Off & Away, an auction website for luxurious hotel suites, launched its website yesterday and its first auction -- for two nights in the Tata Presidential Suite at the Pierre New York.
The Seattle-based business, with $1.35 million in funding from Madrona Venture Group, which has funded Farecast, Amazon and VacationSpot, is the brainchild of co-founders Doug Aley and Michael Walton. Their resumes include stints at Amazon and Orbitz Worldwide, respectively.
Off & Away, unveiled with a presentation yesterday during the Startup Battlefield competition at TechCrunch Disrupt in Manhattan, is the latest entry into what some are calling the "alternative sales" arena.
The basic draw for Off & Away is that it auctions off stays in luxurious suites in upscale properties -- the kind of rooms most people wouldn't think of reserving even on their wedding nights. For example, the "rack rate" for the Tata Presidential Suite is said to be around $20,000 per night.
I'll explain how the auctions work -- but essentially Off & Away at its core is a hotel-booking website.
There's one winner for each auction and the winner will get an "absolutely insane deal," Aley, the Off & Away CEO, told the TechCrunch crowd.
"We're all about creating amazing experiences that you couldn't ordinarily hook up yourself," Aley adds.
OK, so here's how the auctions work.
Hotels offer a stay in their upscale suites and consumers buy bids from Off & Away for $1 a piece. Each time a consumer makes a bid, the price of the room being auctioned rises $0.25 and the auction time gets elongated. It's important to understand that consumers don't offer a particular bid price, but merely click "bid" and the price increases $0.25 each time.
For the last two hours or so, I've been watching the last "30 seconds" of the Tata Presidential Suite auction, which began, as of this writing, about 18.5 hours ago.
The bid price for the suite currently is about $375 per night -- and climbing. Each time someone submits a bid, the price rises $0.25 and the auction time gets expanded. And, each time someone submits a bid, they've spent another dollar.
Eventually, when the price climbs high enough, the last surviving bidder will win, and then the guest must book the suite at the winning auction price within 24 hours.
Then, with the fireworks over, Off & Away's core business kicks in.
All of the people who were attracted to the lavish accommodations -- but didn't win -- then have the option to book a room at the Pierre at a discount. Off & Away enables these consumers to place 110% of the money they spent buying bids toward a reservation at the Pierre, which is booked through Off & Away.
If consumers don't want to stay at the Pierre, then they can use 100% of the money they spent buying bids toward booking a room at published rates at any hotel through Off & Away, which provides customer service and is the merchant of record in the transactions.
Off & Away processes those transactions, and earns commissions, through a private label deal with a major online travel agency, which it declined to identify.
Users have seven days to book a room or to reuse their purchased bids.
In addition to the Pierre, hotel partners at launch include the InterContinental San Francisco, the New York Barclay, the Wynn Las Vegas, Thehotel at Mandalay Bay Las Vegas, and Affinia and Excellence Group Resorts properties.
One hotelier at the Off & Away launch party at the Pierre last night said he views Off & Away as a great marketing opportunity, with little risk and no up-front money, for the hotel. The property, he said, has plenty of suites available and can promote the hotel and attract bookings from auction losers by offering the suites a few times over the next couple of months during off-peak periods.
Off & Away officials hope the auctions will spur excitement about travel, and caution that the website is geared for travelers who were planning on taking a trip to the city in question anyway.
After all, if they lose the auction -- and there is only one winner per auction -- consumers have to book a hotel room or lose the money they spent buying bids.
Officials said their challenge will be to explain the auction process in a clear manner, and to provide enough value to ensure so that consumers don't come to view Off & Away as gimmicky.
Aley said Off & Away will run two or three auctions per day for now, and plans to expand beyond hotels into restaurants, event tickets and destination services.