A bold statement from Switzerland-based Treovi, a startup which is about to take the covers off a service which it says has a business model “very different” from other online reservation services.
The company is the brainchild of Mohamed El Nasharty, Michal Wrobel, Peter Burjanec, Tom Pitcher, a quartet without specific roles but backgrounds in hotel business and finance (Nasharty), strategy and product development (Wrobel), design and marketing (Burjanec) and code/developing (Pitcher).
A further six members of staff make up the full team. The company is currently self-funded and, as its founders are eager to point out, not connected with any existing travel agency.
So what is different about Treovi?
The company says any hotel will be able to register for free to list their inventory and they will not be charged for bookings. Users will not pay for securing a reservation either.
How does it make money, seems to be the obvious question then. Treovi says it will only introduce “additional paid services” (though isn’t clear what these might be) “at a later stage of our development cycle”.
Such services will be optional, it says, not impacting on what it says will always be its “core concept” of free reservations.
“This revenue will help to support the costs of our free service (which, incidentally, isn’t as expensive as existing travel agents would like you to believe).”
Bold, indeed.
Q&A with co-founder Michal Wrobel:
How is the way you are solving this problem more special or effective than previous attempts you or the market has seen before and how different do you have to be to succeed?
We are establishing a modern and progressive sales model in the hotel industry. This sector has been stale since the 90s, and has missed out on the innovation that many other industries have been enjoying for years.
Our interfaces for both hoteliers and guests will be as functional and fresh as our business model – providing an efficient and pleasant experience for everyone involved. No one likes fighting through a website to get something done, and we’re focusing on solving that.
Why should people or companies use your startup?
We’re going to provide a service that is both free and a pleasure to use. Additionally we plan to introduce tighter integration with social media services, as well as some innovative tools for customers.
Other than going viral and receiving mountains of positive PR, what is the strategy for raising awareness and getting customers/users?
We’ve got a full ad-campaign planned for future users and we’ll be directly contacting potential partner hotels. We don’t want to divulge too much information on this yet, but we’ve got some big plans ahead, so stay tuned!
What other options have you considered for the business and the team if the original vision fails?
As long as hoteliers are interested in saving money and retaining their sales freedom, our core vision cannot fail.
However, we expect to be constantly adapting the functionality of our additional services to the needs of hoteliers, and look forward to building solid platforms and features for them to utilise.
What mistakes have you made in the past in business and how have you learned from them?
The core team is experienced in their respective fields. We have behind us successes related to growing online communites, web design and programming, design for successful startups, hotel group management, strategy for market introduction of various consumer products.
We are familiar with the bumpy road to success, and have a catalogue of past experience for us all to build and expand upon.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
The web has grown to be far more than just an alternative to using the telephone. For businesses like hotels, it should allow increased access to competitive products and services that can save them money and allow investment in other areas.
Until now, the online products and services available to the travel industry have utilised some of the available technology, but deliberately reinforced the old commissions business model.
We will break this mould and finally deliver this lost opportunity to market, providing desperately-needed savings to hotels by freeing them from the stranglehold of commissions.
Tnooz view:
Hotel distribution might not come across as controversial as its airline counterpart in recent years, but it is certainly triggering a number of new business promising a revolutionary model (Global Hotel Exchange, being one of the most high profile and vociferous).
Treovi, like GHX, is trying to tackle the problem by coming at a perceived problem in the industry in a different way – the commission issue, in this case by not having any at all.
While in some respects it sounds too good to be true (especially for hoteliers), Treovi’s obvious challenge will be how it grows the business without a discernible revenue source.
The company says it will come up with optional revenue-generating services from hotels, but with a team of ten to support and other bits of infrastructure, volume of users will be massively important.
And therein perhaps lies the largest problem: getting users. Will an ad campaign be enough?
