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?

Related Explainer

What are Bed Banks?

Peter O’Connor
Peter O’Connor
Professor of Strategy at University of South Australia Business School

In the non-US marketplace, bed banks continue to play an essential role, providing both offline and online intermediaries with a long tail of hotel inventory that would be impossible to source otherwise.  Assuming historical bad behaviour regarding abuse of net rates can be controlled, newly consolidated and professionalised bed bank companies can have a long and happy future.  But if they fail to clean up their act...

Erik Muñoz
Erik Muñoz
Chief Commercial Officer (CCO) at Lybra.tech

Bedbanks business may contract over time, however, they will remain a significant player in the online travel marketplace due to the large number of consumers who prefer to have their local travel agent make their travel arrangements. Whilst consumers are more than capable of researching and booking their own flights, car rental, and hotels - that doesn't mean it's something everyone wants to do. Particularly with family reunions or group travel.

Simone Puorto
Simone Puorto
Founder | CEO | Futurist
Max Starkov
Max Starkov
Adjunct Professor NYU Tisch Center for Hospitality and Hospitality & Online Travel Tech Consultant