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Room Key: Operators like site, question costs
January 20 2012

While many hotel operators are excited at the prospect of saving money on commissions by using RoomKey.com, some are concerned they will have to fork over additional funds to make it work.

Highlights
  • “It will be a huge impact and a huge savings,” Katherine Steed, director of marketing for The Hotel Group, said of the decrease in commissions the company will pay after moving room inventory onto RoomKey.com from some of the channels they currently use.
  • Shaun Burchard, executive VP of sales and marketing at Marshall Hotels & Resorts, said he cannot picture the brands subsidizing marketing efforts without having to pass some of the costs along.
  • Marriott already started rolling out webinars at their branded properties to familiarize GMs and revenue managers with the site.
By Stephanie Wharton
HNN contributor
swharton@hotelnewsnow.com

REPORT FROM THE U.S—As major hotel brands are rejoicing at the launch of RoomKey.com, several hotel operators are pondering whether the negatives will outweigh the benefits.

Choice Hotels International, Hilton Worldwide, Hyatt Hotels Corporation, InterContinental Hotels Group, Marriott International and Wyndham Hotel Group announced last week they joined forces to launch RoomKey.com, a new portal for consumers to search and shop for hotel rooms. Best Western International signed on with the group the day following the announcement.

Scott Pusillo, corporate director of revenue management and ecommerce for Crestline Hotels & Resorts, said he and his colleagues haven’t seen anything about RoomKey.com they don’t like.

“It’s too early to tell how well it’s going to go, but we love the concept,” Pusillo said.

In addition to the site’s user-friendly interface, Pusillo said he likes that RoomKey.com is launching as a supplement to the other distribution channels rather than as a substitute.

Katherine Steed, director of marketing for The Hotel Group, said a lot of the company’s room inventory currently goes to online travel agencies and opaque channels, which charge at least 18% on commission for branded properties.

“It will be a huge impact and a huge savings,” Steed said of the decrease in commissions the company will pay after moving room inventory onto RoomKey.com from some of the channels they currently use.

Shaun Burchard, executive VP of sales and marketing at Marshall Hotels & Resorts, said the new site possibly could give operators a leverage point to go back to the established OTAs and ask for better deals on commissions.

He also hopes to save on commissions if the site gains traction against the already-established travel sites, but said he is unsure how long it will take Room Key to become a fierce competitor in the industry.

RoomKey.com marketing
“It will take time to establish the brand, and it will take dollars to establish the brand,” Burchard said. The question for Room Key executives will then become, “Where do the marketing dollars come from?”

Burchard said he cannot picture the brands subsidizing marketing efforts without having to pass some of the costs along.

Patrick Goddard, president and COO of Trust Hospitality, said he believes Room Key will need a contribution of marketing dollars from the hotels to benefit from the system.

“Without substantial investment in creating awareness to consumers about the new portal … they are going to have a hard time competing against the traditional OTAs,” Goddard said.

Burchard said several of his peers in the hotel industry are concerned that the Room Key concept seems similar to the defunct site TravelWeb.com.

“Probably everyone in the industry remembers TravelWeb and the fact that it was largely a failure,” Burchard said.

The short-lived site, partly owned by Hilton, Hyatt, InterContinental, Marriott and Starwood, was sold to Priceline.com in the early 2000s.

Consumers need to have a compelling reason to buy from RoomKey.com instead of using one of the familiar OTAs, he said.

Steed said there will be tremendous benefits for the consumer: “With RoomKey.com, they will have the flexibility, the best rate guarantee and still have the same function of the OTAs to be able to compare rates.”

The site also could help eliminate consumers’ confusion on hotel cancellation policies, changes and deposits owed, among other issues that arise for customers using the traditional OTAs. It would remove the middle man as RoomKey.com customers will book directly with the brand instead of a third-party site, Goddard said.

Steed said Marriott is starting to roll out webinars to their branded properties to familiarize GMs and revenue managers with the site. She expects the other six other brands will follow suit and also begin providing education to hotel staff at their properties.

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