The founders of Hotels.com this month launched Getaroom.com, a hotel-booking website that pays travel agents a commission when they book rooms for clients over the phone.
Bob Diener and Dave Litman, who founded the business that evolved into Hotels.com in the 1990s, then sold it to Barry Diller's USA InterActive in stages, completing the deal in 2003, had been under five-year noncompete agreements with Hotels.com and Expedia.
Those agreements expired on Jan. 1, and two weeks ago Diener and Litman officially unveiled a hotel-booking service that turns the Priceline-type opaque-booking model on its head.
Getaroom.com, which the duo owns in its entirety, offers published hotel rates for online booking in select markets on its website. But it also gives consumers and travel agents the ability to book these properties at what it says are discounts of 10% to 50% after registering on the website and calling a toll-free number to complete the transaction.
Agents must phone Getaroom's call center in Dallas, which is staffed by a third-party company, and present their IATA numbers when booking to receive 10% commission.
While online booking is generally considered more cost-effective than phone bookings, Diener said the company's phone booking costs are being kept to a minimum because customers already know what they want when they call and because the call center operator, which he declined to identify, has deep experience handling hotel bookings.
Diener points out that most companies are trying to push consumers online, whereas Getaroom is incentivizing agents and consumers to dial for deals.
He described Getaroom's offline model as using "reverse opaque rates," which give hoteliers a channel to market distressed inventory without having to dilute their brands by publishing the rates online.
Unlike with Priceline, agents and consumers know up-front which hotel they are booking. Users of Priceline bid on a star category in a section of a city, but they learn the hotel's identity only after booking it.
For example, Getaroom.com listed the five-star Trump International Hotel Las Vegas at $128.75 per night for a mid-July booking, and that published rate could be booked on Getaroom.com. But, in theory, agents and consumers could get a steep discount on that price by calling the call center.
Diener said that in the Expedia Inc. fold, Hotels.com remained "a major player" and still enjoyed great branding. But he said that he and Litman were "much more focused on value" when they ran the show there.
Hotels.com wants to be "everything to everybody," Diener said. "They have lots of hotels, even if some are of low value. Their philosophy is to put on everything everywhere."
In contrast to most companies' desire to be comprehensive, Diener said Getaroom.com focuses on select markets and only lists hotels that offer great value for customers.
Diener said he and Litman decided to jump back into the fray after their noncompete agreements expired because little had changed in the interim regarding the ways hotels get booked, and "we love the industry. It's in our DNA."