Room Key, which launched on Wednesday, is positioning itself as a game-changer for online hotel booking by allowing customers to book directly with hotel companies on more supplier-friendly terms.
Six hyper-competitive hospitality giants managed to come together to found Room Key — Choice Hotels International, Hilton Worldwide, Hyatt Hotels Corp., IHG, Marriott International Inc. and Wyndham Worldwide Corp. Each owns an equal percentage of the company. Meanwhile on Thursday, Best Western International signed on as the first commercial partner to supply hotel inventory to Room Key.
To find out more about what makes Room Key unique and how it plans to succeed in the crowded online booking market, HOTELS spoke with the company’s CEO John Davis III. While no revenue projections or investment figures were revealed, Davis shed light on the new company’s plans for 2012.
HOTELS: What are the comparative costs for hotel companies having rooms booked through RoomKey.com versus other online travel agencies?
John Davis III: Each one is negotiated separately. It is much less than the normal price point is. It depends on how many hotels but I can assure you that it will be less than what they are used to having to pay to third-party online travel parties.
The intent all along was to drive down the cost of distribution and provide consumers with a better experience.
By allowing them to book directly, and become a direct guest of the hotel is a game-changer. You [the customer] get a hotel confirmation number from the hotel company. You get a chance to earn points if you are in their frequent guest club.
HOTELS: How did the Room Key company form?
Davis: About a year and a half ago, three of the hotel companies got together and started discussing this. What is out there [for online booking] is confusing — a hotel room is not like an airplane ticket, it’s a much more personal choice.
As online bookings continue to grow and the cost of those bookings continue to go up, these hotel companies decided ‘we would like to provide consumers with a better experience and lower costs.’ They joined up with three other hotel companies.
For the past year we’ve been honing and working on the business plan. We’ve done a lot of consumer testing. We acquired hotelicopter over the summer, which gave us the meta-search we’ve been looking for.
The fact that we’ve been able to pull this off without anyone figuring out what we’re doing is mindboggling.
HOTELS: How much was initially invested in RoomKey.com by these six companies?
Davis: We’re not disclosing that but it is a significant amount. It’s always difficult to get people to write checks, but this was important enough that they were willing to write a pretty large check.
The CEO of each company is very supportive of the venture.
HOTELS: How does RoomKey.com make money and what are its projected revenues?
Davis: We will be paid a commission on each of the reservations we deliver to the hotel. That commission varies on the size of the property and the number of hotels it has with us.
The company is for profit.
HOTELS: What makes RoomKey.com unique for consumers versus the multitude of other OTAs?
Davis: Firstly, the information is provided by the hotels, it’s real info you can count on. It’s a very clean easy way to search. I can’t even find on some of these screens where to book. RoomKey.com is easy and elegant. You’re one click away from finding everything you need to know about amenities.
Secondly, you are booking directly from the hotel and you are their guest, which is what they wanted. By having a guest check-in with a third party, that doesn’t build the relationship like they want. That way they can give them points and upgrades. This way, consumers can call the property directly.
HOTELS: Are there expansion plans to include other hotel brands?
Davis: We intend to add independents, small chains and big chains access to it. We currently launched a beta site with 23,000 hotels. It would be my preference 80,000 hotels by the middle of the year.
The website’s offerings are global already. Our consumer push will begin in March, and it will begin in the U.S. and we will expand that later in the year.
HOTELS: How will RoomKey.com be marketed to consumers?
Davis: We’ve got a number of very creative ventures we will introduce in March. Some I’m not willing to disclose yet.
We are willing to leverage our parent hotel companies. They have some very smart people that can help us and have so far. We don’t have billions to go buy TV ads and we have to come up with some other options.