Given that, in Europe for example, Treovi’s biggest competitor, Booking.com, is a massive and long-term spender of search marketing, ensuring people find the site in the first place (in the midst of dozens of other hotel booking services), stick with it with future bookings, and tell others, will take either a large marketing budget, pick-up in social and mainstream media and/or a dose of luck.
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About Kevin May
Interesting concept, I wonder if lodging will go for a service that doesn’t require any form of deposit, “Users will not pay for securing a reservation either.” As a lodging facility one would not have any form of recompense for a cancellation of a booking.
This is a nice concept, but wont stay a website very long. A lot of customers will just never use the booking and be considered a ‘no show’. Then Trevoli will get charged a one night penalty for the reservation and the customer will not. How does that make sense? They have to atleast take one night from the customer, to hold the room. Otherwise, they will be losing money.
Also, who likes to get bumbarded with ads? I would rather pay the extra $30-40 bucks that other websites are adding on. Less hassle.
I expect Treovi to charge a deposit but depending on the annual (or monthly) fees hotels will need to pay for increased exposure once it gains popularity will refund the deposits charged to the hotels. No commissions, most likely. No annual fees to remain listed where travelers actually see you, unlikely.
Just offer hotels a contract in which you state we will not need to pay more than 5% commissions on bookings for the next 10 years and I see pretty much all of us signing up!
Heather – thank you for pointing that out. Explanation is needed. The user will be able to secure a reservation with a credit card. The reservation system will be no different from booking.com for example. “Users will not pay for securing a reservation either.” is an answer at the other business model challenging the commission-based reservations, where the user has to pay a fee to the company on top of the booking price (i.e. displacing the commission on the end user, instead of the hotel). Treovi will not charge the user. You can also follow us @treovi to see how we are going to change the current reservation models.
@Michal W
So you are going more in the direction of availabilityonline and webervations but on a free model then? Interesting! I’d be interested in learning more about the system. Thank you, will follow.
Heather. Exactly. “Like OTAs” but 100% Free.
I have a very hard time understanding how this company will make any money. Users don’t like to be bombarded with advertising, so that’s not a viable source of revenue.
Offering traditional air and car? Maybe, but that would mean having to manage access to multiple suppliers and providing a better user experience than the OTAs (not that hard a thing, depending) but also convincing users that the Treovi experience will be as good and as predictable as booking.com or expedia, etc.
What are these “additional paid services?” Most services owned by the hotel (restaurants, spas) aren’t going to share revenue for on-site bookings with a third party. They don’t mention groups so I’m going to assume they aren’t in the meetings business. Maybe tours and activities, but aggregating the info and managing revenue share is a lot of overhead.
If they can make this work, more power to them, but right now it sounds too good to be true.
If you get this right monetization will be easy. You’ll need a killer UX (as in unlike anything seen before), amazing marketing plan, a lot of money for marketing and a smooth talking sales team to get hoteliers onboard.
Get all that right and watch the traffic roll in. Then diversify, offer something extra for money, upgrades for hoteliers and chains to help them get even more bookings, become the webs hotel GDS, charge partners for access to content, syndicate etc etc. Adverts also a possibility, sponsored listings etc. To make good money, as in really good money, you really are going to have to differentiate the experience significantly.
Sadly most startups who aim big in this way end up dying as they can’t monetise and so decide to start charging which kills loyalty.
Wish you guys luck! If you need help with the UX piece let me know!
Thank you for the kind words!
I’m not connected with Treovi but interested in your thoughts about UI. Can you, please, write how can I connect with you or write a message to info@travelatus.com?
Everyone wanna bet how much time will they survive?
Try to enter a dog fight against Expedia Inc, Priceline Inc, etc with over $20B each in annual sales, $4B in revenues and almost 30% of it going directly to advertisement.
It’s a great idea at first, but foolish in this cruel world.
Exactly the sentiment Yahoo!, AOL, Lycos, WebCrawler, Excite, HotBot, Ask Jeeves, AltaVista, LookSmart, MSN Search, and some others had when Sergey and his buds came up with, what was that infantile name again? Was it Google? As for hotels signing up, we must ask the question; “What is there to lose?” Free evangelism is a no brainer.
