Before the internet turned the hotel industry on its head, wholesalers and bedbanks were the backbone of room distribution, Hotels sold their rooms to a wholesaler, who sold them to a travel agency, who sold them to the end customer.

A markup at every stage meant every party profited. We all know what happened next. The internet came along, online travel boomed, and hotel distribution systems didn’t keep up.

Suddenly, hotels were competing for bookings with their own rooms advertised at different prices across the web - and no longer had a full view of exactly which bookings were coming from where.

Despite being contractually obliged to sell rooms only under the terms set out by the hotel, it’s not uncommon to see wholesalers
‘unbundling’ rates designed to be sold as part of tours or packages. These heavily discounted rates then find their way onto OTAs like Amoma, and a hotel room worth $200 ends up being sold for $120.

The overwhelming response from the hotel industry to the ‘Amoma problem’ is one of frustration. Frustration that wholesalers break their contracts, frustration that it’s hard to easily determine which wholesaler is unbundling rooms, and most of all, frustration that a negative cycle like this one has come to exist.

The hotel industry faces an uphill struggle against antiquated technologies and non-communicative systems. Wholesalers run on tech that was built for offline bookings, but can no longer make money without selling online. Static rates designed to be rolled into packages and sold by traditional travel agents are now being shipped out to a multitude of OTAs, with no oversight available to the hotels whose rooms they relate to.

In spite of these issues, most hotels continue to use wholesalers. Many aren’t in a position to turn down a proven sales channel, which wholesalers irrefutably are. But are they truly worth it?

We surveyed a diverse group of 50 hoteliers about their attitudes to wholesalers. Respondents were a mix of Triptease clients and non-clients, and responses were collected over the month of August 2017.

Wholesalers: the hotelier’s view

Of the 50 hotels we spoke to, only four do not currently contract with wholesalers. Of those, two had deliberately chosen to stop
working with wholesalers on account of undercutting.

The discord that unpackaged wholesale rates can sow between hotels and their OTA partners is a major problem. For hotels attempting to maintain the upper hand (and moral high ground) in rate parity discussions with their partners, it’s at the very least
embarrassing when cheaper rates than they’ve given the OTAs surface elsewhere on the internet.

Only five of those surveyed had not come across the ‘Amoma problem’ prior to our survey

Read the full report here.

Moriah Olschansky is a Direct Booking Coach at Triptease.