A bed bank (also called a wholesaler) is a B2B company that purchases rooms from accommodation providers in bulk at discounted, static prices for specific dates, and sells them to OTAs (Online Travel Agencies), travel agents, destination management companies, airlines, or tour operators.
When it comes to hotels’ revenue management, there are two different rates:
- B2C Rates (Business to Consumer)
These rates are offered directly to guests and are extended to all OTAs. - B2B Rates (Business to Business)
These rates are offered to business partners, such as travel agencies, at a lower rate than B2C rates since agencies need to markup the rates. B2B rates are not supposed to display on OTAs or metasearch engines.
“Bed banks provide discounted rates in bulk to travel agents, OTAs, and tour operators, optimizing room allocations and pricing strategies.”
Disadvantages of B2B Rates on OTAs
With bed banks being connected with OTAs, B2B rates are often extended to OTAs. When B2B rates appear on B2C platforms, a lot of rate parity issues and confusion arise for both hotels and guests.
Inconvenience Caused to Guests
Guests may believe they have booked directly with an OTA, but the hotel receives the booking via a travel agency. When guests show their OTA booking confirmation at the hotel, the front desk may not find the booking under the OTA name, causing check-in delays and dissatisfied guests.
- Bed Banks Solutions
- Bed Bank Analysis & Research
- Maximized Revenue with Secure Contracts
Inconvenience Caused to Hotels
When B2B rates are sold through B2C platforms, hotels receive bookings at lower rates, leading to revenue loss. This also creates rate parity issues, which harm the hotel’s visibility on B2C platforms.
How to Minimize Revenue Losses
- Do not offer heavily discounted rates to bed banks.
- Provide rates with a limited room allocation and a longer release period.
- Continuously monitor the situation and address the issue with bed banks.
