The coming together of six of the biggest and most competitive hotel companies to create Room Key showed just how important it was to the founding partners to create a lower-cost alternative to OTAs. Yesterday, Room Key removed its beta tag and officially launched to consumers with several new features, including inventory from the unlikeliest partner: Travelocity.
Yes, you read that right. Room Key — the brands' meta search-engine answer to online travel agencies — worked out a deal with the big, bad wolf. And it was a smart move, and one that shows CEO John Davis is running Room Key, not its founding (and funding) partners.
“Are we going to do what's right for us or for our consumers,” Davis says was the question to the board. “We want to take care of the customers, we're too new to the game and we came to the conclusion we needed the added inventory. There was some gnashing of the teeth, but it was a quick resolution.”
The white-label agreement with Travelocity provides all of the OTA's inventory to Room Key, so consumers today have a choice of approximately 100,000 U.S. hotels compared to just the 30,000 properties from Room Key's founding and newer commercial partners.
Consumers won't know they're booking via Travelocity, and a prominent note on Room Key's site makes it clear that “A hotel logo means you book directly on that hotel's website and enjoy these great benefits [lowest rates, loyalty points and others are listed].” If consumers choose to book one of the hotels from Travelocity's inventory, Room Key offers a “book it” button versus “book at [brand logo]” and takes them to the white-label reservation page that appears to be from Room Key.
The boost in inventory brings Davis the hotels he hasn't been able to secure directly from Starwood, Carlson Rezidor, La Quinta and other independents and small chains. He says it's a “long-term contract” with Travelocity, but hopefully an “interim solution” allowing customers the breadth of choice needed to make Room Key viable now and give Davis the time he needs to add those other brands directly.
“As we bring hotels to direct connect, we take them off private label,” says Davis about the revenue-sharing agreement with Travelocity. “It's s fair deal for both of us, a great tradeoff.”
Davis also has contracts with CRS providers Sabre, TravelCLICK and Trust International that will bring another 20,000-plus rooms of direct inventory to Room Key by this summer, including smaller chains like World Hotels, Leading Hotels, Kimpton and Rosewood. Now that the consumer launch has passed, he also says the focus will shift to adding the larger brand companies and some announcements could be coming within the month.
Other new features unveiled with the consumer launch on May 9: a new Facebook page with consumer contests, a short-list tool for trip planning and social-media sharing, and consumer reviews and ratings from TripAdvisor.
Room Key drew 1.9 million visitors in March and although not official yet, Davis expects closer to three million in April. “I am a little surprised to be knocking on the door of three million in the third month,” he says of the early results since the beta launch in January. The most important number: 25% of those are repeat customers. “That's the win. … The strategy we've laid out with exit traffic is working.”
Davis says there will be some traditional online and print advertising, but the focus will remain on social networking and the exit-traffic pop-under windows from the partner's brand.com sites. “There's no use swerving the car, we're getting the numbers, let's not get crazy and spend a bunch of money on advertising when the initial plan is working.”