Roomkey.com's demise (temporary or not) shouldn't be seen as a sign hotel companies can't compete with OTAs. But if revived, the brand will likely need a more in-your-face approach than pop-under ads to drive traffic.
Hotel operators have long battled with online travel agencies, but the OTAs appear to have won the struggle against one hotel-backed competitor.
Roomkey.com is no longer providing hotel search functions, the company announced Monday. But the operational suspension may not equate to a swan song for the hotel booking search engine. Roomkey is “in the process of redefining our business operations,” according to a press release.
“The board felt the resources at the company could be utilized on other strategic opportunities,” Roomkey.com CEO Steve Sickel said in an interview with Skift Monday afternoon. “Given the current uncertain economic environment that’s going on right now, they felt that would be the best decision for the company.”
Coronavirus continues to wreak havoc on travel companies, with analysts and executives both labeling it worse for the industry than the 9/11 terrorist attacks and 2008 financial collapse combined. But critics have doubted Roomkey’s viability for years against bigger OTAs like Expedia or Booking.com.
Roomkey — a joint venture among Choice Hotels, Hilton, Hyatt, IHG, Marriott, and Wyndham — launched in January 2012 as “an innovative new online hotel search engine that will provide the simplicity, transparency and breadth of choice consumers expect from a search engine” while also booking directly from the hotel companies instead of a third-party site like Priceline.
But the website struggled to gain traction with travelers compared to OTAs. Roomkey’s pop-under ad strategy meant travelers often only learned about the website after they had clicked out of a site like Marriott.com after not completing a booking.
Roomkey’s suspended search function shouldn’t be read as a sign hotel companies can’t compete against OTAs, Sickel said. He also defended the criticized pop-under business strategy.
“It leveraged an asset — that was a visit that doesn’t turn into a booking — that every brand owner has millions of. It leverages that asset to see if it can monetize into a booking,” he said. “I think that strategy is quite solid.”
The fact that its founding members rarely, if ever, mentioned it in financial statements led skeptics to believe Roomkey made no material impact on earnings.
While the site struggled for relevance since its launch, Roomkey.com did turn its first profit in 2015 and posted a 50 percent gain in transaction volume in 2017, a Roomkey spokesperson claimed to Skift in early 2018.
Sickel, while not providing specific financial details Monday, said Roomkey remained profitable.
“Every year since, we’ve turned profitable. You see what’s happened: a big change in the economy and the travel demand market,” he added. “It’s raised the question which has already been contemplated prior. It’s not just about the amount of profitability but how can this asset and this investment be best used. That conversation started, and the current economy pushed the conversation further.”
Reservations made through Roomkey are unaffected by the search shutdown, as bookings were ultimately made directly with a hotel company. Roomkey also promised to delete all private user data.
The six founding hotel company members behind Roomkey will remain with the company, Sickel added. All six deferred Skift’s request for comment to Sickel.
The Roomkey board’s decision to pivot to other opportunities beyond its former hotel search functionality also led to layoffs, Sickel said. He declined to provide a specific number of how many people had been let go or elaborate on his own future with the company.
“I continue to work with the board, and so we’ll see what the board decides to do with this company and whether I’m part of that or not,” he added.
Subscribe to Skift Pro
Subscribe to Skift Pro to get unlimited access to stories like these ($30/month)Subscribe Now
Photo Credit: Roomkey.com, founded by six of the world's largest hotel companies, suspended its hotel search functions Monday, June 8. DragonImages / Adobe
Accor’s Hotel Owners Are Clamoring to Become Lifestyle Brands
CEO Sebastien Bazin has certainly evolved Accor's luxury and lifestyle lineup, but will that be enough to help him finally break into the U.S. market?
Matthew Parsons | 3 hours ago
Hilton CEO: Business Travel Demand Will Eclipse 2019 Levels in 3 Years
Don't discount the return of business travel demand, but Hilton has an advantage in having a bulk of its business transient traffic coming from smaller companies. Those relying on major corporate traffic to fill hotel rooms shouldn't get too excited quite yet.
Cameron Sperance | 19 hours ago