Everything you need to know about hotel wholesalers

Whether through direct bookings on your website, the extensive reach of online travel agencies (OTAs), or the visibility gained from metasearch platforms, every channel plays a unique role in a hotel’s distribution strategy.

But there’s one key player often-overlooked in this distribution landscape: wholesalers.

Despite their behind-the-scenes presence, these middlemen quietly facilitate room sales by connecting hotels to various third-party travel providers. Understanding their role in the hospitality industry - and learning how to work with them strategically - can therefore help hoteliers build a more balanced and profitable distribution strategy.

In this article, we’ll cover wholesalers, the advantages and challenges they bring to revenue management and tips to help you navigate the complexities of wholesaler relationships and enhance your distribution goals, rather than disrupt them.

What is a hotel wholesaler?

When it comes to filling rooms and boosting visibility, wholesalers - often called bed banks - can be a powerful part of a hotel’s distribution strategy.

These B2B companies buy rooms in bulk at discounted rates, then resell them to OTAs, travel agents, tour operators, and even airlines. They bridge the gap between hoteliers needing steady occupancy, and travel companies eager for inventory.

Here’s how they work:

Wholesalers secure room inventory at a static or negotiated rate, ensuring hotels have reliable occupancy even in low-demand periods. They connect with hotels directly or through travel suppliers, often integrating with Property Management Systems (PMS) or using third-party connectivity solutions (or APIs) to keep bookings and availability accurate in your reservation system.

For hotels, this means wider exposure with less hands-on booking management, connecting your property to networks that sell to a unique range of guests worldwide. Wholesalers can be particularly valuable for filling room blocks that might otherwise go unbooked during slower periods, especially because you have sold them a fraction of your inventory and effectively made your hotel smaller, with fewer rooms for you to sell on any given night.

Many wholesalers go beyond just selling hotel rooms. They may offer ancillary travel inventory - from event tickets and local activities to car rentals and transfers - enabling their partners to create complete packages that appeal to different travel segments.

This versatility positions wholesalers as a unique middleman, expanding market reach for hotels while helping travel providers offer a range of services.

Major players in the wholesale market include:

• Hotelbeds - 300K+ properties in 195+ countries

• HPro Travel - 1 million hotels and apartments in 70 000 destinations

• WebBeds -  500k+ properties in 170 different countries

• Bonotel - 10k luxury hotels in 65 countries

• GRNconnect - 500k+ properties in 108 countries

While there are countless other wholesalers, each with their own unique features and appeal, the crucial element is that they provide access to an extensive network of resellers, which can help fill your hotel.

Wholesalers Vs. Online Travel Agencies

So, what’s the difference between a wholesaler and an OTA? 

While both help fill rooms, they differ in their business models and their role in a hotel’s distribution strategy.

OTAs like Booking.com, Expedia, and Agoda are consumer-facing platforms (B2C), allowing travelers to search, compare a wide range of hotels, and book rooms directly, typically for a commission. OTAs provide hotels with high visibility and exposure to a wide audience.

On the other hand, wholesalers operate on a B2B model, selling rooms to OTAs, travel agents, and other partners who resell to travelers. This difference shapes how hotels manage each relationship:

Sales model: 

• OTAs: Sell rooms directly to travelers, handling bookings and customer interactions and in return take a commission per booking from the hotel.

• Wholesalers: resell rooms to various partners, who then handle consumer-facing interactions.

Inventory control:

• OTAs: Hotels manage availability and pricing on the OTA platform, allowing real-time adjustments to match demand. 

• Wholesalers: Buy rooms at discounted rates for specific dates, providing predictable occupancy but less control over how these rates are distributed. While this can impact rate parity if left unmonitored, the stability of these pre-sold rooms can help hotels forecast occupancy reliably, particularly in off-peak periods. Wholesalers also simplify distribution by managing multiple partner relationships under one contract, reducing the need for hotels to manage smaller channels directly.

Market reach:

• OTAs: Provide hotels with direct visibility to a global consumer audience, particularly for transient travelers from various markets.

• Wholesalers: Help hotels reach niche segments like international travelers, tour groups, and conference attendees. Though they may not yield the highest average daily rate (ADR), wholesalers guarantee occupancy, supporting your RevPAR goals.

By understanding these differences, hoteliers can optimize both types of partnerships. OTAs allow direct visibility and flexibility in rate management, while wholesalers can supplement occupancy with larger bookings and extended reach. Managing each of these relationships strategically can help hotels get the most value from each of these channels.

Wholesalers are a double-edged sword for hotels

We’ve discussed how wholesalers work, but there’s another side of the story that we should also mention. As mentioned above, because wholesalers operate on a B2B basis, their rates are often discounted for bulk or package sales, intended to remain hidden from consumers. 

When these rates surface on metasearch platforms or retail OTAs, they can undercut a hotel’s direct rates, creating rate parity challenges.

Metasearch engines, like Google Hotel Ads, Kayak, and Trivago, aggregate rates from multiple sources, making any price discrepancies across booking channels easily visible to travelers. 

