As a hotelier, you have different options for distributing your hotel rooms in the online market: the wholesale model, the retail model, the merchant model and the tour operator model. The answer to the question above lies within the wholesale model.
The wholesale business model
Hotel wholesalers are intermediaries. They don’t directly market hotel rooms to guests, but rather to Online Travel Agencies (OTAs). The wholesaler will distribute rooms allocated to them by the hotel amongst the OTA brands – some of which may be unfamiliar to you.
The three key stages:
- The hotel provides a heavily discounted net rate, because the hotel wholesaler buys rooms in bulk. The wholesaler pays the hotel for the rooms bought in bulk, guaranteeing to cover the room costs, whether they’re resold or not.
- The wholesaler applies a mark-up to its net rates and resells the rates to other OTAs. The wholesaler sends an invoice to the OTA, charging them for all rooms they’ve resold. The OTA, in turn, institutes an additional mark-up.
- Guests can book the same hotel room at different prices depending on the mark-up chosen by the OTAs or tour operators. The customer will be paying the OTA directly.
How do I find out who is actually selling my rooms?
Check the contracts you signed with your online distributors. Normally, there is a net rate agreed with the wholesaler for a sold number of night stays, as well as permission enabling them to resell these rooms to third party vendors in the contract details. This is why you may find hotel rates distributed through Online Travel Agencies you’ve never heard of.
Why might the final price differ for the customer?
You’ve negotiated a net rate with the hotel wholesaler, but you don´t have control of the final price displayed to the traveller. Why? Because there are two different contracts. Your contract with the wholesaler and another between the wholesaler and the third parties. Once resold, the OTAs will apply a mark-up to the final price of your rooms (percentage varies depending on the OTA’s marketing policies).
Increasing your customer reach with a wholesaler
If your hotel is bookable through different channels, spread across several markets, you are more likely to maximize your occupancy. That´s why collaborating with a wholesaler can be a good option.
There are great benefits to signing a contract with a wholesaler. Not only will you have the opportunity to reach customers through internationally established OTAs, you will also have a certain occupancy rate guaranteed.