John Davis IIIThree decades after co-founding 1-800-FLOWERS and more than 20 years after launching hotel room distribution technology company Pegasus, John Davis III has returned to startup mode, albeit with some well-funded partners. Davis was tapped by some of the largest hotel companies in the world, including Marriott International, Hilton Hotels & Resorts and InterContinental Hotels Group (IHG), to serve as CEO of RoomKey.com, a hotel search engine and booking site that will compete against online travel agencies (OTAs) for Web-based reservations.



Davis ran Pegasus in 2003 when that company collaborated with Hilton, IHG, Marriott and Starwood Hotels & Resorts as well as Priceline.com on a similar venture, TravelWeb. Priceline acquired that venture outright the following year. Hotels editor Danny King recently spoke with Davis about his plans for his newest venture
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Q: What makes RoomKey.com different from TravelWeb?

A:
The major difference is the commitment from the shareholders. Before, the majority of the money was through the profits of Pegasus, so there was very little money from the hoteliers themselves. And we're getting a commitment for room availability, and we're getting access to the best available rates. I'm not sure that was true with the early days of TravelWeb. The hotels have some very clever ideas to build brand awareness, and they're going to help us promote this brand.

Q: But there's also more competition.

A:
The world has changed dramatically in 10 years. When we started TravelWeb, there was no "travel Web" going on at all. It was not necessarily the place where people went to book.

Now you have a wide variety of sites, and the number of transactions is only going to keep going up dramatically. And the costs have risen significantly in what they pay for a third party to sell rooms. So the challenge is to provide the consumer with a better experience with a sales channel that costs a little bit less.

Q: How does RoomKey.com expect to compete against OTAs that, at least now, have broader inventory as well as booking capabilities for airline tickets and car rentals in addition to hotels?

A:
With buying an airline ticket, it's about getting the cheapest rate. The hotel room is a very personal purchase, and there's a host of information that people want. And if you have a problem, you can do something completely original and call the property directly.

Q: Most industry experts say that, on average, OTAs get about a 20% discount on the rooms they purchase from hotels, making that channel an expensive one for hotel companies. By how much will RoomKey.com cut costs through the online channel?

A:
The cost of OTA sales to hotels varies pretty dramatically across the board. I would hope we can drive down the cost of distribution. Anything we can carve off is good.

Q: Starwood participated in TravelWeb but opted not to do so with RoomKey.com. Is that a concern?

A:
We met with them and had good discussions, but they made the decision not to jump in as an investor immediately, which is fine. I do intend to go back to them. The lines of communication remain open.

Q: You've launched a number of startups over the past few decades. What attracts you to them?

A:
I was intrigued to get back to a startup; I enjoy them. I've got three sons looking at me saying, "My dad's doing an Internet startup?" But I'm really enjoying it.

For hotel and hospitality news, follow Danny King on Twitter @dktravelweekly.
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