Role of Global Distribution Systems and Online Travel Agencies (OTAs).

Distribution is an important part of the marketing function of firms and industries for both goods and services. Distribution can be viewed as part of a system. As a marketing function, it must interact with the other parts of the marketing system. Distribution considerations affect pricing strategy. Product and service strategy can be heavily dependent upon the form, efficiency and cost of distribution services. GDSs are extensive private electronic networks that connect airlines, hotels, travel agents and other participants in the travel, tourism and hospitality industry. They reportedly account for in excess of 16% of total reservations worldwide. In many ways, the Indian online travel market is qualitatively different from what it was like just a few years ago. Travel suppliers especially airlines  are boosting their efforts to connect directly with their customers, threatening the traditional role of global distribution systems (GDSs) and OTAs. Acquisitions and consolidation continue to tighten the online space, and companies all along the travel value chain are evaluating and testing the potential of social media and mobile technologies. Meanwhile, travelers themselves are more demanding cost-conscious than ever.  Many online travel agencies (OTAs) in India are struggling to stay profitable, and one of the key challenges has been how to make loyal customers. At the moment travelers are just browsing for the cheapest price, and as the profit margins of many OTAs are already low, there is a need to find ways to make the buyer to book from an OTA even though they do not necessarily offer the lowest price. Now, in the second decade of 21st century, you can shop for nearly everything you want online. One business model was to transfer the traditional travel agency solely online and still offer the same services as the traditional agencies, without human contact. This allowed these newly formed online travel agencies (OTAs) to save money in personnel and hence made them able to offer better deals for the buyers than the traditional offline agency. Throughout the years, the increasing online growth gave rise to a new business model of online travel agencies which threaten traditional tour operators nowadays. Tourism companies are exposed to a variety of external and internal factors, which stimulate a continuous need for business model innovations. The most important forces can be identified as social and technological. A key input of developing the yield strategy and forecasting is the acquisition of information from the online booking engine (operator website), call centre (voice) and GDS. Furthermore, tracking the origination of business to the website requires referral analytic reporting. This Article represents the referring traffic to the website to determine which search engines heavily contribute to traffic. Traditional travel agents are today sometimes referred to as “bricks and mortar” agencies. They are under intense pressure to transform themselves to adopt new, more effective, and lower cost business models. Airlines, which at one point were travel agent’s main source of income, have been reducing or eliminating commissions. In response to this direct threat to their viability that has occurred over the past decade, the travel agency industry has seen the introduction of new business models where agencies charge fees for managing an organization’s total travel budget. One of the most important considerations an online travel agency must grapple with is the extent to which it should include and focus on specific products – air, accommodations, car rental, rail, vacation packages, etc. Striking the correct product balance is critical, and must take into account geographical factors, market conditions and traveler profiles. OTAs have a wide range of plans regarding the next wave of growth. Most OTAs consider dynamic packaging a substantial source of growth potential. Non-core travel products such as destination activities and insurance are also considered opportunities to enhance revenue. But beyond the standard product enhancements, OTAs expect to continue to drive business via special offers, including daily deals, limited time offers and other exclusive offers. The success of Traveler is just one example of how the OTA business model can learn new tricks. While OTAs are well aware of airlines’ direct connect strategies, they express confidence that their GDS partners will solve the technical challenges required to aggregate and distribute air content. While many remain open-minded about the possibilities, they are not convinced of the value of wide-scale direct connect airline initiatives.

Major distribution channel includes:

Domestic and international airlines.

Accommodation properties, including:

Guest houses, motels, backpacker hostels,

Hotels and resorts.

Car rental companies.

Cruise ship lines.

Railway companies.

Tourist attractions, such as museums, sightseeing facilities at natural attractions, restaurants, theatres,sporting grounds.

Tour coach companies.

Shipping lines and cruise companies.


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