Distribution System Market Expected to Reach $15.4 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “Distribution System Market," The distribution system market was valued at $7.5 billion in 2022, and is estimated to reach $15.4 billion by 2032, growing at a CAGR of 7.8% from 2023 to 2032.

Reservation inventory is connected via a computer-based network called the Global Distribution System (GDS). In the tourism industry, GDS is widely employed particularly by hotels, airlines, and vehicle rental firms. Service providers like travel agencies and online travel agencies (OTAs) may offer tickets for a specific airline, hotel, or vehicle rental owing to this system. A vast database that holds and updates copious amounts of information on assets and lodging rates for travel agencies and websites is an advanced global distribution management system. GDS serves as a third party between a travel agency and the internet reservation system of a hotel (or airline). GDS is used by over 600,000 travel agents to find and reserve hotel rooms via online shopping portals. With the help of this Business-to-Business (B2B) technology, hotels may communicate with a wide range of prospective customers and receive real-time data regarding hotel room availability. The airline and hospitality industries are witnessing a surge in the implementation of GDS, premises distribution systems, and cloud-based distribution systems, mostly due to reasons including economic growth, political stability, and aggressive tourism campaigns.

Furthermore, rise in globalization and modernization of technology primarily drives the growth of the distribution system market. However, rise in implementation costs and complexity and the difficulty of integration hamper market growth to some extent. Moreover, enhanced effectiveness and output is expected to provide lucrative opportunities for market growth during the forecast period. 

On the basis of application, the hotel and resort segment dominated the distribution system market in 2022 and is expected to maintain its dominance in the upcoming years owing to leveraging GDS, hotels and resorts to resourcefully manage their room availability, charges, and promotions, ensuring maximum residence and revenue generation, which propels the market growth significantly. However, the car rental segment is expected to witness the highest growth, which helps companies to keep a tab on the extensive network of travel agents and online platforms. This helps in increasing their visibility and bookings.

Region-wise, the distribution system market size was dominated by North America in 2022 and is expected to retain its position during the distribution system market forecast period, owing to the increased focus on technological advancements and infrastructure development aiding the growth of the distribution system market. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to the increased need for strong distribution networks and efficient order fulfillment processes which is expected to fuel the market growth in this region.

The COVID-19 pandemic caused unprecedented hurdles and disruptions in the travel and tourism business, which had a substantial influence on the global distribution system (GDS) market. Bookings and revenue for GDS suppliers significantly decreased as an outcome of travel restrictions, lockdowns, and a reduction in travel demand brought on by the pandemic. The cancellation and delay of travel plans was one of the direct effects of COVID-19 on the GDS business. Many people and companies were forced to postpone or cancel their travel plans due to safety concerns and travel restrictions. Thus, due to a drop in consumer demand, travel agents and service providers witnessed a major loss in bookings and revenue for GDS platforms. In addition, the COVID-19 pandemic influenced people's preferences and travel habits. One major area of damage to GDS suppliers was business travel, which was once a major source of revenue. Businesses adopted alternate methods of conducting meetings, collaborating and cutting down on travelling owing to the increasing acceptance of remote work and virtual meetings. As a result, corporate travel reservations decreased, which affected GDS platforms' income streams. Furthermore, the pandemic caused operational difficulties for GDS providers in addition to the drop in travel demand.                

Technological Trends

GDS providers are deploying AI and ML technologies continuously to boost operational effectiveness and improve user experience. Chatbots and virtual assistants driven by AI are used to expedite the booking process, offer customized recommendations, and respond to consumer inquiries. Large-scale data analysis is done by ML algorithms, which allows GDS platforms to provide users with more relevant and accurate travel options. For travel service companies, these technologies also aid in revenue management and price strategy optimization. Moreover, massive amounts of data, such as booking patterns, travel trends, and customer preferences, are produced by the GDS industry. Big data analytics is utilized by GDS providers to obtain insightful information and make data-driven choices. Through data analysis, GDS platforms gain insights into customer behavior, improve personalization, and identify opportunities for promoting and targeted marketing. Additionally, by forecasting demand trends, streamlining inventory management, and spotting possible obstacles in the travel booking procedure, data analytics enhances operational efficiency. Furthermore, the traveler engagement with GDS platforms evolved as an outcome of the widespread adoption of smartphones and mobile applications. Mobile applications offer real-time updates, booking features, and trip information while travelling. To satisfy the increasing demand for mobile travel solutions, GDS suppliers are making investments in mobile app development, responsive design, and mobile-friendly interfaces. Travelers may also track their travel plan, get customer service, and receive personalized notifications owing to mobile applications, which improves their whole trip experience.

KEY FINDINGS OF THE STUDY

• By application, the software segment accounted for the distribution system market share in 2022.
• On the basis of application, the hotel and resort segment generated the highest revenue in 2022.
• According to the distribution system market analysis, region-wise, North America generated the highest revenue in 2022.

The key players profiled in the distribution system industry are Amadeus IT Group SA, Sabre GLBL Inc., Travelport, Pegasus, TravelSky Technology Limited., Sirena-Travel JSC, SiteMinder, INFINI, TravelPerk and Kiu System Solutions. These players have adopted various strategies to increase their market penetration and strengthen their position in the distribution system industry.