Hotel Reservation Reseller Eyes Corporate, TMC Opportunities

When assessing prepaid, nonrefundable hotel rates for corporate travel programs, risks traditionally outweigh potential savings. Online hotel marketplace Roomer is seeking to change that equation by making nonrefundable hotel bookings more palatable to both travel management companies and the small to midsized corporate travel buyers.

Founded in 2011 and activated this year, Roomer informally bills itself as a StubHub for hotels, said Richie Karaburun, a former executive with Radius and GTA North America who recently joined Roomer as its managing director for North America. As in the ticket resale marketplace, users on Roomer post their reservations and set their price__but unlike StubHub, they cannot "scalp" their reservation at an inflated rate, Karaburun said. Roomer in turn validates the reservations to ensure they are appropriate for resale. When someone buys the reservation, the site handles transferring that reservation into the new traveler's name.

Roomer estimates about $8.6 billion is lost each year to nonrefundable hotel room cancellations.

Users looking to buy rom can search by specific dates or see what dates have available reservations in their desired destination. They also can set up alerts if nothing immediately meets their criteria.

For now, the conversion rate on listed rooms is about 27 percent, which Karaburun said should increase as the site gets more publicity and members, and as it readies a newer version that helps sellers better manage their sales. "We'll have more guidance, like average discounts and on average how long it would take to sell the room," he said.

Roomer is "not for the major companies that have major managed travel," Karaburun acknowledged, but the site is looking for users among small and midsized enterprises, many of which already may have travelers booking nonrefundable hotel stays.

"No one knows how much companies are spending for no-shows," Karaburun said. "Some companies want to take the risk, so this basically gives them an option. These rates are very attractive, on average about 20 percent lower than a flexible rate."

Roomer also is targeting corporate and leisure agencies that could make use of the service as a "cost-mediation product," he said. Not only could they offer rates through Roomer but also could offer nonrefundable rates with the ability to relist them on Roomer should travel plans change, he said.

"It gives them an option to book the cheapest rates out there with a caveat," Karaburun said. "When rooms are cancelled, travel agencies lose commissions and income. If it's transferred to someone, they can get their commission."

He added that hotels generally are happy to comply with requests to switch reservations. Even though their payment is secure regardless of whether a prepaid traveler shows up, they lose such ancillary revenues as food and beverage when they don't. Additionally, he noted that no-show travelers often dispute nonrefundable hotel room charges with their credit card companies, causing additional headaches for hotels.