Travel Wholesalers in the Hotel Distribution Industry

Travel wholesalers are essential in connecting hotels and travel agents within the complex hotel distribution network. Their involvement ensures that hotels reach a broader audience, maximizing occupancy rates and revenue. This blog delves deep into the world of travel wholesalers, shedding light on their operations, benefits, and challenges. It will also look at some of the industry's leading players.

What are Travel Wholesalers?

Travel wholesalers, or bed banks and accommodation wholesalers, are B2B companies that act as intermediaries between hotels and travel agents. They purchase large blocks of hotel rooms at discounted rates and then resell these rooms to OTAs, tour operators, and other travel sellers. This model allows hotels to ensure a certain occupancy level while enabling travel agents to offer competitive packages to their clients.

Read Also:What is an Online Travel Agency (OTA)? Best OTAs for Hotels

Are Travel Wholesalers Relevant?

The answer is yes. Look at some of the statistics.

1. According to Allied Market Research, the global travel wholesale market was valued at $234.3 billion in 2019 and is projected to reach $399.4 billion by 2027, growing at a CAGR of 7.6% from 2020 to 2027.
2. A study by Phocuswright indicates that travel wholesalers and their networks influence 47% of hotel bookings worldwide.

How do Travel Wholesalers work?

1. Bulk purchasing:
   Travel wholesalers negotiate with hotels to buy rooms in bulk at a lower rate.
2. Distribution:
   These rooms are distributed to multiple travel sellers, including travel agents and tour operators, who package them with other travel services like flights and tours.
3. Resale:
   Travel agents sell these packages to end customers, often at a marked-up price, ensuring a profit margin for themselves.

Benefits of Working with Travel Wholesalers

1. Increased occupancy:
   Selling rooms in bulk can ensure a higher occupancy rate, reducing the risk of unsold inventory.
2. Extended market reach:
   Partnering with wholesalers allows hotels to tap into markets and customer segments they might not reach independently.
3. Reduced marketing costs:
   Hotels can save on marketing expenses as wholesalers handle much of the promotional activities.
4. Predictable revenue:
   Bulk sales provide hotels with a predictable revenue stream, aiding in better financial planning.

Disadvantages of Working with Travel Wholesalers

1. Lower profit margins:
   Selling rooms at a discounted rate to wholesalers can reduce hotels' overall profit margins. Furthermore, wholesale pricing may remain unchanged for extended periods, restricting the hotel's ability to generate profit.
2. Reliance on third parties:
   Hotels depend on wholesalers to sell their inventory, which can be risky if the wholesaler fails to distribute effectively.
3. Potential brand dilution:
   Working with multiple wholesalers can sometimes lead to inconsistent pricing and brand representation. Plus, managing multiple wholesalers could be a time-consuming task.

List of some Leading Travel Wholesalers

1. Hotelbeds:
   It is one of the largest travel wholesalers globally, offering a vast range of accommodations and travel services. It represents over 170,000 accommodations, including hotels, resorts, boutiques, hostels, apartments, villas, and B&Bs.
2. HPro Travel:
   It works with over 1000,000 properties of all types and operates across 70,000 locations globally.
3. WebBeds:
   It represents 31,000+ independent hotels and 62,000+ hotel chains

Is it Worth Considering Travel Wholesalers for Your Hotel?

Travel wholesalers can benefit large groups and chains with favorable agreements and the right hotel distribution technology. However, to maximize the benefits of working with travel wholesalers, hotels must consider their specific target demographics and guest profiles and strengthen their distribution networks and capabilities. Additionally, they should focus on enhancing their online presence and reputation to increase bookings.

Best Practices to get more out of your Engagement with Travel Wholesalers

Do you want to work with travel wholesalers? Then, you must understand that managing wholesale agreements can be complex in the modern distribution landscape. Here are the following best practices:

1. Thorough planning and trial:
   Before entering into any agreement, it's crucial to have a clear plan and conduct comprehensive research on potential partners. Go for a trial period. It can help in determining the long-term benefits you might see.
2. Continuous management and analysis:
   Treat wholesalers as strategic distribution partners and continuously manage the agreements to prevent parity violations and maintain control over inventory and pricing. Consistently monitor for contract violations to assess if you need to make some favorable changes in the agreement.
3. Utilize dynamic rate agreements:
   It will help you minimize disparity and retain control over pricing across all distribution channels.
4. Hire dedicated resources:
   Effective management of wholesale agreements requires dedicated resources that understand distribution, rate management, and hotel revenue management.

Travel wholesalers are integral to your hotel’s distribution ecosystem, offering significant advantages in terms of reach, occupancy, and revenue stability. However, they also present challenges that you must navigate carefully. By understanding the dynamics of working with wholesalers and strategically managing these relationships, you can optimize your distribution strategies and thrive in a competitive market.

Travel Wholesalers with AxisRooms Channel Manager

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