PhoCusWright Study Finds Global Distribution Systems to be the "Quiet Giant" of the Travel Industry

Travel industry research authority PhoCusWright has just released a comprehensive study of the Global Distribution Systems (GDSs) that provide much of the electronic infrastructure behind airline, hotel, car rental, and other travel transactions. Based on original PhoCusWright research and proprietary data provided by the three major GDS companies (Amadeus, Sabre, and Travelport), the study found that the GDS industry processed more than 1.1 billion travel transactions in 2008 representing more than US$268 billion in global travel sales. The study was commissioned by the Interactive Travel Services Association (ITSA) in the US.

"This study shows the crucial role that GDSs play in online travel agency and traditional business models," says Tom Parker, secretary general of ETTSA (European Technology and Travel Services Association), ITSA's European counterpart. "In Europe alone, GDS transactions accounted for more than one-fifth of 2008 travel supplier revenue. GDS share of revenue is predicted to grow globally over the next year, in spite of the lingering effects of the recession."

"Global Distribution Systems are the quiet giant of the travel industry," says Douglas Quinby, senior director of research at PhoCusWright and author of the study. "Although many consumers have never heard of them, GDSs power the billions of electronic transactions that both online and traditional travel agencies use to book airline tickets, hotel rooms, car rentals, and other travel arrangements. By aggregating inventory and rates across thousands of suppliers, GDSs help individual and business travelers by providing more transparency, better access, and increased competition."

• GDS companies powered more than US$268 billion in worldwide travel revenue in 2008 through 1.1 billion transactions - or more than 2,100 transactions per minute.
• Travel revenue powered by GDSs in the U.S. rose from US$93.6 billion in 2006 to US$98.2 billion in 2007 and US$98.7 billion in 2008, despite the recession.
• GDSs also account for a significant portion of all European travel revenue, with 21% of all revenue and 47% of airline bookings in 2008.
• GDS companies power the reservations and technology infrastructure for more than 163,000 travel agency locations and nearly half a million travel agents worldwide.
• The GDSs provide access to more than 550 airlines, 90,000 hotel properties, 30,000 car rental locations, and hundreds of major tour operators and cruise lines.
• The three major GDS companies, Amadeus, Sabre, and Travelport, had combined corporate revenue of US$9.624 billion in 2008 and employ more than 23,000 people.

"If the transaction value enabled by the GDS industry went to a single company, it would rank third on the Fortune 500 list, behind only Wal-Mart and Exxon Mobil," said Arthur Sackler, ITSA's executive director. "Transactions powered by GDS companies are the financial lifeblood for tens of thousands of travel agents, tour operators, hotels, airlines, car rental agencies, and other participants in the travel industry. We must continue to allow the GDS industry to grow and innovate, so it can provide the critical infrastructure and technology needed to expand the global travel industry."

The study, titled "The Role and Value of the Global Distribution Systems in Travel Distribution," derived market data from original PhoCusWright research. The three major participants in the GDS industry, Amadeus, Sabre, and Travelport, also provided PhoCusWright with proprietary transaction and transaction value data from 2006 to 2008 for air, hotel, and car rental bookings. The study was commissioned and sponsored by the Interactive Travel Services Association. The executive summary and full study are available at PhoCusWright's web site at www.phocuswright.com and on the ETTSA web site at www.ettsa.eu.