Just thinking out loud. The “money and power” argument only goes so far. Otherwise governments would never topple and so forth.
Always,
Phil
Sounds exciting. My guess for the revenue – paid for premium positioning / featured properties in the results section?
Really think a better domain name would be effective though.
Good Luck anyway!
Hi Michal
Keep fingers crossed, and a lot of success with your innovative project. Looking forward to more details.
Pozdrawiam
Tomasz
Thank you all for remarks and kind words. If you have any questions please post them here, or follow us on twitter (@treovi) or visit our website. Michal.
From a hotel point of view this is a nice idea. In theory, signing up hotels should be easy. The great unknown is the business model. Ads, premium listings, analytics? This shouldn’t be something that is left until later to test. Don’t wait until the money’s running out to find your first customer. Having a revenue stream, however small, will also build confidence with the hotels being signed up.
Removing the agent commission doesn’t necessarily help the consumer, particularly if you still require a credit card. Most don’t care about paying a down payment since it (theoretically) comes out of the total price. The big problem for visitors will be the lack of choice initially.
A further challenge is the difficulty in bringing on board affiliates. There’s no commission to share after all. Or at the very least, it sounds like it will be a lot less than it would be signing up with another provider. Another distribution channel lost.
A tough slog, but good luck!
Michal,
Best of luck on this project. There is a true need for a disruption in the hospitality industry in regard to abnormal commissions. The key challenge is that people want a comprehensive review when searching for lodging, which makes scaling organically a huge issue to address. Hope you find success in this endeavor!
When you are spot on, you are spot on. Nice one Kevin. I think we are looking at a sort of “domino effect” where industries paying commissions is concerned. Bottom line is, “you gotta provide something new, innovative, and good in order to charge for it.”
Simply plastering billboards with SALE SALE SALE… has gone “Bye Bye”
Nice analysis.
Always,
Phil
Is part of the strategy to work with channel managers?
What about rate parity? Are you saying that hotels will publish their Best Available Rate with no commission to treovi?
Great Idea Though!!
Hotels will publish their BAR. And we won’t charge any commission on it. You got it right.
For Tnooz readers, why isn’t the model evident? The value of this endeavor will be found in the “big data” that these guys will aggregate. Think of the value of that behavioral travel data to many travel marketers and connect the dots!
The FAQ mentions “every hotel will be given a unique link which can be sent out to anyone”… curious to know how this will work.
Right to mention that. Unlike any other online reservations website, Treovi will offer to the hotelier the possibility of having a personalized url for its hotel profile page, example: http://www.treovi.com/hotelname (simplified: treovi.com/hotelname – similar to what facebook offers for fb pages). We know this is a great deal especially for small hotels that don’t have a website or have an outdated reservation engine on their website. Simply put, this specific url will be another channel to get commission-free bookings for a hotel.
And of course, this service will be free.
Seeming as the website is a holding page, and there is no way to see how the listings will look apart from graphics on this article, this worries me it’s all hot air. Like the government announcing an initiative, waiting for response and criticism before deciding to go-ahead or not.
PR is an avenue to announce a “wake-up call” to the industry, but is it being ‘over-used’?
There’s a lot of groundwork with the industry that needs to be done to make this a success, if they need volume then they need to connect to channel managers, revenue managers will test it if it is easy to update. They need global inventory or focus on a market. They need to identify if they are an all-for-all seller, like booking or expedia, or more specific market.
I am interested to see where this goes
Dear all,
Treovi.com is now live – Hoteliers can register a hotel, set profile, and receive commission free reservations from now on! More info to come in the next hours, so stay tuned.
Michal.
As owner/operators of a small hotel, we have felt trapped; as if we have had no choice but to use online reservation companies costing between 15 and 25% of the total price charged, including taxes. It hurts.
