Room Key – what does it mean for our industry?

Unless you’ve been on another planet, you will not have failed to see the hype around the announcement of Room Key.  Founded by a group of leading hotel companies, Room Key’s mission is to offer travellers direct access to a broad network of hotels, provide accurate and comprehensive information and make it easy for travellers to discover what’s right for them.  Currently in beta mode, Room Key is made up of six hotel brands, Hyatt, Marriott, Hilton Worldwide, InterContinental Hotels Group, Choice Hotels International and Wyndham Hotel Group and headed by some impressive names from the world of hospitality.

But why has Room Key been created?  Reading between the lines and overlooking the fluffy marketing tale, it’s for one simple reason.  Hotel chains are of course challenged by the pressure and dominance of Online Travel Agencies (OTA’s) who traditionally sell rooms cheaper and of course, take a commission.  This goes against hotel chains primary objective of capturing a booking direct – controlling their rates and ensuring that guests book direct (and keep booking direct) which is of course the most profitable route to success.  Room Key was the birth of these hotel chains coming together and thinking by creating a channel of their own, where they can guarantee the best available rate would start to claw back some of the power of the big OTA’s, such as Expedia and Priceline.

So, what’s the problem?  Well, there isn’t really.  Unless you look into how this will work and of course ask yourself, will the real aim of Room Key be achieved.  It’s a complex question for many reasons.

The online marketplace is dominated by big and powerful OTA’s – the likes of Expedia, Last Minute, Booking.com etc. They are far ahead on the game, so entering this arena is always tough. There has to be a clear benefit to change a shopping habit, and this is what Room Key needs to find and focus on. Really, it should be price. If the providers are pushing their best available rates to Room Key, you’d expect to find the best deal there. Wrong. I checked some hotels this morning and found the same offering on Expedia cheaper 7 times out of 10, so something is clearly going wrong.

Of course, Room Key is in beta mode right now, but the functionality of the site so far is really nothing special and often clunky. Hotel shopping should be easy and an enjoyable experience. Look at the way the newest players are doing things – the way a company like Room77 have totally changed the way you search for a hotel on their website. Room Key offers nothing unique to date. It also doesn’t help that once you’ve found your rate, you are re-directed back to the hotel providers website (on too searches I made, I ended up at a landing page, not the booking page).

It will be extremely interesting to see how the industry responds to Room Key. What will the GDS’ make of it? How will the dominant OTA’s counter attack for business? And of course, how will Room Key improve their offering and make it the place everyone has to check in their shopping process. Time will tell.

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6 thoughts on “Room Key – what does it mean for our industry?

    • This quote, taken from the Hotel News Now article, is exactly what I was talking about:
      “We know about Room Key because we are in the industry and people are paying us to know about it. But the average consumer—how do they even learn about Room Key?” said Max Starkov, president and CEO at Hospitality eBusiness Strategies.

  1. Hi,
    Nice post. I have read this article, and i found it quite interesting article on hotel room key. Thanks for sharing such useful information on rook keys in hotel industry. Keep sharing this.

  2. What I don’t understand is what Room Key offers that each provider doesn’t already do on their own direct channel website. To me, it just adds confusion over rate parity, not straightens it out. I think providers are all getting excited about jumping on the band wagon and trying to dent to power of big OTA’s like Booking.com. Surely it will also pi*s off the GDS as well? another channel claiming to have a ‘best available rate’?
    This product does not deliver what an OTA can (e.g. pre-payment etc). I’d love to see the results after a year, and if this goes any further.

  3. Where I think RoomKey is continuing to fail is marketing, in particular, marketing spend. Priceline (inc Booking.com & Agoda) have spent $700M on online advertising in the first 9 months of 2011. How can RoomKey compete with that? How can they drive traffic when dominant OTA’s are spending big? It didn’t work when they launched, and it’s still not working now…

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