Hotel-Booking Startup Roomer Raises $5 Million in Funding

Roomer, a hotel-booking site that enables travelers to sell nonrefundable-hotel reservations they no longer want to other travelers at a discount, picked up $5 million in a Series A round.

Founded in 2011, Roomer has to prove to buyers that they can nab substantial discounts and when they arrive at the hotel everything will be in order with their reservation.

Co-founder and CEO Gon Ben-David says the company studied how companies such as Airbnb and eBay handled trust issues and instituted a buyer protection policy, fielding a 24/7 call center team and guaranteeing that if anything goes wrong with a reservation then Roomer will give the traveler a "new hotel room at either the same hotel or a similar hotel in price, location and ranking."

Ben-David says the Series A round signifies that Roomer has successfully proved its concept of creating a secondary market for nonrefundable-hotel reservations, and the company will use the $5 million in funding to increase its distribution and supply.

In the U.S., more than 200,000 hotel rooms get canceled daily, and that translates into an $8 billion annual loss, Roomer estimates.

Venture fund Disruptive led the Series A with participation from existing investor BRM Group, bringing Roomer's total funding to $7 million.

With 20 employees, Roomer has an R&D team in Tel Aviv, a call center staff in Manila and a business development office in New York.

Ben-David says Roomer is testing distribution through metasearch and has implemented partnerships with travel agencies, including the consortium, Hickory Global Partners.

"Booking a hotel through a secondary market should be just like booking a hotel from Booking.com or Hotels.com," Ben-David says.

Beyond the trust issue, Roomer's challenge is to publicize the service to scale it and to provide meaningful discounts off published rates in myriad markets.