These companies affiliate or swallow each other and forcefully dominate the web; Expedia.com, Hotels.com, now Booking.com and Trip Adivisor.com, Venere.com, etc. It seems to be all the same company. Your name is pushed of sight in cyperspace if you don’t use their services. We know it is true because when we toyed with dicontinuing with them, our business listings all but disappeared from the internet and the number of reservations we received immediately dropped by more than half. We cover the cost by giving less and charging more. Bottomline: The guest pays in every way..
It has to hurt all the companies that use online reservations. The airlines for example, can barely give passengers peanuts and a soft drink let alone adequate legroom anymore. Consumers are oblivious as to the real cost of that easy online reservation. Click! Click! It has surely driven important companies out of business already.
I’ve already signed my small hotel up for Teovi’s service, but I don’t dare quit using the others. What can I do to help Teovi grow? Or…. is Teovi’s founder’s strategy to become a burr in the side of the big guys, only to be bought out by the establishment?
Marketing your product costs money. You can always go the other route and just buy ads direct on Google. See how much that ends up costing you. If it’s cheaper, then well done. If it’s not, then maybe the OTAs aren’t such a bad deal after all.
p.s. the link on your name is broken
As a hotels owner I expect – once hotels help to grow their popularity – to be charged commissions for ‘featured listings’ which once placed on top with a label ‘Treovi recommends (because of blabla commissions of course) and the likely service they can advertize special deals etc, will give them maximum exposure and influence travelers to book and hence Treovi will earn an increasing annual fee from hotels signing up for such listings. In this scenario hotels would be back to the old system and charged annual fees probably depending on the number of bookins they generated in the month before (so related to the commission based model with the marketing strength not calling it such) with just an extra channel to update manually or to connect to with their channel managers with a possible extra connection cost.
I expect hotel owners to be weary of such new channel since undoubtedly hotels always will remain the only source of revenues for Treovi (since travelers will always remain to book free of charge, except for agoda who adds an extra so called ‘hotel tax’ on top of room prices), the question is what they will receive in return…?
Reasons why I see this grow – slow but steady – is that :
1) Many hotels are marketed by companies who can please – ignorant – hotel owners to have them signed up with as many channels as possible for ‘increased exposure’.
2) It looks beneficial for hotels that are not listed high on other popular channels for the moment (and that is 90% of the hotels in an average city!) and would like to get rid of their previous unfavorable reviews, now they – hopefully – know where they can improve (it’s pretty tough to move location though) and wish to start off with a clean sheet in the future.
Hey wait a minute… that’s us, where do I sign up
The Treovi concept is going nowhere. They are re-inventing the wheel. Commission-free booking is like a free directory listing for hotels, something which already exists .There are thousands of free directories on the internet from which visitors can simply find a hotel and make a booking resulting in zero commission paid by the hotel.
The fact still remains that you get what you pay for. Commission-driven advertising is more aggressive, competitive, and creative because of the financial rewards, and it will always reach a wider audience that Treovi can only dream about.
The second fact is that there is no free lunch, there is nothing for free in this world. A company whose goal is not to make profit will not survive. If you look at Treovi, it looks attractive to hotel owners because there is no commission fee for them, but it’s not attractive to a traveller or visitor.Treovi will have to make a case to a visitor on why it’s better than established and trusted booking giants like Booking.com, Expedia and TripAdvisor.Predictably, it’s a futile case.
Since Treovi free booking is no different from a free directory listing, it means hotels will not get much exposure. In the end, hotels will be required to pay to get the top spot, which is no different than using a commission-based OTA. It also means hotels will stick to proven methods of getting a consistent flow of clients i.e. making use of OTAs, affiliates and PPC.
In the end, only the one who is making money will survive and win, and Treovi is a company that under-estimates profit making.
OTAs will always be there, because they do what they do best – marketing and attracting customers. It also goes that hotels that make use of OTAs, affiliates and PPC will always be ahead profit-wise that those who don’t.