For a travel agency, tour operator, TMC, or booking platform, choosing between bed banks and direct contracts is not simply a matter of connectivity. There are multiple factors at play: the breadth of available inventory, control over rates, the ability to leverage negotiated agreements, and the profitability of hotel distribution.
Bed banks ( see the DIGITRIPS hotel distribution glossary) provide quick access to an already aggregated international inventory. Direct contracts, on the other hand, offer greater control over the relationship with hotels and over commercial terms. In practice, these two approaches address different needs and are increasingly combined within a hybrid model.
In short: bed banks are particularly effective for quickly achieving broad coverage. Direct contracts are better suited for strategic properties and companies that want to control their negotiated rates. A hybrid model combines the benefits of both, provided you have a platform capable of connecting, comparing, and prioritizing the various sources.
Table of content
- Bed bank vs. direct contract: What are the differences?
- Which solution should you choose based on your model?
- Hybrid Models in the Hotel Industry
- How DIGITRIPS Tech Centralizes Bed Banks and Direct Contracts
- FAQ
Bed bank vs. direct contract: What are the differences?
Bed banks
A bed bank is a B2B intermediary that purchases or negotiates lodging capacity from numerous establishments and then redistributes it to travel agencies, tour operators, corporate travel managers (TMCs), platforms, or other travel professionals. In this way, it centralizes a broad, often international inventory that is accessible through a single login.
This approach allows a distributor to quickly expand its inventory without having to negotiate or maintain individual integrations with each hotel. The bed bank handles part of the contract management, data standardization, availability tracking, and connectivity.
Direct Hotel Contracts
In contrast, a direct hotel contract is entered into between the distributor and the hotel or hotel chain. The two parties directly agree on the terms: negotiated rates, any room allocations, sales periods, cancellation policies, commissions, promotions, or specific benefits.
A direct contract strengthens commercial control, but it also requires the ability to correctly upload, link, update, and distribute the associated rates and inventory. Its value therefore depends as much on the quality of the negotiation as on the technical capacity to implement the contract.
| Objective | Bed banks | Direct Contracts | Hybrid model |
| Building Your Inventory | Immediate access to a pre-compiled catalog | Offer limited to participating hotels | Extensive catalog, supplemented by contracted hotels |
| Expand to New Destinations | Rapid deployment without having to negotiate with each hotel individually | Gradual and targeted rollout in accordance with the agreements signed | Immediate coverage, followed by targeted expansion of direct contracts |
| Define the terms and conditions | Terms and conditions set by each supplier | Terms negotiated directly with the hotel | Preferred direct terms, when they are more advantageous |
| Managing Your Margin | Margin dependent on rates provided by suppliers | Opportunities for optimization at hotels generating sufficient volume | Selecting the most relevant source based on the margin and the defined rules |
| Manage Connections | A connection via a bed bank or an aggregator | Connection and maintenance are required for each direct source | Sources consolidated and managed through a common platform |
| Manage Availability | Depends on the inventory data provided by suppliers | Access to stocks that are traded or directly connected | Direct contract as the first option, with an alternative offer if necessary |
| Preferred Use Cases | Rapidly expand hotel coverage | Promote strategic hotels and destinations | Combining Coverage, Monitoring, and Sales Optimization |
Which solution should you choose based on your model?
1. To quickly expand your inventory
A company launching a hospitality business or looking to quickly expand into new destinations is generally better off starting with bed banks. A single integration can provide access to a large number of properties, categories, and markets.
This coverage is particularly useful for meeting scattered or unpredictable demand. An agency that sells customized trips, a travel management company (TMC) handling numerous business trips, or a tour operator testing a new destination does not always have the volume needed to enter into direct contracts with each hotel.
Bed banks thus help expand the product lineup and reduce time to market. Their primary role is to accelerate large-scale coverage.
2. To better control its profit margins
Direct hotel contracts become particularly attractive when a company identifies hotels, chains, or destinations that generate consistent volumes. By eliminating a layer of intermediation, they can enable the company to negotiate terms better suited to its business and improve its potential profit margin.
They also offer greater flexibility in creating a unique value proposition: exclusive rates, included perks, special cancellation policies, or reserved availability. The distributor no longer simply sells inventory that’s available to many competitors; instead, it builds on its own unique business relationship.
However, entering into a direct contract with a hotel that generates few reservations may create more work than it is worth. The costs associated with contracting, uploading rates, maintaining data, and operational monitoring are also factors to consider.
3. To distribute its negotiated rates
Companies that already have hotel contracts often face another challenge: making those rates actually available in their booking processes.
