Bed banks are specialized B2B platforms that contract supply from hotels and accommodations providers and make it available to travel sellers that aggregate travel demand from a variety of sources (smaller OTAs, traditional travel agents, airlines, or tour operators.)
Bed banks have been active players in hotel distribution for over 20 years now. They are not a new business model, but a simple online technology version of the traditional wholesalers of hotel accommodations that have existed for decades before that.
Some argue that the era of bed banks is getting to a close due to shrinkage of the brick-and-mortar distribution marketplace due to consumers shifting to online travel planning and booking (U.S. 30,000 travel agencies 20 years ago vs less than 7,500 today); unstoppable increase of branded vs independent hotels worldwide (major hotel chains do not like and have less need for bed banks). Add to that the increased market power of the OTAs, fueled by the ongoing pandemic and the adoption of online shopping and service consumption even by late adopters.
The question is: what does the future hold for the bed banks sector?
The best way to describe whats around the corner for bed banks is: Evolve or became a slave of distribution.
Slave scenario: Bed banks have a very strategic value for OTA's as we have seen with Expedia becoming a middle man between brands and bed banks / wholesale system. The strategic part is that you (OTA's) can start brick-walling hotels as well as become a "pool of rates" that can be used where there was previously no access or at least no control of that access.
Evolve scenario: Bed banks take on OTA's with a dual value proposition by becoming an OTA themselves. A) give us the ability to go B2C for you (the hotel) and B) we will not provide rate leakage to the OTA's.
Airbnb is expected to complete its much anticipated IPO before the end of 2020 and Wall Street analysts are understandably excited, while hospitality industry experts worry that access to cheaper capital would allow Airbnb to increase its share of the current ultra-weak travel demand at the expense of hotels.
Amazon Explore launched recently, tries to capture consumer demand for experiencing virtual tours and activities in destinations, such as how to cook a dish, personalized guided tours of cities and attractions.
The "old" Thomas Cook, a 179-year-old company and the second largest tour operator in the world after TUI, collapsed in September of 2019. Fosun Tourism Group, a Chinese travel conglomerate that already owned the famed Club Med, bought the rights to the bankrupt company's brand for $14 million.
Bed banks are specialized B2B platforms that contract supply from hotels and accommodations providers and make it available to travel sellers that aggregate travel demand from a variety of sources (smaller OTAs, traditional travel agents, airlines, or tour operators.
Travel suppliers - hotels and airlines - have experimented for years with a supplier-owned online travel agency (OTA) to combat their over-dependency on the mega OTAs like Booking Holdings and Expedia Group.
