While the life of Room Key hasn't exactly always been plain sailing, CEO Steve Sickel is feeling positive about the hotel search site's outlook for 2018. The recent launch of browser extension Scout (a similar proposition to The Guestbook's Gopher) comes as Room Key look to maintain the momentum of their successful pivot to a loyalty-driven model. We spoke to Steve about Room Key, Scout and the Direct Booking Movement.
About Room Key
TRIPTEASE: How has Room Key evolved from its launch six years ago?
Steve: Getting six competitors in a room and agreeing to a joint venture that (1) was accretive to all involved; (2) stayed well within the boundaries of anti-trust; and (3) was commercially viable presented a material challenge which consumed most of our focus in the early days. We successfully launched in mid-2012 and took the next 18 months or so to iron out our wrinkles. When we came up for air we realized we had forgotten one critical element: the customer. We had adopted a mentality of "if you build it, they will come". We saw a good commercial performance from the moment we launched, but we knew that in order to achieve our ambitions, we had to be better.
We then began focusing on creating a compelling customer value proposition, something that makes customers want to shop at Room Key and then keep coming back. That's when we embarked on the value proposition we have today, anchored in access to loyalty rates which other third-party distribution sites can't access. These loyalty rates are very often lower than any other published rates available - and since we target leisure guests, for whom price is a top factor in the purchasing process, we knew we had something promising.
We re-launched with this new value proposition in 2016 and saw our business more than double over the next 12 months. We have carried that same commercial momentum since, and have been refining our value proposition to further build trust with our customers - something our research says is lacking with other third-party travel sites.
TRIPTEASE: How does Room Key approach the issue of brand awareness in such a crowded marketplace of aggregation sites?
Steve: Third-party hotel distribution is indeed a crowded space, with big, established players who have high brand awareness and large marketing budgets. When we launched Room Key, we knew we had to compete in a way that was uniquely Room Key: a way that leverages our assets and capabilities, and is not reliant on mimicking the approaches of our competitors. Against that strategy, we feel brand awareness is simply a means to an end, and that end is site visits and customer engagements.
Room Key is able to generate millions of site visits from referral traffic from our founders' websites [the company uses 'pop-under' ads to capture leaving visitors]. From this referral process, Room Key gains millions of highly-qualified visitors that would cost millions of dollars in normal digital marketing to acquire. This is one of our structural advantages that allows us to generate bookings at a materially lower cost of sale.
TRIPTEASE: Are there plans to widen the pool of hotels on Room Key?
Steve: Currently, we have a pretty robust offering. Room Key partners with over 60 of the world's largest hotel chains, offering 45,000 hotels in 150 countries around the world. Our target customer prefers staying in branded hotels, so we place most of our focus on signing new branded hotels and less focus on independents. We have nearly all the branded inventory in North America and are now focused on improving our international coverage. For example, we recently added NH Hotels to widen our western European and Latin American offering.
TRIPTEASE: How does Room Key fit into the wider Direct Booking Movement?
Steve: Room Key is a critical piece of that movement. While hotel suppliers have done a good job of educating consumers on the better pricing and perks you get when booking direct, the one flaw in their value proposition is that some customers want a multi-brand shopping experience. That's where Room Key comes in.
Room Key provides all of the benefits of an OTA multi-brand shopping experience along with all of the advantages of booking direct: the best of both worlds for a consumer. When customers make their hotel selection from a search on our website, they are taken to the hotel's own website to complete their booking. Therefore, booking through Room Key is booking direct.
TRIPTEASE: What do you see as the future of Room Key?
Steve: Room Key's forward strategy focuses on three simultaneous paths: (1) to continue to grow our customer-focused booking efforts; (2) to continue to create new customer shopping tools to enhance the buying experience; (3) to potentially invest in other ventures related to hotel shopping - ones which we feel can be leveraged in a way that supports our charter of saving hotels money, as well as enhancing the experience for consumers.
TRIPTEASE: Why did Room Key choose to develop the Scout browser extension?
Steve: We launched Scout for the same reason that we launched Room Key: to relieve travelers of the confusion they experience when trying to find the best hotel deal. The savviest travelers know that the secret to getting lower rates is usually to book directly with the hotel. However, searching across every hotel site is time-consuming and overwhelming.
With the introduction of Scout, a customer doesn’t need to switch shopping sites. For customers who prefer to shop on traditional third-party travel sites, Scout provides the same advantage of having a multi-brand selection with access to “book direct” pricing and perks.
Once installed on a user's browser, Scout remains out of sight and activates only when they view a hotel on an OTA like Expedia or Booking.com. Scout then checks the hotel's own website for lower hotel-direct prices. With a gentle corner notification, Scout alerts the traveler when it finds a better rate for that stay - and provides links for how and where to book it.
Scout currently works with Google Chrome on Expedia, Booking.com, Hotels.com, Priceline, Travelocity, Orbitz and Hotwire.
TRIPTEASE: What does it cost?
Steve: Both Scout and Room Key operate on a commission model similar to third-party travel sites. However, there are significant differences between the two groups.
Firstly, Scout and Room Key charge a materially lower commission to hotels. Secondly, we don't bias information. Most third-party sites show the highest-commission hotels first in order to maximize their revenue; this is why the first few pages of hotels you'll see from an OTA search are ones you've never heard of.
Room Key remains committed to a non-biased search experience, displaying hotels that are best fit for the customer's search regardless of the commission level. We believe our business will be successful through doing what's best for our customers, not what's best for our pockets.
TRIPTEASE: How has Scout been received so far?
Steve: We saw very positive reactions in our initial consumer testing, and that reaction has continued post-launch. Downloads of Scout are exceeding our projections, and we are confident that this momentum will continue as more people learn about Scout's capabilities. We have an aggressive set of enhancements planned for this year, which will expand Scout's reach and enhance its experience.
First, we're expanding the range of browsers that work with Scout, opening it out to Firefox and Safari. Second, Scout will function on more third-party sites like TripAdvisor and Kayak. Finally, we're going to continue marketing Scout and making more people aware of its capabilities.
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