Room 77, the hotel metasearch startup, sent a letter today to its shareholders saying that Google is licensing its booking software, according to a story first reported by Bloomberg News.
The move suggests Google is moving into fulfillment, not just search. Google will be able to bolster its Hotel Finder metasearch tool as a result.
CEO Drew Patterson confirmed the story to Tnooz.
The startup will keep its consumer brand. Yet the company's "primary focus" will be CheckMate, a B2B service for hotels to manage mobile bookings, that it acquired last year.
"Think of it as a platform that enables communication between hotels and their guests and helps them to be able to communicate across any distribution channel, no matter how or where the guest is transacting."
What will change? Patterson says:
"Part of Room 77's engineering team will join Google as part of the deal. We'll continue to operate our branded website and apps for consumers.
More than anything, the fact that we could license it to Google speaks to quality of the platform we built."
Why did Google enter this licensing arrangement? Patterson says:
"Aside from the fact that our technology is awesome? Two things.
The work we've done around price comprehensiveness, is number one. We routinely come up with lower prices than other search engines do.
We index more sources for availability. We're the only one going to tens of thousands of hotels to make sure availability is real.
Given the rising occupancy environment post-recession, this makes our product more reliable than what others are offering.
Second, we do brand-to-book. It's easy to complete the transaction, and there's no bait-and-switch in the consumer's mind. Other metasearch companies have struggled with direct booking.
Consumers get frustrated if they run a search and think they're booking with the property they want but end up at another third-pary site.
We're really fired up. It's a validation of our investment in our brand, which we'll continue to invest in."
The company will lose to Google Calvin Yang, one of its co-founders, plus "many" of its engineers.
The company has raised $43.8 million to date.
UPDATE: One theory behind the licensing deal is that many hotels balked at Google's connectivity requirements for Hotel Finder, and that Room 77's technology removes that technical hurdle.
More at Bloomberg News.