Room Key: Open to all, will lower hotel distribution costs, features and marketing to come
More details emerging about Room Key, the global hotel search platform created by six of the biggest accommodation super-brands in the world.
CEO of the business and ex-Pegasus founder John Davis has high hopes for Room Key, not least because it has been 18 months in the making after a number (names not disclosed) of the six founding partners came together to work out how to tackle the problem of growing distribution costs and a desire to capture more direct bookings.
From a corporate perspective, the six companies – Choice Hotels International, Hilton Worldwide, Hyatt Hotels, InterContinental Hotels, Marriott International and Wyndham Hotel Group – wholly own the joint venture, Davis says, although a exact breakdown of the stakes in the business has not been disclosed.
At launch today (Davis stresses it is a “beta” product at present) there are 23,00o properties listed on the system, with designs on having close to 80,000 worldwide by the middle of 2012.
Davis estimates the total number (“cap-out”) of hotels on the system will eventually be around the 120,000 mark.
The 23,000 figure will jump within the next week, Davis says, as another major hotel chain is joining the platform, though not as a founding partner.
Similar to the launch of Google Flight Search in September 2011, online travel agencies are currently not participating in the platform.
Industry analysts such as Henry Harteveldt of the Atmosphere Research Group suggest this is a “shot across the bows” of OTAs, but Davis says the door is open for them to participate, adding: “We will do whatever is necessary to get the right coverage on the site.”
Unlike the Travelweb multi-chain effort of the early-2000s, which featured Pegasus as a provider of accommodation, no GDS or other switch will be participating in Room Key, Davis confirms.
So what is the motivation behind Room Key, and why now?
Davis says chains have become increasingly wary of rising distribution costs for some time, while hotels increasingly want to “own the booking”, giving them a chance to up-sell ancillaries to travellers and allow guests to manage their bookings in a better way.
From a distribution perspective, Room Key will have lower “commission” or referral fees than other platforms, Davis claims, plus as the site is purely a metasearch service the hotel will continue to secure the booking and handle so-called guest management.
The shadowy figure of Google and its growing Hotel Finder service does appear to be lurking in the background, at least in terms of the timing of Room Key’s launch, although the idea for the site clearly came about before Google muscled in on the game.
Davis will not discuss where he thinks (and hopes) hotels will divert their existing distribution costs from in order to feature on Room Key, but Google is clearly one brand in his sights, as well as other metasearch players (Kayak’s Steve Hafner wrote “Travelweb part deux, congrats JD” on a TechCrunch article about Room Key) and the OTAs.
The challenge will presumably come when persuading OTAs that it might be a good idea to feature on Room Key, but at the same as potentially losing out on their home turf.
At this stage it appears chains are micro-managing whether all their properties are included or not, whether some are exempt, etc.
Davis says some of the chains have an opt-in system for franchises, while others have automatically include franchise properties and they will have to opt-out. Some may not have a choice, he admits.
The site is only at stage one, Davis concedes, with property reviews coming “very soon” at the conclusion of discussions with “major players in the review space”, as well as a plan at some point to include reviews from its own users.
The current process of allowing users only to search by city and date will also evolve, he says, with options to find properties based on hotel name and chain to follow.
But with any new consumer-facing brand comes the age-old problem of gaining exposure and growth.
Davis says a full-scale, multi-national marketing campaign will begin in March 2012 to attract visitors, with a number of “creative ways” of getting exposure.
More importantly, perhaps, will be the support which Davis says the chains (“birth parents”) themselves will be giving by alerting new and existing customers to the fact that the Room Key service exists.
Meanwhile, the Hotelicopter team, which is was quietly acquired by Room Key in June last year for an undisclosed fee, makes up a large part of the 22-strong number of staff.
Its CEO Adam Healey will head a Room Key Solutions division, maintaining the existing white label partnerships Hotelicopter has with tourism boards and DMOs while developing other partnerships, Davis says.
Kevin is senior editor and a co-founder at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.
He has worked in regional newspapers (Essex Enquirer) and started his career at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and publishes his first book - a biography about Depeche Mode - in early-2017.