Coming out of beta today, Rocketmiles is a Chicago-based startup that lets travelers earn frequent flier miles in major airline programs when booking hotel stays through its site.
The site has been in beta since January, and says that in its three months of testing its customers received, on average, awards of 3,500 miles per night. It says its hotel rates are competitive with what online travel agencies list.
The company plans to make separate fundraising announcement several weeks from now and it is rumored that it will be substantial.
Rocketmiles has a transactional revenue model where it earns margin for each hotel booking. It is the merchant-of-record, allowing it to handle all customer service in-house instead of using affiliates.
To date, it has partnered with five major US airlines: American, Delta, United, US Airways, and Hawaiian.
Like HotelTonight, Rocketmiles has only a handful of hotels available in 15 major US cities, such as a maximum of eight properties in Boston on any given night.
Its co-founders are serial entrepreneurs Jay Hoffmann, Kris Helenek and Bjorn Larsen. Hoffman, for instance, led the partnership business at United's Mileage Plus.
The startup has a 14-person team.
It says an international expansion of hotels and airline alliances is in the works.
Q&A with CEO Jay Hoffmann:
Describe what your start-up does, what problem it solves (differently to what is already out there) and for whom?
Our customers’ core need is to save up miles and points to enable incredible vacations. Currently, the fastest ways to accumulate miles are by taking flights and using credit cards.
Rocketmiles offers a fresh way to earn miles. also created an incredibly simple user experience, with a limited number of premium hotels, and a meaningful mileage incentive on every booking.
Why should people or companies use your startup?
Hotel partners are able to generate demand from premium customers for inventory that would have otherwise gone unsold — without weakening the brand through public discounting.
For loyalty program partners, we will also become an attractive source of ancillary revenue as we purchase miles from these partners.
Other than going viral and receiving mountains of positive PR, what is the strategy for raising awareness and getting customers/users?
We are very excited about entire mountain ranges of positive PR, but recognize the need to identify additional ways to get the word out.
Responses to our private beta were incredibly compelling. In particular, our refer-a-friend program--where each party received 1,000 bonus miles for the first booking—has already proven to be a high-performing channel.
We founded the company with a desire to help people vacation faster and go farther. There are so many incredible startups that focus on travel inspiration, but not so many that help provide the fuel for those trips.
If we are successful, we’ll help millions of our customers reconnect with their friends and family.
How did your initial idea evolve?
In some ways, I’ve been working on this idea my entire career.
My first job after school had me on the road 4 days per week and saving up tons of miles to fund an epic trip to Nepal.
Later, I led the partnership business at MileagePlus, helping people earn miles through credit card, shopping, dining and other products.
Finally, my time helping build e-commerce at Groupon offered first-hand exposure to the power of a curated approach to e-commerce.
We have adopted a lean/agile approach to the business, so have been letting the data tell us where to focus our energy.
There have been no fundamental pivots, but I couldn’t have more confidence in our development team who have built a robust platform that will allow us to move quickly and add new products.
Where do you see yourselves in 3 years time, what specific challenges do you hope to have overcome?
By then, our travel partners will consider Rocket the very best place to find premium travellers.
By then, we would like to have enabled one million vacations using currency earned via Rocketmiles.
The average user could earn about 80,000 extra miles a year. That's the difference between celebrating Mardi Gras in New Orleans and celebrating Mardis Gras in Rio, a beachside cocktail in Miami or one in St. Tropez, a trip to play golf at Pebble Beach or a trip to both Pebble and Torrey Pines.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
We think there are two market opportunities.
First, booking travel is more complicated than it needs to be. We think new businesses can emerge to simplify that booking process with clean, simple user experiences. HotelTonight provides great reference design for this philosophy.
Second, we believe there is a mismatch between “Inspiration” and “Funding” of those trips. We would love for consumers to identify their next adventure via Pinterest, Jetpac, Hopper or Fotopedia, then turn to Rocketmiles to help get there faster.
Tnooz view:
Rocketmiles looks solid on paper. Its co-founders complement each others' backgrounds on the key points of marketing, technology, business development and managing the product road map.
They also have a solid set of advisors, including Scott Hintz, Drew Patterson, Evan Konwiser, and Jere Doyle.
Concern number one is how they plan to acquire consumers. Their target customer is probably booking on OTAs or through managed corporate travel channels today.
How will they reach these customers at scale? It's unclear.
As for acquiring hotels and airlines, it may want to focus on trying to achieve a balance of not becoming too "strategic" or "core".
Hotel bookings make up a roughly $50 billion market in the United States, so even taking a small fraction of that market in a profitable way would be a viable plan.
Red flag number two is how the company plans to outmanoeuvre PointsHound, a startup launched earlier than it, in October 2012. [Tnooz profiled PointsHound, here.]
Focusing on a simple product and an intuitive user experience may give Rocketmiles an edge.
PointsHound has been covering its bases by offering two tiers of hotels, with more than 100,000 at a small amount of frequent flier miles and a top tier of a handful of hotels for which it offers large awards of frequent flier miles.
Will customers prefer its variety -- feeling that there's always a hotel wherever they want to go -- or will they prefer RocketMiles' more selective approach -- focusing solely on huge reward opportunities. Only market research will tell.
Hiring smarter is another way to counteract PointsHound.
Rocketmiles hiring decisions seem smart so far. For example, its head of marketing is Jason Haefner, previously director of online marketing and customer relationship management for Dyson.
Savvy marketing may also help. One way to generate ideas might be to storyboard a day in the life of the customer to figure out when and where to interrupt them.
NB:TLabs Showcase is part of the wider TLabs project from Tnooz.