Why Expedia and Priceline Don't Want You to Hear About RoomKey.com
A new travel website launched earlier this week.
RoomKey.com will scour through the available hotel rooms across several lodging chains, offering up the best deals. In a world where Expedia (EXPE), Travelocity, Orbitz Worldwide (OWW), and priceline.com (PCLN) do essentially the same thing, why should Room Key stand out?
Well, Room Key is actually a joint venture including six of the country's largest hoteliers. Founded by Choice Hotels (CHH), Hilton Worldwide, Hyatt (H), InterContinental Hotels Group (IHG), Marriott (MAR) and Wyndham (WYN), Room Key is starting off targeting the U.S. travel market, but overseas expansion is inevitable.
It's easy to see why hotels want to cut out the middlemen. Instead of doling out commissions every time that someone books an overnight stay through a traditional travel portal, Room Key's flexible search feature links directly to each hotel's booking page.
First Music, Then TV, now Hotels
Corporate giants often have a hard time trumping hungry upstarts. It happened in the music industry a decade ago, when the major labels split into two camps to form MusicNet and Pressplay. Both online music services quickly faltered.
Things have panned out better for television production studios. Hulu -- bankrolled by three of the major networks -- has been a smashing success streaming fresh television shows to audiences on demand.
It remains to be seen if Room Key will be the next MusicNet or Hulu. The consortium of lodging giants is already talking to other hotel chains and independent operators to make its destination as complete as possible. But it will probably never have everybody on board.
Starwood (HOT), the parent company of Sheraton and Westin, is telling The Wall Street Journal that it passed on the opportunity to participate after studying the joint venture for several months.
However, having a trusted source that feeds right into the hotel booking engines seems like a good idea in theory.
No Vacancy
Things can always backfire on the participating leisure companies. It's quite possible that traffic to their own landing pages may suffer.
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If you're part of the Hilton HHonors reward club and typically begin searching for a place to stay at Hilton.com to see the available Hilton, Hampton Inn, and Embassy Suites in the area, why not go to RoomKey.com instead? Sure, you may miss out on an opportunity to earn points or collect your member perks, but what if there's a comparable room being offered by a rival at half the price?
Instead of counting on having a captive audience through their proprietary websites, there might be some competitive jockeying for position between the founders.
It will still be worth it in the end. If consumers are hungry for an assortment of options wouldn't they eventually wind up at a travel portal or one of the popular aggregators including Kayak? Hotel chains have their best chance ever to control the booking experience. They better not blow it.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. Motley Fool newsletter services have recommended buying shares of priceline.com.
