrating the system wth hotels' PMS, as well as other factors like relationsip, services, brands....

Most branded hotels are already connected to GDS and Pegasus. Now they are trying porals (like booking.com), meta search engine (kayak.com), tripadvisor and its own search marketing on google.