Skift Take
Online travel "supermarkets" Travelocity and Expedia years ago looked like winners, but hotel "specialist" Booking.com prevailed, Room 77 argues. And, it's betting that a singular focus on hotels will one day enable Room 77 to out-Kayak Kayak. It's a huge hill to climb.
After a several-month CEO search, the heavily-funded hotel search startup Room 77 has its first official CEO: Jetsetter co-founder and CEO Drew Patterson.
A surprise pick, Patterson left flash-sales site Jetsetter amidst controversy 10 months ago and in the interim co-founded a hotel and mobile software startup, CheckMate.io, which is still at a very early stage. As part of the hiring, Room 77 has also absorbed CheckMate, and co-founder Adam Rugel and others on the team will come along.
Patterson was out raising money for Checkmate and had already raised some from Twitter co-founder Biz Stone and former Twitter Chief Scientist Abdur Chowdhury. Post-acquisition, Room 77 will continue developing Checkmate’s main product, an app that enables hotel guests to check-in from their mobile phones.
In an interview with Skift, Patterson, who was VP of marketing at Kayak for three years before co-founding Gilt Groupe’s Jetsetter in 2009, said no company has “claimed the mantle of leadership” in mobile and vertical hotel search, which he described as only being “in the second or third inning.”
Purists and not supermarkets
Unlike Kayak and some other travel metasearch players, Room 77 will continue to be a pure hotel-search company and won’t be distracted by offering airline tickets or car rentals, Patterson said.
“We can do hotel search better,” he said. “Room 77 is as well-positioned as anybody to take it to the next level.”
Patterson said he’s proud of what he accomplished at Jetsetter, and the experience will inform some of his labors at Room 77. But, Room 77 is trying to solve a different problem than Jetsetter as Room 77 attempts to deliver hotel search results that are “fast, comprehensive and relevant,” Patterson added.
Jetsetter, which ended up doing flash and retail hotel sales, had an editorial focus, and wasn’t in such a hurry to have consumers do their business and get out of there.
Brad Gerstner, Room 77 founder and chairman, said the board selected Patterson because he’s capable of making “world-class product decisions,” and can “lead the charge” even though “bigger names” were considered for the job.
Gerstner argued that hotel search is at an inflection point and that Room 77 has a “terrific product,” but needs to develop its mobile prowess and “shout the story from the mountaintop.”
Like Patterson, Gerstner argues that “specialist sites” such as Room 77 will be the ultimate winners in hotel search and not “supermarkets” such as Kayak, which he noted still gets the bulk of its revenue from airline search.
The choice rationale
With $43.8 million in funding from companies including Expedia, Concur, General Catalyst Partners and Sutter Hill Ventures, and angels such as Rich Barton, Erik Blachford, Hugh Crean and Bob Pittman, you’d think Room 77 would have tapped a CEO candidate with public company experience for a possible IPO, and one who didn’t have the baggage of a messy exit, as was Patterson’s at Jetsetter.
“It is the right time and right place for Drew to make his mark,” Gerstner said, noting that Steve Hafner at Kayak and others have been very successful as first-time CEOs.
Patterson succeeded in building a brand and leading flash-sales site at Jetsetter, but left amidst accusations about a staff in turmoil and allegations about an arrogant managerial style. Today, Gilt Groupe is in late stages of selling Jetsetter as losses pile up at what Gilt considers to be a non-core asset.
Gerstner said he’s known Patterson since even before he started at Kayak in 2004, and “left no stone unturned in the search.” Room 77 consulted with Hafner, Kayak co-founder Paul English, and Jetsetter board members, among others, and determined that Patterson was the right candidate for the CEO job.
“It’s unfortunate how some of that got spun,” Gerstner said, referring to Patterson’s controversial separation from Jetsetter.
Reality check?
Speaking of spin, some will question the announcement’s back story.
Gerstner and Patterson say the idea to hire Patterson as Room 77’s first CEO only emerged around three weeks ago when the two were having dinner and discussing mobile, hotel search, and Patterson’s fledgling CheckMate.
As chairman and founder, Gerstner has wielded control of Room 77 since its beginnings in 2010. Perhaps opting for Patterson instead of one of the “bigger names” would ensure that Gerstner’s choreography goes unchallenged.
In addition, Gerstner said Room 77 acquired Patterson’s CheckMate because it will help to solve the “last mile of travel” — the juncture following the booking and prior to arrival at a destination, presumably with the check-in app.
What now?
With Priceline’s pending acquisition of Kayak, and Expedia’s taking of a majority stake in hotel metasearch site Trivago, Room 77 might be considered a hot property, as it is well-capitalized, with a very respectable product and team, and lots of room to grow.
There will be a lot of tough work and pressure ahead with nearly $44 million in venture capital riding on the outcome.
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