Guests love the simplicity of checking one platform to compare prices for the same hotel or flight across multiple sites. Consumers today are aware of how dynamic travel pricing can be and know they won’t always find the same rate everywhere. This creates a space for non-contracted third-party resellers - those operating outside direct contracts -to undercut larger OTAs.

Since these OTAs lack the brand recognition, customer service, or reputation of larger competitors, they focus on finding cheaper inventory to attract bookings with the lowest rates - even if those discounted rates weren’t intended for retail sale.

In order to do this, it’s often the case that wholesalers contract inventory at a significant discount from a hotel and sell it on to OTAs at a discount, which still leaves room for them to undercut hotels.

For hotels, who have already sold this inventory, this lack of pricing control can affect brand perception and impact direct bookings, especially when discounted rates are offered through third-party channels and are lower than what you are offering on your website.

With Google’s strong presence in metasearch, pricing discrepancies become even more visible, making it essential to balance your distribution strategy with a healthy mix of direct and indirect channels.

Expanding your reach maximizes bookings and revenue

Using a mix of wholesalers, OTAs, and metasearch platforms helps hotels reach a broader audience. This approach enables hotels to attract diverse travel segments - such as international tourists and group bookings - that might be hard to capture through direct channels alone. 

For independent hotels in particular, using metasearch and wholesalers strategically provides visibility on par with larger hotel chains, offering a competitive edge without the extensive marketing costs.

Understanding the wholesaler rate parity problem

However, maintaining consistent rates across distribution channels is crucial for protecting brand integrity and maximizing direct bookings. 

It’s a constant game of whack-a-mole. 

As we highlighted earlier, wholesalers often sell rooms at discounted rates intended for B2B partners, yet these rates sometimes appear on consumer-facing platforms, like OTAs and metasearch engines, driving down rates across channels.

This not only diverts potential direct bookings but also drives up customer acquisition costs for the hotel, as guests book through third parties instead of the hotel’s direct channel.

To address these challenges, hotels should have rate parity clauses with their distribution partners in place and use dynamic pricing models to keep direct rates competitive with market demand. Monitoring tools can also help identify rate discrepancies across channels, enabling hoteliers to take corrective action and maintain consistent pricing.

What can hoteliers do about rate disparity?

Addressing rate disparity requires a proactive approach to ensure wholesale rates support a hotel’s distribution strategy without undermining direct bookings or creating pricing inconsistencies. Here are some targeted strategies for hoteliers:

1) Audit and strengthen contractual agreements

Carefully review contracts with wholesalers and distribution partners to include specific rate parity clauses, such as ensuring wholesalers can’t offer rates directly to consumers. Avoid long-term static contracts that prevent flexibility and instead focus on shorter, adjustable terms that provide better control over rate distribution.

2) Enforce accountability with distribution partners

Conduct regular audits of your distribution partners’ rate practices to ensure compliance with contractual obligations. If certain wholesalers are consistently breaching rate parity by partnering with non-contracted OTAs or discounting rates beyond agreed terms, consider re-evaluating the partnership. Holding wholesalers accountable helps protect your direct revenue streams.

3) Prioritize transparent distribution practices

Transparency with distribution partners helps to avoid surprises in rate visibility. Work closely with wholesalers to ensure that discounted rates intended for packages or specific markets remain within those channels, rather than surfacing on metasearch engines or OTAs. This proactive approach helps prevent rate discrepancies that could affect brand perception.

4) Use monitoring tools for Rate Parity

Tools like Lighthouse’s Parity Insight (for hotel groups) and Rate Insight provide real-time visibility, alerting hoteliers to rate discrepancies so they can be quickly resolved.

Understand rate parity performance and learn how to improve it!

Wholesalers play a valuable role in distribution, but their discounted rates can disrupt parity when they appear on consumer channels. Lighthouse’s Parity Insight and Rate Insight are designed to help hotels monitor these leaks, manage parity, and maintain consistency across all channels.

Parity Insight provides hotels with the insights needed to manage wholesaler-driven parity challenges by:

• Using advanced filters - like market, brand, source, channel, and price difference - to help you quickly zero in on specific parity issues and opportunities

• Organizing all data into a clear, user-friendly dashboard, making it easy to identify key problem areas, whether tied to a particular hotel or distribution channel

• Tracking historical data to highlight repeat offenders, allowing you to address ongoing parity violations and maintain compliance across partners

• Helping you prioritize actions based on their impact, so you can focus resources on the areas that will resolve the most parity issues effectively

Rate Insight also equips hotels with essential tools to maintain consistent pricing and protect rate parity by:

• Monitoring rates across both desktop and mobile to ensure mobile-only promotions don’t unintentionally undercut direct rates

• Tracking parity trends up to 12 months ahead, giving you a proactive view of potential issues before they affect revenue

• Using clear visual displays to highlight parity gaps, making it easy to spot and correct pricing inconsistencies to keep your rates competitive

Parity Insight and Rate Insight give you the control to confidently manage the challenges of rate parity, keeping your pricing strategy consistent and your brand reputation strong. These tools give you the power to spot issues before they impact your revenue and take meaningful action to keep your distribution health in good shape.