TLabs Showcase on travel startups featuring UK and US-based Global Hotel Exchange (GHX), a new worldwide trading platform for hotels to distribute and market inventory.
Who and what are you (including personnel and backgrounds)?
What we are: Global Hotel Exchange. GHX is a new worldwide trading platform introduced to provide transparent "market based pricing" to consumers, while offering global reservation/marketing service at no cost to hotels struggling with economic instability.
Going live in March 2012 across internet, mobile and social networks, Global Hotel Exchange is a consumer booking platform that will provide ‘market based pricing,’ a simple, fast and transparent way to book a room at a fair market price.
Who we are: GHX is an independent corporation headed by founder and CEO Thomas Magnuson. Detailed background.
What financial support did you have to launch the business?
GHX has been funded internally. Facebook's evident IPO is one of the dynamic changes and events upcoming, which will open many opportunities.
One can clearly see that this is a time when new forms of democratised industry structure are rising up and taking hold rapidly.
We may not make much money, but that’s not our motive. Magnuson Hotels and Global Hotel Exchange is reforming as Magnuson Worldwide to ensure that this idea goes as far as the market will allow.
What problem are you trying to solve?
In the US alone, over $20 billion a year in franchise and OTA fees are paid, leaving less and less for owners. As a result of contracted funding, declines spiral in employment, property condition and owner profits.
Finally, a record number of hotel foreclosures loom, as there are no funds available for the bankers. The only way hotel owners will survive will be from reducing costs, there is no other way.
Describe the business, core products and services?
Transparent, simple, fast OTA alternative offering market based pricing for consumers, free bookings for hotel owners.
Consumers searching for specific cities, points of interest, dates and star ratings can book from a list of matching hotels with each hotels’ rate next to a market-specific 52-week low/high rate range for that particular search.
Market based pricing provides simplicity to the consumer. Its benchmark pricing answers the question "…what is today’s rate compared to the last year?" allowing for groundbreaking transparency in hotel pricing while delivering consumer trust in a fair price.
In contrast to expensive OTAs, hotel owners will receive worldwide marketing at no cost. There are no merchant discounts, commissions or distribution fees of any kind to hotels.
Hotels will control their own rates and allocations via security extranet. Global Hotel Exchange charges a small service fee to consumers for each booking, which underwrites the marketing and technology necessary to sell rooms at no cost to hoteliers.
For hotel owners struggling with declining occupancy, falling rates and the instability of worldwide economic conditions, Global Hotel Exchange introduces a hotel industry growth platform designed to give back control of pricing and margins immediately.
Market based pricing brings back fair market value to the hotel owner, combating the increasing blur of hyper-promotions and discounts that are eroding hotel operator profits. Easily accessed historic rate range will help owners with forecasting.
Who are your key customers and users at launch?
GHX will be going live in March 2012 simultaneously in over 30 countries. It will feature some of the most iconic hotels in the world as well as small independents. In addition to nearly 30,000 hotels of all calibre and type, GHX will also carry all of the top brands.
Did you have customers validate your idea before investors?
Yes, we did. Feedback from within our own group of hotels, as well as random questionnaires and inquiries with guests inside and outside our organization, indicated points of pain at either end of the B2B and B2C spectrum.
This data, combined with data readily available industry wide, showed a significant opportunity for us. As for investors, our venture was and is self-funded.
What is the business AND revenue model, strategy for profitability?
It is all about finding and serving a good purpose. When this happens, the means will follow.
That being said, our strategies and monetization ideas are one of the proprietary aspects of Global Hotel Exchange. Our ideas on these and other issues are an even bigger part of our disruptive innovation than technologies are.
SWOT analysis – strengths, weaknesses, opportunities and threats?
- Leading, low-cost IT, easy to use for hotels and consumers.
- Our competition could roll out the same product (but they won’t). There are no real weaknesses, given our expectations and the realities of GHX as a platform. We cannot reveal more at this time.
- Serving overwhelmed and jaded consumers with a simple, fast and transparent service.
Who advised you your idea isn't going to be successful and why didn't you listen to them?
- Well you can guess what these are!
The only ones who say this will not be successful are those invested in systems than can be passed by. As for advice, we took our own success mechanisms and levelled them at online travel market dynamics.
Essentially, GHX is a GDS and marketing extension of what Magnuson Hotels was and is for independent hotels. We are just executing tried and true strategies into another sphere.
What is your success metric 12 months from now?
If owners and consumers are happy, then we will be all good.
By this we mean, complete hotel and guest satisfaction with our service. In the larger sphere, providing something every hotel in the world can and will use, as well as a channel any traveller can trust and save with.
We do not see any down side in everyone using GHX.
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NB: TLabs Showcase is part of the wider TLabs project from Tnooz.