The latest entry in the increasingly crowded hotel search engine category, DealAngel last month launched a public beta. Its differentiator, as described by co-founders Roman Peskin and Bob Rogers, is that it ranks hotels by absolute value, not absolute price.
Both Peskin and Rogers are hotel industry veterans. Rogers is a former director at Expedia, having worked on the hotel side in Munich, and Peskin managed revenue and pricing analysis for hotels in Prague. Later, the two joined up to create business intelligence software for hotels, analyzing market behavior and determining whether hotels were charging correct prices. As they used the software internally to help make their own hotel booking decisions, it dawned on them that it also could be the basis of a consumer application, encouraging them "to switch from the dark side to the side of light," in Peskin's words.
Peskin and Rogers spoke recently with The BTN Group lodging editor Michael B. Baker about how the tool worked, their vision for its future and what applications it could have on the business travel side.
Baker: How do you rate deals as opposed to price?
Peskin: Hotel markets are very complicated. Think about how Wall Street analysts are building complex software systems to figure out which stocks are undervalued. Some become rich because they manage to beat the system. Essentially, that's what we have built, but for hotels. You can beat the system and find those undervalued hotel deals. What is a deal? A deal, to me, is when I pay less money than I should have paid. With hotels, it's very difficult to figure what actually is a fair price, because the hotel rates are different every day and they change very often. There's no reference point in hotel prices. We are aiming to build the first travel brand that is 100 percent on the consumer side when it comes to value. We do that through analytics. We don't code deals because someone wants to get rid of the inventory. Most travel websites and online travel agencies today list hotels and rank them according to how much money they pay. They pay them higher commissions or have some other under-the-table deal going on. That's what we don't do and will never do.
Baker: How does it work?
Peskin: Let's say we're going to Las Vegas. The first thing that DealAngel will do is show you which days in the next six-month period offer lower prices and which are overpriced. So, travelers who are flexible can see dates that are cheaper. What DealAngel will do is pull rates and offers from several different deal websites and aggregate them, find the best rates and also sort them and order them by how much of a deal they are. If, according to the analysis, a hotel should be charging $202 for the fair market positioning and is only charging $152, it's a fantastic deal. Why is that happening? They might have low occupancy on these days, some cancellations or some reason to dump the price. The second reason might be that they're not smart, don't know what they're doing and are leaving money on the table, because they're not aware of the fair market price.
Baker: What else can it do?
Peskin: There are some cool features: You can easily, using the integrated timeline, move the slider a couple of days earlier or later and refresh, and then it will search the same condition again but on a different date. The list of deals is going to be different, as different hotels are undervalued. The price analysis gives a little breakdown of the deal, and you can see the confidence and the accuracy about this analysis.
Baker: What are the "fair rates" based upon?
Rogers: We're taking the pricing behavior of the hotel over time and determining where it belongs in the market. When that hotel strays from that position where it belongs in the market, whatever the rate is, that's how we define whether it's a deal or a rip-off. When you're talking about New York City, for example, there could be a high-demand period where the four-star rate is sort of around $300, so if you have the Hyatt as $350, you don't know in isolation whether it's a good price unless you have some sort of frame of reference. We look at the complete market, asking, "Is $350 a good price relative to the other hotels around it? Is it above, below or the same? It's the theory of relativity for pricing.
Baker: When you book, do you book within the tool or at the website where the deal originated?
Peskin: At the moment, we refer you to the website where we found the deal. We'll be aiming to bring the transaction to our site, because we would like the user to experience our meticulous approach to user experience. We're very sensitive about the user experience and design and would like to keep that when a person books something.
Baker: What are the hotel ratings on your site based upon?
Peskin: The ratings are based on aggregated reviews from the sites that we offer.
Baker: Do you see any application on the business travel side?
Peskin: Nobody likes to be ripped off. Very often, the business rates are higher than the market rates, and that sort of analysis is due to happen in the business travel space. I would like to see how we expand in the future into the business travel segments to cater to small and medium businesses, to the non-managed business traveler, who we think are very underserved today.
Baker: Travel buyers often have the discussion of how to measure and report savings. Do you see any applications there?
Rogers: We give a much more objective view of the market, based on that hotel's behavior over time. Every [corporate transient] negotiation is different but usually it's some sort of price that's agreed on that's a flat rate. Sometimes it's a great deal and the hotel is going to prefer not to bring in that business at that rate, and other times it's not that valuable. It's sort of an old way of doing business, and I think it will evolve, because it's better for both parties to work in a real-time environment rather than using a crystal ball to guess what the appropriate rate will be for the next year.
Baker: Do you aim to bring in more sites for deal aggregation?
Peskin: At the moment we aggregate from about 30 sites, but we're constantly adding inventory from more channels and direct links to the chains. We're especially happy that we're able to include those lesser-known channels that very often offer better ways than the blue chip players.
Baker: Will this eventually be a global tool?
Peskin: At this point, we are in beta. We offer about 150 destinations in the United States, Canada and Mexico. It's important to point out that our value is increasing as the players in the market increase. As there are more participants, it's more dynamic. So, it will be more useful in Las Vegas or New York than in a small village that has five hotels that basically don't compete.
Rogers: We're already seeing enormous discrepancies in the United States across channels, but we believe even more to be in Europe for example, because there are a lot more independent hotels that don't have the same discipline for rates that you do have in the United States
Baker: What are your plans on the mobile side?
Rogers: We've got quite a bit in the pipeline. We're optimizing the site for iPad, which is going to come very soon, and we're moving rapidly into mobile because that's an obvious value. There are some companies like Hotel Tonight that offer this sort of service. The advantage we have is we're pulling from the full market, so you're getting a rounded view. If you're only talking about, say, three or five deals from the whole market, you don't have a full view, and once the inventory is gone, there are no offers left.