Friday, July 10, 2009

Critics to Founders of and getaroom: TakeAHike

A raging debate has broken out on this blog about the launch of, the brainchild of founders Bob Diener and David Litman. has a back-to-the future approach to travel distribution. Consumers see published rates and some rotating specials on the website, but then have to phone a call center to get steep discounts.

Hotels thus get to distribute their rooms and put heads in beds without brand dilution, and consumers get these semi-opaque deals, but know the identity of the property and its location before they book. For more more background, see my interview with Diener here.

A chorus of getaroom critics on this blog chimed in that Diener and Litman, who helped put hotel discounting on the map before the days of rate parity and best-rate guarantees, again are taking hotels down a slippery slope to the bottom of the fiscal heap.

"Sorry, I am struggling to understand where the innovation is here," said one anonymous observer. "Allowing a 4-star hotel to compete on PRICE with a 3-star hotel, is this what you call innovation? This is definitely not benefiting the industry. Hotels have fought for years to get to Rate Parity, Brand Protection, and to be able to sell direct on their own website. All I see in this new 'innovative' business is someone trying to make money quickly, but while doing that they are bringing the industry to the dark ages."

And, another basher wrote: "What isn't noted is what is taking as its cut. took 25%, money up front, and payment in the month following the stay. If this is their model for their new enterprise, it will only include the most desperate hotels during the worst periods of time. No one wants to be in that race to the bottom and get raped along the way."

However, a helluva lot of hotels obviously disagree as they vote with their feet. Look at all the properties that feed Hotwire and Priceline.

And plenty of properties see the value in For example, Boston properties dabbling with include: the Colonnade Hotel, the Lenox Hotel, Wyndham Boston Chelsea, Copley Square Hotel and many more. Pick a city, you'll find plenty more.

If they weren't getting some distribution love from, they wouldn't be there.

What others see as another fatal flaw for is that consumers, finally accustomed to metasearch, online travel agencies and various trip-planning websites, will be very reluctant to dial for savings.

"In the age of the Internet why would people pick the phone to make hotel reservations?," another anonymous critic writes, taking up the theme. "I don't understand. People have moved away from offline a long time ago, and tomorrow's bookers are today's kids who do not even use email. They communicate on Facebook, YouTube, Twitter etc..." certainly will not be the be-all and end-all for a lot of consumers, but why wouldn't a segment of savvy consumers, in this era when online-travel booking is so complex, phone a call center for a deal, especially when they know the name of the property and the location in advance?

Mary Song, the president and CEO of Propel Media, writes: "I think it's a brilliant idea given that hotels don't want everyone to know how low they are discounting, hence the success of Priceline and Hotwire. I agree with Dennis and would add that the subset of people who pick up the phone to make the final booking is quite large, but also that the site needs to make it more obvious that the best price to be had is actually over the phone and not online."

One anonymous defender of believes advocates of online-booking only aren't taking a broad enough view. "In my mind, the appeal of the model is the fact that it is the equivalent of saying 'Let me talk to your manager.' A website is not a decision maker and doesn't offer you a different price from Jo-Shmo next door because you pulled some strings or talked to the right person. This model subconsciously offers customers that value of a 'negotiated, rare rate' because of the strings they pulled, and frankly I think the value a consumer sees in that is currently being underestimated."

The anonymous comment-writer adds: "I think this model will be interesting to watch... Let's see what these 'kiddos' can do. If nothing else, it will be entertaining."

These kiddos, Diener and Litman, made a few pennies selling -- now in the Expedia fold -- and own outright, with no VC funding. With deep pockets, Diener said they have "several million dollars" for marketing.

We're obviously comparing a few apples with acres of bananas here, but look at the strides Bing is making with, albeit a cool $80 million or so, as it seeks to blunt consumers' seemingly-automatic impulse to surf to to search.

Might not some consumers learn to halt their browsing for a bit, and dial that call center in Dallas?

Sounding like someone with inside knowledge, another person who commented on this blog wrote: " is investing millions of dollars in promoting the site and the new way to book. By being on the site, it is massive free publicity for the hotel. The hotel controls the inventory. When a hotel needs more business they simply add inventory to the unpublished program, which they can take out anytime. is being promoted now on many online sites, satellite radio, major newspapers and will soon begin a large television campaign. This all means free exposure for those hotels that participate."

The pushback to has been fairly heavy. Let's hope that critics aren't adverse to a company trying something new -- or should we say, something old?

As Mike Redbord tweeted to me, seemingly tongue in cheek: "Haters haters everywhere, give innovation a chance."


Jeff said...

With the proliferation of intergrated computer mics and the popularity of Skype (and the soon to be officially launched Google Voice), I wonder if a click to call button makes sense:

"Click here to call us now!"

Would you click? I would. But I'm also the community manager at a travel startup who plans to spend this Friday night installing Windows 7 on a new hard drive partition. There's not enough of me walking around (be thankful) to make me the target demographic. But I wonder if these technologies are mature enough that someone like, say, my parents (near retirement, budget conscious but like to travel) would hit that Click to Call button.

Instead of grabbing the phone and dialing the number (how archaic!) a user could get the best price available with a single click...

Douglas Quinby said...

Just an FYI to the whole online/offline debate around Getaroom - VacationsToGo is a clear example of success: a highly trafficked site for cruises and packages, but no booking engine. You have to call to book. And consumers do, in large numbers.