Questions Remain as Room Key Consumer Launch Nears

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Room Key was once again a hot topic during the Hunter Conference in Atlanta earlier this week. The new hotel search engine created by six of the largest hotel brand companies was slated to officially launch to consumers in March, but CEO John Davis says it will actually be in late April as the company continues to add inventory and deal with what he terms “clean-up issues.”

The beta version of the site is open for business now, but the consumer launch will bring added features and a renewed marketing push. On Tuesday during the presidents' panel at the Hunter Conference, a good 10 minutes of an hour-long session was spent discussing Room Key.

Steve Joyce, the CEO of founding partner Choice Hotels and an outspoken critic of online travel agencies, was the de facto spokesperson answering for Room Key. Moderator Michael Medzigian, chairman of Watermark Capital Partners, asked if Room Key was successful, why would it be any different than the other OTAs and why the CEO [John Davis] wouldn't try to make it as profitable as possible.

“This is clearly an issue that needs dealt with,” Joyce said. “We have brand companies around the table whose primary function is selling franchise and management contracts. It's a huge mistake, and would be received poorly, if the founding partners starting making lots of money from this. Profits can be had, but the idea is as profits get bigger, you lower the cost, not make more money. I can tell you the alignment around the table today is very strong.”

Jim Abrahamson, now CEO of Interstate Hotels & Resorts but the previous leader of IHG's Americas division during the development of Room Key, added the new site “has to grow and expand for it to be a vibrant tool that customers want to use. They've got to reinvest and market this. This is the first major step to getting control of our inventory back.”

Cyril Ranque, Expedia's SVP of global lodging, wasn't on this panel, but he was asked about Room Key during the conference's opening session the day before. “Room Key will play in the mix, but there are a lot of players,” he said. “The exit window strategy (for marketing) is interesting, but on our site it doesn't convert well. And the customer needs variety.”

Ranque pinned down Room Key's two main challenges far more succinctly than I have in my many stories on the topic.

There's a month left until the consumer launch, so more news could be coming, but I wonder where the Carlsons, Red Roofs and La Quintas of the world are. Leaders at all three companies expressed great interest — even excitement — about the launch, but none have signed on the dotted line yet. Room Key needs those players and more to get the variety Ranque has at Expedia. If everyone keeps waiting, Room Key will face an uphill battle. Adding the Preferred Hotel Group and then the European launch last week with the addition of WorldHotels were good steps, but the biggies (Starwood?) here in the U.S. need to be a part of the mix.

If the exit strategy doesn't work, will Davis have the funds to spend on marketing or will the founding partners be willing to lend a hand (and more money)?

Only time will tell, but we're a month from seeing what this really looks like.

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