The Hidden Costs of Bed Banks for Travel Channels: a Q&A with David Sgroi

We sat down with David Sgroi, Director of Enterprise Sales at Leonardo to chat about bed banks and the hidden costs of hotel distribution. 

Let’s start off with an easy one: what is a bed bank?

David Sgroi: A bed bank is a company that provides hotel chains’ rates, inventory, and availability wholesale to the channels that end consumers (in this case, travel shoppers) browse for hotel nights. In the hospitality industry, this information is called “dynamic content.” Channels essentially use bed banks to get cheap rates in bulk. Since it’s nearly impossible for a channel to work with every chain in the world directly, bed banks are an essential middle party between chains and channels.

How do bed banks work?

DS: Bed banks negotiate rates directly with hoteliers and pull data from rate aggregators. Their job is to make it easier for channels to display the lowest rate for the dates their consumers are shopping for so the channel doesn’t have to grab rates themselves.

Who uses bed banks?

DS: There are a few big players, but there are hundreds out there that channels of all sizes rely on for dynamic content. It seems like start-up channels are emerging all the time. These newer channels more likely to be powered by bed banks because they don’t have time or resources to negotiate rates themselves.

What space are bed banks filling in the digital hospitality industry?

DS: Bed banks have gained popularity because they accumulate a lot of properties quickly. This simplifies the process of sourcing dynamic content for channels. In addition to bed banks, channels will also leverage B2B affiliate networks operated by big players like Expedia or for dynamic content.

Where do bed banks get their images?

DS: Bed banks pair the lowest rate they can find with whatever images and text descriptions – referred to as “static content” – they have access to. Unlike dynamic rates, static content is not updated frequently (hence the word “static”). Because static content isn’t a bed bank’s focus, a bed bank will provide channels with whatever images they have for a hotel the first time they send that hotel’s dynamic content. They provide images to channels as a ‘nice-to-have’ rather than as an essential component of a hotel’s listing.

At the end of the day, channels need a separate source for static content in order to generate revenue.

Why do channels that use bed banks need a separate source for static content?

DS: At the end of the day, channels need a separate source for static content in order to generate revenue. Static content, especially images, is essential to selling room nights. In our 20 years of experience in the travel industry, we’ve seen the impact that higher quality, larger quantities of images have on conversion.

We know that travel shoppers visit multiple channels to shop and compare hotels. If a travel shopper goes to your site and sees out of date images, they’ll almost certainly be looking at a different website at the same time. If you’re pulling dynamic rates from one source that comes along with 5 images, and your competition is pulling rates from another and they have 50, you risk missing out on that booking.

There may be a slight cost increase to sourcing images and rates separately but sourcing them manually – or via a bed bank – comes with the costs of time, money and errors.

How can channels automate the sourcing of static content like they do dynamic content?  

DS: The simple answer is: reliable technology from a trusted partner.

Channels need a static content solution that sources images directly from hotel chains. At Leonardo, we send the brand-approved hotel images we receive directly from our hotel chain customers to channels, categorized and accurately matched to their hotel listings with hardcoded metadata for copyright protection.

Any advice to leave with channels?

DS: Experience is what sells. Airbnb has proven that time and time again. Rather than the traditional hospitality model that sell on rates, they sell experiences, which is what people are basing their booking decisions on today. Images are, hands down, the best way to showcase an experience.

In short, keep sourcing your rates and availability from bed banks, but, if you care about delivering the best possible experience for your consumers and driving revenue, don’t rely on bed banks for images and textual information.

Learn more about the most reliable source for hotel static content.