Bed banks: What are bed banks and how are these useful for travel services providers
Finding the best price for a hotel room online is not always easy for a traveler. But Online Travel Agencies don't have it easy either as there are a multitude of providers to choose from, and connecting to hotels directly might not always bring competitive rate advantages if the OTA does not offer significant booking volumes in return. Also connecting to hotel reservation systems would mean managing more suppliers and would increase system complexity.
So, how can an OTA find ways to diversify their portfolio?
The answer – partner with a bed bank.
What is a bed bank?
A bed bank is a wholesaler of accommodation (rooms) that purchases rooms at a discounted price for specific dates in bulk and resells these to travel agencies, airlines, tour operators, DMCs, TMCs, and OTAs.
Bed banks connect to suppliers' inventory directly or through other intermediary connectivity solutions. The connection to the Property Management System (PMS) is needed so that reservations coming into the property through these channels are automatically fulfilled and the property knows real-time the status of their inventory, who will occupy the room(s) and between which dates.
These businesses represent an intermediary between travel professionals looking to have a diversified offering with decent prices and incentives (commissions) and hoteliers that are looking to expand their reach outside of their geographical region.
Some examples of major bed banks and the number of hotel properties they cover (according to marketing information): HotelsPro 600k, GRN Connect 500k, WebBeds350k, Hotelbeds180k, Travco12k.
What to consider when selecting a bed bank?
As with the selection of any Travel Technology Partner, you need to consider how this provider can fulfill your business needs, and for that, you need to understand what your customer base looks like and what they value (market segmentation), source of inventory (how does the wholesaler connect to the hotel property, direct or through third parties), destination coverage (the content has to meet your customer's expectations), static data content (how frequently are they updating static content to keep this up to date and accurate), connectivity options (especially for OTAs and other online connected businesses, this is important as distribution done through APIs needs to be a focus on speed, content accuracy, and payload) and other features (like multilingual and mapping content, multi-currency support etc).
What is great about bed banks – they are one of the two main sources of hotel rooms for OTAs and with the use of one or more bed banks, your offering can now have a global reach.
What's not so great about bed banks – more and more hoteliers are becoming hesitant to redistribute content through bed banks that resell content through online channels to OTAs and chose to find other ways to directly connect to OTAs, through channels where hotel properties can sell their inventory, not just limited to the contracted amount and have control over prices dynamically.