Nearly three years since six major hotel chains got together and launched Room Key, the hotel search site with the unique marketing model is looking for relevance.
Room Key’s entire marketing strategy is serving pop-under ads for Room Key to consumers when they leave the websites of the founders, namely Choice Hotels, Hilton Worldwide, Hyatt, InterContinental Hotels Group, Marriott and Wyndham, without booking a room.
With 70,000 properties from the founders and other hotels in 159 countries on Room Key, the theory is that hotels shouldn’t lose the customers to big online travel agencies such as Booking.com or Expedia when travelers don’t book on the chains’ sites, but the idea is to bring these travelers to Room Key where they can continue searching for a room from multiple brands.
Living Up to Expectations
The talk in the hotel industry is that Room Key so far hasn’t lived up to revenue expectations, although Room Key and its owners don’t divulge financials about the site, which debuted in January 2012.
It speaks volumes, though, that Room Key hardly gets a mention in annual financial filings from the public companies among the six founders. If Room Key actually had a material impact on the financials of any of these companies, it would have to be detailed.
And it’s common knowledge that consumers tend to resent pop-up ads. It should be pointed out that Room Key’s ads are geared to be the less obtrusive pop-under ads, but insiders point out that they don’t always turn out that way for a variety of technical factors.
Room Key’s founding CEO, John Davis, left the company at the end of September, and Room Key appointed Steve Sickel, who worked at IHG during Room Key’s behind-the-scenes planning stages and already was a board member, as interim CEO.
On allegedly missed revenue targets, Sickel tells Skift, “I wouldn’t call it a miss. I would say we are doing OK.” He adds that parts of Room Key’s commercial plan are on track and others are not.
“If you look at the distribution landscape of all distribution players ou there we would classify ourselves as a mid-size player,” Sickel says.
The focus now, Sickel says, is how does Room Key become a “scale player,” and that’s what he and the board are studying now.
Others are highly skeptical about Room Key’s position.
“To be harsh, simply put, if one takes away the pop-unders, Room Key has no reason to exist,” says Robert Cole of the RockCheetah hotel consultancy. “In its present state, it’s not really a business. It’s more like a feature.”
Cole bases part of his analysis on SimilarWeb traffic statistics for Room Key. [While services such as SimilarWeb and Compete, for example, can be inaccurate, they often are useful for showing directional trends.]
SimilarWeb estimates that Room Key had 4.6 million visitors in September 2014, that it notched just 1.68 page views per visit, and that its bounce rate was 72.93 percent, meaning seven in 10 visitors clicked on a pop-under ad to get to the Room Key homepage, and then abandoned the site without opening another page.
Another wrinkle is that Apple blocks pop-unders and pop-ups automatically on mobile, which means Room Key’s marketing tactics aren’t reaching iOS users.
The bounce rate is particularly troubling, Cole says, “because the structural objective of the site is not accomplished without the user clicking through to a partner site,” including one of the founders or the sites of 100 other brands or independent hotels that display their properties on Room Key.
Room Key, according to SimilarWeb, gets 89% of its traffic from the pop-under ads from partners, just 0.47% of visitors from Google, and a barely detectible amount (0.01%) from social media.
Of Room Key’s traffic derived from search engines, Cole says: “I have never seen a number that low — across any industry segment. Basically, Google barely recognizes the site as even existing.”
“Obviously the site has zero marketing spend, with the site structure, it would be hard to justify any spend based on the apparently low conversion rates,” Cole says. “That return on investment analysis would be a rough one — especially since some of that traffic would have gone to a competitive Room Key hotel brand anyway.”
“So the bottom-line business question for the owning hotel partners is whether they spend more to fund the site than the aggregate commissions they save by letting guests book through an online travel agency or competitive metasearch site,” Cole adds.
Sickel of Room Key insists that the site is doing “material business” and that its status is beyond initial expectations.
The pop-under strategy has “worked,” and is effective for Room Key, delivering “highly qualified traffic,” Sickel says.
As Room Key executives focus on future steps, Sickel says the site plans to experiment with integrating loyalty program memberships into the search process for users. “We think that can be a unique differentiator,” Sickel says.
The site already has a beta under way which enables users to link their loyalty programs to their site profiles, and to track them there, with the idea that chains can deliver individuals special membership perks.
“This resonates with customers,” Sickel says.
Room Key is also investigating whether becoming a behind-the-scenes, or white label, hotel provider to airline and travel agency websites might be the right fit.
Speaking of behind the scenes, the details of Room Key’s contractual relationships with its founding hotel chains is under wraps, but the brands are believed to have multi-year commitments. Room Key also wouldn’t share with the founders whether InterContinental is getting more of a benefit out of the site than Hilton does.
Over the long term, and given the lack of marketing dollars that the chains are allocating to Room Key, it remains to be seen how much commitment they will really have to Room Key’s prolonged existence.