In a case of deja vu all over again, six hotel companies have partnered to launch RoomKey.com, a booking website designed to pull distribution dollars away from online travel agencies (OTAs).
The move marks the second time in less than a decade that hotel companies have banded together to form such a venture.
The companies involved in RoomKey.com are Marriott International, Hilton Worldwide, Hyatt Hotels Corp., Choice Hotels International, Wyndham Hotel Group and InterContinental Hotels Group (IHG).
RoomKey.com, which last week launched as a beta site, lets consumers search for and book hotels. Its developers say it will also eventually provide space for reviews.
The site, which notably does not include Starwood Hotels & Resorts, will be fully operational by the end of March, at which time it will debut in English-speaking countries overseas, according to the site's chief marketing officer, Stephany Verstraete.
The hotels, which hatched the idea of a collaborative booking-engine site in 2010, brought in John Davis III, the founder of travel-technology company Pegasus Solutions, to run the company.
Davis said that RoomKey.com plans to improve the online buying experience for hotel customers by providing more in-depth information about accommodations while giving travelers a direct line of communication to hotel operators instead of having to go through a third party like an OTA.
"The hotel room is a very personal purchase, and there's a host of information that people want," Davis said. "And if you have a problem, you can do something completely original and call the property directly."
Still, some analysts view the launch as just one more attempt by hotels to reduce distribution costs associated with OTAs and other online channels. With OTAs often taking a 20% cut of the hotel reservations they sell, the online giants have had an often uneasy relationship with hospitality companies.
U.K.-based IHG, the world's largest hotel company by room count, removed listings from Expedia and its Hotels.com affiliate in 2004 because the intermediaries refused to unbundle service fees and taxes. IHG's inventory was reinstated in 2008. Choice Hotels' inventory was pulled from Expedia in October 2009 because of a contract squabble before being reinstated a few weeks later.
And last year, research firm STR estimated that OTAs, which account for about 7% of U.S. hotel-room bookings, cost hotel companies about $2.5 billion in annual sales because the online agencies pay so little for their room inventory. That number is up from about $1 billion in 2004, when online booking was less prevalent and OTAs took a smaller cut.
Both Davis and Verstraete said that RoomKey.com was launched, in part, to cut online distribution costs, but neither would disclose specifics about either how much the six hotel partners invested in the venture or by how much they were looking to reduce distribution costs.
To that end, both Douglas Quinby, senior director of research at PhoCusWright, and Henry Harteveldt, principal analyst at Atmosphere Research Group, speculated that if RoomKey.com proves popular, it could become a bargaining chip for hoteliers in their dealings with the OTAs.
Quinby observed: "As the room-rate recovery continues and key operating metrics improve for hotels, there's going to be more leverage at the negotiating table for the hotels, because they're going to need the OTAs a bit less. John Davis is an incredible veteran of the industry. It's a clear indication that the chains that are involved are very serious about RoomKey.com."
At stake is the hotel companies' distribution share of the approximately $120 billion in annual U.S. hotel revenue. With the launch of RoomKey.com, hotel companies are looking for greater control of a distribution channel that's likely to grow as travel spending rebounds. Between 2009 and 2013, annual online U.S. hotel bookings by leisure travelers will have jumped 44%, to $39.2 billion, and will account for a third of all hotel bookings, PhoCusWright predicted in a November report.
Already, RoomKey.com has signed Best Western International, whose chain includes more than 4,000 hotels globally, as the site's first commercial partner, and it aspires to bring in other hospitality companies. The most notable omission from the partnership is Starwood Hotels & Resorts, though the second-largest publicly traded U.S. hotel company behind Marriott did leave the door open for possibly joining RoomKey.com.
"We made this decision carefully, after six months of due diligence," Starwood said in a statement. "Looking ahead, we will assess the potential benefits of this new distribution channel for our hotels."
RoomKey.com marks the second time in nine years that many of the larger U.S. hotel companies partnered to form their own booking engine. In 2003, four hotel companies -- Hilton, Marriott, IHG and Starwood -- teamed up with Priceline.com and Pegasus to launch a similar venture, TravelWeb. Priceline acquired the venture outright the following year.
"The major difference is the commitment from the shareholders," Davis said. "Before, the majority of the money was through the profits of Pegasus, so there was very little money from the hoteliers themselves."
RoomKey.com's Verstraete said the site would offer "the lowest publicly available rates."
Harteveldt said the site's clean look and its ability to offer customers loyalty-program points through its bookings could help boost traffic.
"The website is nicely designed, pages download quickly, and the site offers some helpful features, including three different ways to display search results and filters for price and hotel star quality," Harteveldt said. He also noted that most U.S. leisure travelers who book online belong to at least one hotel loyalty program.
OTAs and their representatives last week downplayed the threat of RoomKey.com making a big dent in demand, arguing that their advantage lay in offering broader hotel-room inventory plus the ability to book airline tickets and rental car reservations within a single site.
Priceline.com spokesman Brian Ek specifically highlighted that site's "seamless booking experience and millions of reviews from customers who've actually stayed at the hotels."
Joe Rubin, president of the Washington-based trade group Interactive Travel Services Association, which represents the OTAs, said, "We think that consumers will quickly remember all of the services that our companies offer beyond just hotels. In addition, our basic inventory and range of choices is far broader than what Room Key may be offering for consumers."
Either way, despite what looks to be continued growth in online hotel booking and despite investments by deep-pocket hotel companies, Quinby said that RoomKey.com's success was far from assured.
"OTAs have all of the inventory under one roof and are clearly the preferred shopping channel, especially for the leisure travelers," he said. "Room Key's a start-up just like any other, and this marketplace is as competitive as it's ever been. So there's no guarantee that this will be a smashing success out of the gate."
For hotel and hospitality news, follow Danny King on Twitter @dktravelweekly.