tag:blogger.com,1999:blog-8307132730056862398.post5647706709758596748..comments2023-06-23T07:45:28.484-04:00Comments on Dennis Schaal Blog: Nothing Opaque About Priceline's Take on getaroom.comDennis Schaalhttp://www.blogger.com/profile/12073829623151186628noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8307132730056862398.post-66587837411347069732009-08-13T17:58:16.512-04:002009-08-13T17:58:16.512-04:00I agree with Nick - Dave Litman and Bob Diener are...I agree with Nick - Dave Litman and Bob Diener are both very smart and experienced in introducing disruptive business processes to the hospitality industry.<br /><br /> And they have done it again - this time, they just made the price opacity a little bit more translucent. This obviously does not appeal to the major hotel chains - neither did Litman & Diener's Hotel Reservation Network (which became Hotels.com.)<br /><br />The two know that independent hotels, lacking the distribution networks of the major brands may be more willing to provide deals - one reason is that the hotel owners are not paying the chains franchise and/or management fees. Without broad distribution, rate parity is not as big an issue.<br /><br />So in their new model, Litman & Diener are finding and negotiating with a hand picked selection of hotels across a variety of quality tiers in destinations with significant tourist demand. They can tout a significant advertising budget and an intent to channel volume into their partner properties.<br /><br />This is fundamentally a traditional tour operator model. It works and the participating hotels love it as long as the distributor can generate sufficient room night volume to satisfy the number of participating hotels.<br /><br />This model also supports cooperative marketing efforts with the properties quite nicely, but getaroom.com may not be asking for marketing contribution at this point - they are probably just asking for a deeper discount on the rate.<br /><br /> Will it work? I believe so. It certainly did for HRN as this was exactly how they got that business started.<br /><br /> For non-target markets, they tie into Travelocity's partner network. However, they should be able to easily branch out into new markets armed with "here's the success we had in Boston for a property just like yours..." pitch.<br /><br />There is nothing a hotelier likes to hear than a promotional opportunity that has a proven track record and targets their property. Hoteliers will understand it may require a preferential rate, but if unencumbered by corporate edicts designed to protect the brand as a whole, they will sign on.<br /><br />Last time, there were some small properties that gave ALL their rooms in exchange for a guaranteed check each month. Much lower risk - perhaps with a lower reward, but right now, hoteliers are trying to mitigate risk.<br /><br />getaroom.com is different from Priceline's reverse auction model and the standard OTC supermarket with every hotel on the shelf. Each model has its advantages and disadvantages, but there is ample room for them all to compete. The biggest mistake an OTC could make would be to underestimate Litman & Diener.RobertkColehttp://www.rockcheetah.com/blognoreply@blogger.comtag:blogger.com,1999:blog-8307132730056862398.post-39803856125627169022009-08-13T13:00:56.994-04:002009-08-13T13:00:56.994-04:00There is no question that getaroom is a disruptive...There is no question that getaroom is a disruptive model. They've got an impressive management team to pull it off, but as you note, the big players stand to lose a lot, as do hotels. Right now, the economic weakness is in their favor, as consumers want cheaper rates more than ever, and hotels need to get up their occupancy rates quickly. Hotels I've visited recently have been very, very quiet and empty.Nick Ashtonhttp://www.sftravel.comnoreply@blogger.com