A negotiated rate can be uploaded to a static tool, transmitted via a channel manager, or accessed in real time from the hotel’s system. These various methods must then be standardized and connected to the sales interface, the booking engine, or the API used by the distributor.
The challenge, therefore, is not simply to sign a direct contract, but to turn that contract into bookable content with reliable and up-to-date information. A hotel distribution platform must be able to manage rates, availability, restrictions, property and room mapping, as well as priority rules among sources.
Hybrid Models in the Hotel Industry
Today, many players in the travel industry are instead seeking to build a hybrid hotel distribution model: bed banks ensure a broad range of offerings, while direct contracts enhance control and profitability in strategic segments.
What are the benefits? a single company can rely on third-party suppliers to cover thousands of destinations, whilst prioritising its own contracts with hotels where it enjoys more favourable terms
The ability to connect multiple sources
The first challenge is to connect the various sources without increasing the number of custom developments. Each bed bank, channel manager, or supplier may use its own formats, rules, and identification methods.
Centralized hotel connectivity reduces this complexity. It allows the distributor to integrate multiple content sources through a common technical layer and to gradually expand its network of hotel suppliers.
This approach also avoids reliance on a single source. A company can add a new supplier, integrate direct contracts, or expand its geographic coverage without having to completely rebuild its booking process.
The ability to coordinate priorities and rules
Simply connecting the sources isn’t enough. When the same hotel is listed on multiple bed banks and through a direct contract, the platform must identify, compare, and organize the available offers.
This coordination can be based on several criteria: price, margin, cancellation policy, availability, data quality, or the business priority assigned to a contract. It also requires reliable mapping to identify the same property or room type despite differences in nomenclature among suppliers.
This allows the distributor to maintain control over its strategy. It does not simply list all the offers it receives; rather, it determines which sources to prioritize based on its business and operational objectives.
The opportunity to maximize the value of the most profitable contracts
The hybrid model truly comes into its own when it automatically prioritizes direct contracts where they offer a real advantage, while using bed banks to supplement availability or coverage.
A more profitable direct booking may be prioritized. If that rate is no longer available, an offer from a bed bank can be used instead to ensure the sale is not lost. As a result, the procurement strategy becomes dynamic rather than static.
This approach helps travel agencies, tour operators, corporate travel management companies, and platforms strike a balance between three objectives that are often difficult to reconcile: offering sufficient choice, protecting their margins, and maintaining a seamless booking experience.
How DIGITRIPS Tech Centralizes Bed Banks and Direct Contracts
DIGITRIPS Tech offers a hybrid approach to hotel distribution that combines Travel Plugz and Hotel Direct Access.
Travel Plugz allows you to connect and aggregate content from multiple bed banks within a single environment. This enables the company to build multi-source hotel coverage without having to maintain each connection separately in its own tools.
Hotel Direct Access, for its part, enables the distribution of direct contracts and negotiated rates. The solution facilitates their integration with hotels’ inventory and availability data so that they can be made bookable through the relevant sales channels.
Combining these two solutions makes it possible to:
- link content from bed banks and direct contracts
- centralize their distribution through unified connectivity
- apply selection and prioritization rules based on the defined objectives
- give priority to the most attractive contracts where they are available
- keep an alternative option available in order to maximise the chances of a booking
- Gradually increase the share of direct bookings in the hotel’s revenue mix.
This architecture embodies the three essential functions of a modern hotel distribution strategy: connecting sources, coordinating rules, and highlighting the most relevant content.
The hybrid model involves selecting the sources best suited to each need and managing them through a platform capable of turning this diversity into a competitive advantage.
DIGITRIPS Tech supports travel industry players in developing this strategy and in the gradual integration of their various hotel sources.
Interested? Contact us!
FAQ
A bed bank is a B2B intermediary that aggregates rooms and negotiated rates from numerous hotels and redistributes them to travel agencies, tour operators, corporate travel management companies (TMCs), and booking platforms.
A bed bank provides access to the inventory of numerous hotels through a centralized connection. A direct contract is negotiated directly between the distributor and the hotel and generally offers greater control over the terms and conditions.
No. They can improve margins when they involve hotels or destinations that generate sufficient volume. However, you must factor in the costs of negotiation, setup, connectivity, and contract maintenance.
Yes. A hybrid model uses bed banks to ensure broad coverage and direct contracts to optimize rates at strategic hotels. A hotel distribution platform or solution, such as DIGITRIPS’, then aggregates and prioritizes this content.
Bed banks are primarily suited to meeting capacity and rapid deployment needs. Direct contracts are ideal for recurring hotel bookings, strategic destinations, and companies that want greater control over their rates and margins. A combination of the two is often the most flexible solution.
