REPORT FROM THE U.S.—In a long-anticipated move, six of the hotel industry’s biggest brands have come together to offer consumers a new channel by which to search and price hotel rooms. Roomkey.com will offer the ability to search, shop and compare hotel rooms from all of the major brands and still allow consumers to book direct.
With Wednesday’s launch of Roomkey.com, the biggest implication for hoteliers is bookings will be pushed direct rather than through intermediaries, which Roomkey.com CEO John F. Davis said will result in commissions “significantly less than that what would be considered market.”
During an interview Wednesday morning with HotelNewsNow.com, Davis said 23,000 hotels are available on Roomkey.com, and he hopes to add additional brands throughout the year, with a goal of 80,000 hotels available by the end of 2012. Another partner brand adding “thousands of rooms” will be announced as soon as early next week, he said.
Offering rates and availability direct to Roomkey.com are Choice Hotels International, Hilton Worldwide, Hyatt Hotels Corporation, InterContinental Hotels Group, Marriott International and Wyndham Hotel Group, all of which are listed as “founders” in Roomkey.com’s first news release.
UPDATE: On Thursday, Best Western International announced it has jumped on board as well.
Davis—most recently CEO of BirchStreet, who also launched hotel distribution switch technology company Pegasus in 1989 and co-founded 1-800-Flowers in 1982—said the Roomkey.com concept was discussed for more than a year and a half.
“Three of the big brands more than a year ago got together and started talking about what they can do to reduce distribution costs,” he said. “As they began to talk, word got out, and they invited more hoteliers into the discussion. Through 2010 it was primarily hoteliers discussing it.”
“Then they started discussing how to fund it and how to put together a management team and they called me,” he continued. “I’ve done this once or twice or three times. I listened to the business plan and became very intrigued.”
Flo Lugli, executive VP of marketing for Wyndham Hotel Group, told HotelNewsNow.com Wednesday that the six founding brands have made a commitment to build Roomkey.com to scale by directing a small portion of their direct traffic to Roomkey.com. With that support, Roomkey.com “doesn’t need to go out with a US$50-million war chest” because the brands will be able to help build the project to scale with little or no investment.
More specifically, if travelers search on a brand.com site but don't end up booking, as they leave about 10% will receive a message directing them to Roomkey.com for more options.
Steve Sickel, senior VP of distribution and relationship marketing for InterContinental Hotels Group, said brands’ direct websites don’t compete on the ability to offer choice of brand. Roomkey.com, however, gives the customer “the choice that they’re looking for and the confidence of booking direct.”
“The other piece of it is that we are consumer centric,” Sickel said. “The sooner we can start to interact with the customer, the better. Once the shopping phase is done we can start their branding experience and carry that experience to the hotel.”
A reaction to Google?
Davis said Roomkey.com was “somewhat” a reaction to Google’s foray into the travel space, but the big difference between Google and Roomkey.com is that Google isn’t being driven by hoteliers; Roomkey.com will operate via a direct connection to hoteliers’ inventory.
“The concept is not a copy of Google, but we’re both going down the same path because that’s what the consumer is demanding,” he said. “I sleep well knowing Google is working on something similar to us—they have some smart people working there.”
Davis said hoteliers today are faced with the conundrum that they’ve got to distribute hotel rooms electronically but have got to do it in a cost-effective manner.
“They also need guests to be able to book directly,” he said.
SalesMktg Ad Will Appear Here
Both Davis and Lugli stopped short of saying Roomkey.com will allow revenue managers to reduce the amount of inventory given to OTAs or Google, rather it will be another—more cost-effective—channel to assist in finding the optimal channel mix for each individual property.
“It doesn’t really change how we advise our revenue managers,” Lugli said. “Roomkey.com is just another tool for us to drive direct business, along with several other initiatives underway, including the relaunch of our direct websites.
“Ideally, we would get 100% of our business direct, but that will never happen,” Lugli said. “We have an extremely positive relationship with both Google and the OTAs, and the Roomkey.com venture is not a venture that is us targeting any other third party.”
Davis said, through Roomkey.com, hoteliers will be able to recognize guests at the front desk as one of their own rather than being introduced through a third party, which is an oft-heard complaint about selling rooms through third parties.
Roomkey.com soon will offer independent reviews and the ability to compare, plan and share with friends and family. It initially will be as U.S.-only model, but an expansion to English-speaking regions outside the United States is expected shortly.
Roomkey.com acquired its technology platform from hotelicopter in an asset deal that closed last year, according to the news release. Stephany Verstraete will serve as chief marketing officer and J. Kurt Zimmer will serve as chief technology officer.