Dear WuBookers, travel agencies, OTAs, and metasearch engines are entities that we have come to know well. However, they are not the only ones: so-called travel wholesalers, bed banks, or wholesale tour operators have also been active on the market for years. These are B2B (business-to-business) intermediaries that can represent an additional sales opportunity for those who know how to take advantage of them. Here’s what they are and what the pros and cons are.

What are travel wholesalers?

Travel wholesalers are B2B (business-to-business) companies that buy hotel rooms in bulk and resell them to travel agencies, airlines, OTAs, and so on. Unlike online platforms and other intermediaries, bed banks do not offer accommodation directly to travelers, but rather act as intermediaries between buyers and sellers. Guests are often unaware of their presence because they receive information and details directly from their purchasing platform. Wholesalers provide everything necessary for agencies and OTAs to place rooms and, when these are booked, they transmit the end customer’s data to the property.

Wholesalers may operate in different ways: they may decide to sell only rooms or rooms and vacation packages, and specialize in certain types of accommodation or markets. In any case, purchases are usually made at controlled prices and for a large number of accommodations (all or almost all of the inventory), which makes wholesalers an attractive distribution alternative, especially for large chains or more seasonal businesses.

Pros and cons of wholesale tourism

As stated on a well-known travel information website: “Before the pandemic, hoteliers sold approximately $50 billion worth of rooms through bed banks and other wholesale channels.” According to the publication, this trend is set to grow in the coming years. Travel wholesalers represent an additional opportunity for hotels and, if well managed, can contribute positively to sales strategy. However, before embarking on this type of collaboration, it is important to be aware of the possible advantages and disadvantages.

The advantages of travel wholesalers

Working with travel wholesalers can bring numerous benefits, including:

• Wide reach and user base: wholesalers often have access to new or hard-to-reach channels and markets, especially for smaller businesses. Expanding your sales network can thus also help improve your marketing potential;
• more efficient organization: selling to wholesalers allows you to manage your inventory in a linear fashion, because you know availability and occupancy in advance. It also reduces the need to deal with many smaller and potentially distracting channels;
• advance and reliable payments: bed banks purchase beds in advance, ensuring a secure and reliable cash flow: as they are intermediaries working with other intermediaries, it is more difficult to encounter scams and non-payments.

Possible downsides

On the other hand, like all commercial operations, the wholesale of hotel rooms is not without possible negative effects, such as:

• low rates, lower than the prices available to the public, therefore with reduced ADR, even if “certain”;

• prices that are likely to remain static for a very long time: wholesalers tend to buy at a fixed cost that remains the same even after a long time;
• poor control over sales markets and agreements between wholesale tour operators and other retailers, with the possibility that the hotel may appear with inconsistent rates on multiple portals.

Before undertaking such an initiative, therefore, it is advisable to carefully weigh the pros and cons and also consider some protection and management tools that streamline the work.

5 tips for better bed bank management

To safeguard the hotel’s interests and maintain smooth operations without further burdening the activities of those who manage a property and its employees, it is important to keep a few precautions in mind.

1. Choose strategically

The first aspect concerns choosing the best partners. As we said, each wholesaler may work differently and therefore have specific strengths and weaknesses. For example, they may be very knowledgeable about selling accommodation only or also experiences, or they may have a particular foothold in one geographical area rather than another. Before deciding, explore the market and try to understand the distinctive features of each company and whether they can bring you a real advantage.

2. Set clear and precise contractual terms

Once you have identified the right wholesaler, it is a good idea to define the agreements very carefully and thoroughly. The contractual terms and conditions determine not only the terms of sale, but also the terms of collaboration. In this case, you might consider activating one or more bed banks only in the low season, when demand is low, and discontinuing distribution as soon as it rises again. Defining all the details clearly is a fundamental form of guarantee, even if unforeseen events occur…

3. Regularly check the work of wholesalers

Unfortunately, things do not always go as planned, and you may find your rooms for sale on channels such as OTAs at the same price agreed with the wholesaler. This is an unpleasant situation that risks causing difficulties with other business partners, undermining your positioning strategy, and compromising your reputation (a price that is too low may not necessarily be perceived positively by the public and, on the contrary, could give the wrong impression of your property). Therefore, be prepared to regularly check the channels managed by the wholesaler to avoid unpleasant surprises and ambiguities.

4. Analyze sales trends

Wholesalers purchase rooms in advance, but this does not mean that you can ignore sales trends. Having a clear understanding of guest profiles, average length of stay, and typical spending on extra services and other items not included by the wholesaler—also in relation to other distribution channels—helps you understand whether the business is really profitable and how to implement it if necessary.

Obviously, to do all this in an agile and streamlined way, you need a tool to track reservations and their origin. A tool such as Zak, the PMS by WuBook, which not only simplifies all aspects of hotel management, but also allows you to monitor each reservation and analyze its performance. To simplify this phase even further, Zak also allows you to set up custom agencies and companies to match with reservations, making it easier to view only the information that interests you and make informed decisions.

5. Adopt a reliable channel manager

Speaking of reservations, until recently, wholesale reservations were managed manually.

Today, however, it is possible to lighten this part of the workload by choosing partners that integrate directly with the channel manager and avoid the hotel having to enter rates and reservations manually. Once again, Zak is already set up to work in this way, as its Channel Manager allows direct connection with HotelBeds and, soon, also with WebBeds, two of the leading wholesale tour operators in the industry. The connection is already established, secure, and reliable, and inventory and sales management is extremely simplified.

So, as we have seen so far, when approached with the right precautions, strategy, and tools, wholesalers represent an additional distribution and sales opportunity for hotels that want to grow.