The Three Global Distribution Systems (GDSs) are still important engines for travel commerce.  Sabre, Travelport, and Amadeus each transact massive amounts of reservations each day.  Most traditional or offline travel agencies access and book travel inventory via a GDS, and many web sites are also powered by GDS technology.  There used to be two industry switches(Pegasus and Wizcom) that connected travel providers such as hotels to the GDSs, but now there’s just one (Pegasus). Pegasus used to be a big, financially sound company with lots of very talented engineers. Now… well we’re not so sure anymore.

So what would happen if the Pegasus switch crashed?

Well for one, I’d show up for the 21-gun salute to a lost soldier.  Other than that, this is what I foresee:

The GDSs would lose tons of hotel bookings. GDSs would not be able to book hotels connected through the switch since they don’t have the rates and availability in their databases anymore. If they had they could make bookings and deliver them to the hotel by email, for example. (Oh, and Lanyon, who used to publish the rates and availability in GDS would make lots more money again suddenly!)

Some bookings would still be possible since some big hotel chains have direct connections with some of the GDS. Those hotels that remained bookable would get a lot more business – at the expense of the rest of the industry of course.

The rest of the lost GDS bookings would be made online… I suspect through the online travel agencies, primarily. But the cost to the hotel company of a $400 hotel reservation would go

• from somewhere just under $50 for a commissionable booking (10% commission to the travel agent plus $10 distribution fee – GDS fees included) or $10 for a net negotiated, non-commissionable booking (a very sizeable chunk of GDS reservations)
• to about $88 (about 22% commission to Expedia.)

The large travel agency consortia too would lose lots of money from lost commissions on hotel bookings no longer possible.

Pegasus would likely go out of business (I don’t think it has the financial strength to withstand a crash of its switch), its meager remaining assets distributed to the highest bidder.

The Pegasus switch is a massive single point of failure for the hotel industry.
Hoteliers, reservation system providers and GDS need to wake up.

It’s easy to interface now, unlike 20 years ago. XML, web services, HTNG, Open Travel Alliance a tried and tested booking process make it easy to connect industry reservation systems. We’re not in the late ‘80s, early ‘90s anymore.

The GDS need to open up their interfaces and publish them on the internet. Let reservation technology providers build to those specs. The GDS also need to get rid of archaic technical constraints like “session control” and “two-phase commit” – they’re not really needed and every online agency does just fine without them. They should automate the testing of new connections, speed up the deployment of direct-connects and move their hotel platforms  into the 21^st century.

The industry as a whole will benefit and rest a little easier.