Hotels are making yet another attempt to modernize the booking process while still maintaining a high amount of control over it. Just last week, major hotel chains Marriott, InterContinental Hotels Group, Hilton, and Accor collectively invested $50 million in a small company called Groups360, a platform which helps match meeting planners with venues.
The investment is relatively large, meaning the hotels seem to be serious about this new step. They’ve begun to bristle at the rising costs associated with using a third party service like Cvent, and it is increasingly impossible to ignore that consumers are not going to put up with the current, outmoded form of meeting booking for much longer.
“Our customers have told us that the current shopping and booking process for small groups is out of sync with their day-to-day digital shopping habits,” said Brian King, Marriott International’s global officer of digital, distribution, revenue strategy and global sales. “This process is even more cumbersome when a meeting planner must source across multiple brands.”
The problem is that hotels have not exactly had the best track record when it comes to streamlined booking platforms, and have often been most resistant to any changes in the booking process. In fact, almost the exact same hotel companies involved in the Group360 investment launched a similar platform called Room Key in 2012, which never caught on, and eventually fizzled out.
“A lot of times things look really similar, but can be very different,” said Groups360 CEO Kemp Gallineau, when asked about the comparison. “A lot of it is timing and the approach to the solution, and I think we’re in a unique position to be able to provide that approach.”
But it is still very early days, and a lot of the platform’s success will depend on how the hotels can leverage those differences in order to avoid making their previous mistakes. To get a better idea of what is in store for Groups360, it makes sense to go back to the days of its predecessor.
Room Key was launched in early 2012 by six major hospitality companies: Choice Hotels, Hilton, Hyatt, IHG, Marriott, and Wyndham. It was designed as the hotel industry’s response to online travel agencies (OTAs), which had just begun to dominate the booking space at the time. Much like an OTA, Room Key would act as a search engine, allowing consumers to find and book rooms simply and quickly.
It had an edge on the OTAs, though. The hotels’ platform would charge lower commissions, and would not have biased search results. It would also refer consumers to the main site of each of the original hotels involved, giving those hotels an advantage.
Despite these perks, the platform never lived up to the success that had been expected of it. In 2016, four years after it had been founded, traffic to the site was still minuscule, when compared with OTA giants like Booking.com or Expedia. Even the founding hotels were seeing up to 20 times as many visitors to each of their main sites as Room Key was to its platform. This slow business could no longer be blamed on how new the company was — Room Key just wasn’t catching on.
In part, this is because the hotel industry’s platform didn’t hit the market early enough. By the time it did, OTAs were already so huge, and so ingrained into consumers’ booking habits, that there wasn’t much space for a new entrant.
“I think Room Key did a really good job, but it was a little late,” said Groups360 CEO Kemp Gallineau. “It was after the online travel agencies became what they were.”
Skift reached out to Hilton and Hyatt, but the hotels declined to comment on the recent investment.
To stand a chance, the hotels would have had to invest massive amounts in marketing, or at least much more than they did. For reference, Booking Holdings and Expedia each spent roughly $5 billion in marketing in 2018, totaling over $10 billion collectively. Meanwhile, a major hotel like Marriott or Hilton might spend between $100 and $200 million in marketing in a given year.
So What’s Different This Time?
On the outside, Groups360 looks to be extremely similar to Room Key, but this isn’t entirely true. The most obvious difference, of course, is that Room Key was intended to help travelers book hotel rooms, while Groups360 is designed to help meeting planners book venues.
This is especially important when you look at the timing. Room Key suffered in part because it was trying to enter an extremely crowded market, which already contained major players with large customer bases. In short, there was already a product on the market that gave consumers exactly what they wanted, and the OTAs had it.
The same thing can’t be said about booking meetings, however. As Skift has documented many times, the process of booking a meeting is nearly universally hated, because of how time consuming and tedious it often is. Even as instant booking platforms like Bizly and Meetingsbooker have grown, the old fashioned method of booking meetings refuses to die.
This means that hotels are not yet completely late to the party, according to Groups360’s Gallineau.
“The investment is earlier on in the cycle of what they’re trying to solve when compared with Room Key,” he said. “Also, we already exist and we’re in the industry now, and we’re running a successful platform. We have unique knowledge on our team of what the meetings industry is going after.”
That’s another difference: While the hotels launched Room Key from scratch, Groups360 is an existing company, and has some experience as a third party meeting booking platform.
That being said, the company is extremely small – only about 30 people – and it does not yet have experience in instant booking. Plus, the hotels have majority stake in it, meaning they will be the driving force behind how the company operates. This is not necessarily good news, considering hotels have often been most resistant to embracing a more modern method of meeting booking.
“It seems that this is already set up for failure,” said Julian Jost, CEO and cofounder of Spacebase, a meeting booking platform launched in 2014. “You have hotels that are currently not ready to accept instant booking the way that it is working, and they have a major say in what the company does. And then you have a company that is not really ready for instant booking.”
Hotels, he added, are generally used to large bookings made very far in advance, whereas many meetings are small and have a booking window of less than three weeks. Plus, providing instant booking, even on their own platform, takes away some of the control hotels have over how venues are booked.
“They have whole teams of revenue managers whose sole job is to upsell meetings organizers onto extras,” he said, referring to add-ons like coffee breaks or catering. “And with instant booking, they often don’t believe they’ll get that. But we have gone through a long learning-curve. We know it is possible and can even outperform current offline processes, but they have to re-learn how it works.”
The large amount of money invested into Groups360 could be the platform’s saving grace, however.
“There’s definitely some capital to build something,” he said. “We just don’t know yet what it is.”