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Davis gives Room Key update, hints at future
April 29 2013

The “exit-traffic” strategy to capture demand from brand.com sites is driving results. Next, the company will address guest frequency programs and work through some mobile issues.

Highlights
  • Roomkey.com gets about 14 million to 16 million visits a month.
  • Room Key could connect with brand loyalty programs to add to guest personalization.
  • The company plans to have a mobile site by the end of this year.
By Jason Q. Freed
News Editor
jfreed@HotelNewsNow.com

 

DALLAS—Nine months after implementing an “exit-traffic” strategy that drives consumers who don’t book hotels on several brand sites to a more comparative-shopping experience on Roomkey.com, results are beginning to roll in.

The site—which was founded by six of the world’s leading hotel companies—has grown “enormously,” CEO John F. Davis III told HotelNewsNow.com last week.

Davis said the site’s traffic metrics are right in line with the goals identified in the business plan two years ago. Conversion figures are falling slightly short, however.

“For the past nine months our team has been focused on how many users we can get to hit ‘book direct’ (on the Room Key site),” Davis said, which then sends them to a partner hotel supplier. “Now we’re going back to our hotel members to see how we can improve on getting them to actually book the room. We’re meeting with the chains individually because the conversion rate is solely dependent on what that landing page looks like.”

Davis provided traffic figures, upcoming initiatives and potential challenges in the following Q-and-A:

HotelNewsNow.com: What are the site’s key traffic metrics?

John F. Davis III: “We get about 14 million to 16 million visits a month. About 8 (million) of those are unique visitors. We started listing 23,000 hotels, and we’re now well over 50,000 hotels that we have direct connect to. We have hotels in 159 countries. There has been a lot of effort in the past nine months.”

HotelNewsNow.com: How have the founding companies responded to the traffic leads?

Davis: “We do have a contract with the six founders where we are obligated to meet a quarterly number of users via exit traffic. They have increased that number by about 50%, so we’re driving more traffic than we had in the initial business plan.

“If anything, they are getting more aggressive in how they push us. The first step was to get the site up and make it work. Now they want to know what else we can do. We’ve got some really clever ideas coming out this fall that will make us a unique site. It has to do with frequent guest programs. That’s highly unusual because those are near and dear to a hotelier; that’s the blood flow to these companies. We can add to the personalization if we can interact with those programs.”

HotelNewsNow.com: Why is driving business direct so important for hoteliers?

Davis: “It’s why we exist. As the hoteliers looked at the landscape of what was out there, they noticed they’d lost control of the customer. Now the customer is of a third party. However, it’s in a hotelier’s DNA to want to take care of the guest. If they don’t know anything about the guest, it’s difficult to take care of them. If someone comes in from an (online travel agency), the hotelier immediately says, ‘Wow, this is an expensive guest.’ And now the consumer is starting to realize they’re an expensive guest.

“When you book with the hotel, now they know who you are. By booking direct, we can personalize the message. And from a hotelier’s standpoint, when it’s frustrating is when they pay these high fees and (OTAs) in turn use the money to grab their customers away.”

HotelNewsNow.com: How does the “exit-traffic” strategy work?

Davis: “Users come into Marriott.com, for example, searching for a hotel. As they hit the ‘X’ and leave the site, there’s an interstitial (Web page) that appears. As you go through and click on that interstitial, that’s where the (Room Key) funnel starts. From there, once the user does real research, they flip the cards over. It’s a very clean presentation. Then they hit the ‘book now’ button, which is when they leave Room Key and go back to brand.com.”

HotelNewsNow.com: Has the staff size grown since inception?

Davis: “We’re up to 31 employees. About two-thirds are in Charlottesville (Virginia) where we have the IT department and development staff. We have another 12 in Dallas.”

HotelNewsNow.com: How important is having an international reach?

Davis: “Very important. However, we’re focused on English-speaking countries. The pitch I make—and I was just in France for five days, where we picked up 2,400 hotel rooms—is that if you’re looking for a Frenchman traveling in France, Room Key is not going to be your answer. But we will drive Americans and Brits to your hotels if you’re internationally located. That pitch has resonated well; everyone says that’s exactly what they’re looking for.”

HotelNewsNow.com: Does Room Key have a mobile strategy?

Davis: “We’re getting there and we will get there. It will be this year that we’ll have it. Based on where we’re spending money, we’ll probably be more focused on a mobile Web solution rather than an app. Apps are a nice-to-have, I’m just not sure we’d be better served on a mobile Web solution. I haven’t seen any research on how many hotel apps a user is willing to have.”

HotelNewsNow.com: Is there an opportunity to compete in last-minute bookings or other “fenced” strategies?

Davis: “I think we can. Clearly the best use of a mobile app is when (travelers) get to their (destination). But 75% of our business is corporate business; these are people who book in advance. It’s an important market opportunity for us.”

HotelNewsNow.com: What kind of consumer marketing budget does Room Key have and how is it being used?

Davis: “We’re still focusing on exit traffic. That was the intent all along for the first year. I look at exit traffic as the runway to get the venture off the ground. We’re there. By the second half of this year you’ll see us get much more aggressive on building traffic. We want to start by the end of this year building that direct traffic and that will come in conjunction with our loyalty approach.”

HotelNewsNow.com: Where does Room Key fit in a hotel's overall distribution strategy?

Davis: “We’re new; we’re nine months old. Give us a couple years and we’ll be able to drive more traffic. As revenue managers start looking at where they want to provide inventory, at some point it’s going to be enough of a savings where it makes sense. If my hotel is 85% full, I’d like to sell those remaining rooms to a low-cost channel rather than a high-cost channel. We’re not there yet, but we’ll be there. We’ll start giving them enough rooms, and they’ll begin keeping the low-cost channels open as they fill up.”

HotelNewsNow.com: How are you addressing concerns that Room Key is shifting share away from direct business?
 
Davis: “Quite frankly (users) go right back (to brand.com). If you’re looking at a Hilton Garden Inn and all of a sudden on the interstitial they see a Hampton, then Hilton didn’t lose the booking at all. Often times after travelers have been able to look at seven alternatives they often times come right back. In addition, the interstitial is only shown when (users) hit ‘X’, so in essence they’ve already left the building. This gives the industry a much better shot at a second chance.”

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