Hotel chains create joint reservations site


A new hotel search engine, backed by six of the largest lodging chains in the industry, is taking direct aim at online travel agencies such as Expedia.com and Priceline.com.

Roomkey.com is making a play for the estimated 90 million travelers that book rooms via the Web with promises of low rates, extensive selection and brand loyalty points.

Owned by a joint venture of Hilton Worldwide, Marriott International, Hyatt Hotels, InterContinental Hotels Group, Choice Hotels International and Wyndham Hotel Group, the site searches their inventory of nearly 30,000 hotels. Once customers select a property from the list of results, they are routed to the hotel’s Web site to book the room.

“We’re putting you right into the reservation system of the hotel, so you get your points and an easy way to change your reservation,” Roomkey.com chief executive John Davis III said. A beta version of the site rolled out earlier this month, with the official debut slated for March. “We’re trying to help travelers cut through the clutter.”

Davis would not disclose how much money the founders invested in the Web site, but acknowledged they will share in proceeds once the venture generates profits.

The Web site charges companies lower fees to list their properties than its competitors, allowing hoteliers to capture more revenue from online booking, Davis said. He would not divulge the exact fee structure, but said it is substantially less than the average 15 to 30 percent commission online travel agents typically collect.

Hotel owners flying the brand flags of any of the founding partners receive the lowest rates. New member brands can take an equity stake in the Web site for the same deal or sign up as a commercial partner, as Best Western is doing.

Travel analyst Henry Harteveldt of Atmosphere Research Group said the site will have to “build out the number of brands and locations” to be successful in a highly competitive field. “Roomkey has an uphill battle. We are reaching a stagnation in the number of people who are going online and booking travel, so it will have to fight for an audience.”

Joseph Rubin, president of Interactive Travel Services Association, which represents online travel sellers, said many of his members have spent years building brand loyalty and will be difficult to dislodge.

“The products and services that they offer far outpaces whatever Roomkey.com may offer,” he said.

Roomkey.com’s founders began bouncing around ideas for the Web site two years ago as the hotel industry was emerging from the depths of the recession. Coming off a period where hotels relied heavily on online intermediaries to fill rooms, they saw “room for improvement,” said Shafiq Khan, senior vice president of e-commerce at Bethesda-based Marriott.

After drafting a plan for the site, the partners purchased Hotelicopter, a Charlottesville-based technology platform, to power the search engine and invited Davis to head the project. A former chief executive at Pegasus Solutions, Davis was instrumental in the 1996 creation of Travelweb.com, an online agency owned by Pegasus and several hotel chains. It was eventually snapped up by Priceline.com.

About 11.2 percent of all hotel bookings are now done through online travel agents, such as Priceline.com, while the largest percentage of reservations, 25 percent, are made on hotel Web sites, according to research firm Travelclick. Hotel Web sites were the fastest growing booking channel last year, but third-party sites continue to gain share.

A recent study by Tourism Economics said the hotel industry would lose 4.4 percent in revenue for every 10 percent in market share gained by online travel agents. The research firm estimates that those agents cost the industry $2.5 billion in revenue in 2010.

Though hotel companies maintain an uneasy relationship with online travel companies, they value the audience that frequent the sites. Harteveldt, however, pointed out that hotels have been handing online agents fewer rooms to sell.

Chuck Sullivan, senior vice president of global online services at McLean-based Hilton, said, “The [online travel agent] channel is a very important distribution source for us, but it’s one tool in our tool chest. The online world is in a constant state of change ... those who succeed will recognize that and be nimble enough to adjust.”

Danielle Douglas covers the banking industry for The Washington Post.
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