Big Brands' New Search Site Could Tempt Travelers, But Analysts Don't See A Differentiator

The new effort launched Wednesday by six major hotel companies to drive a greater share of direct bookings does not have immediate implications for corporate travel buyers or providers. But like a variety of existing and developing hotel booking sites, the search engine would appear to provide travelers yet another temptation to book outside the typically preferred travel management company channel.

The site is the result of a partnership among Choice Hotels International, Hilton Worldwide, Hyatt Hotels Corp., InterContinental Hotels Group, Marriott International and Wyndham Hotel Group. Now in beta mode, it works like a basic aggregation site. Travelers select a destination and dates, the site shows rates across properties and then directs travelers to a hotel's own website for booking.

Room Key last year acquired hotel search tool Hotelicopter to serve as its technology platform. Room Key CEO John Davis III, the former Pegasus Solutions chairman and CEO, said connecting with travel agents or offering negotiated rates are not in the initial plans. "There are a number of ideas," he told The Beat. "We could provide this service as a standalone for a large corporation to book, but that's not going to be tomorrow."

"Hotelicopter has a very good hotel database that we've enhanced significantly, and it provides us a great platform with a lot of flexibility that's cloud-based, so we can expand the products and services as we want to," Davis said.

The benefits to participating hotels are clear. Bookings through Room Key carry a commission but incur a significantly lower cost than bookings through third-party websites, some of which can cost the hotel as much as 30 percent of the total charge. The tougher task is demonstrating benefits to travelers, particularly with the proliferation of booking options over the past few years.

Morgan Stanley analysts in a research note wrote that they were "doubtful Room Key will gain meaningful traction among travelers," citing limited choice and the failure of prior similar efforts, including Travelweb and AndBook.

Davis said Room Key currently has 23,000 properties and, by the middle of this year, expects to have more than 80,000. In addition to the six participating chains, it announced on Thursday that Best Western International signed on to become the "inaugural commercial partner," adding its 4,000 properties to the engine's inventory.

Morgan Stanley added that irrespective of Room Key's success, it expected hotel direct bookings to increase in 2012 because of a greater investment by hotel chains. TravelClick's North American Distribution Review, issued Wednesday, indicated hotel websites during the third quarter of 2011 were the fastest growing hotel booking channel, accounting for about a quarter of bookings.

Hudson Crossing managing partner Tom Botts said that in order to be successful, Room Key must demonstrate "a clear reason why I would book here opposed to anything else."

"There are lots of tools out there that provide ways to check rates," Botts continued. "Kayak does a really good job at looking at lots of different channels. Room 77 differentiates on content and to some extent pricing. I'm not sure what the differentiating factor is here." Our Upgrade and Hipmunk are among the others vying for travelers' attention, just as corporate buyers are challenged to increase the percentage of hotel bookings that go through managed channels.

Davis said Room Key's selling point is the benefits of direct bookings. Sites that screen-scrape from other sites often provide information that's inaccurate or out-of-date, because hotels have no direct control over it, he noted. Direct bookings also make it easier for hotels to access guest information and process changes and cancellations, he said.

"Consumers are looking for an easy, simple way to search and book," Davis said. "If a guest is showing up at the front desk with a confirmation from another company, the hotel doesn't know that he likes a bottle of white wine or if he's in the [rewards] club. All that information has been hijacked by a third party."