Roomer, the secondary market for non-refundable hotel reservations, has received a $5 million Series A equity investment round, led by venture fund Disruptive.
Also participating was BRM Group, which led the previous $2 million seed funding of Roomer.
The Israeli startup has been getting its inventory into more metasearch websites. It is already live with HotelScan and HotelLook.
It's about to go live with Skyscanner. It is in testing with Google Hotel Finder.
It aims to outpace rivals like Cancelon in user acquisition. It is far ahead in funding.
Proof of concept
When the startup launched, some critics in the industry were skeptical that a secondary market in hotel cancelations could work.
But CEO Gon Ben-David--the CEO who co-founded Roomer in 2011--says his team used the seed funding round to prove that the concept is effective.
He wouldn't disclose key metrics, but did say that markets in key cities were functioning properly, with typically enough supply and demand to be compelling.
"One way we measure our value is by the rising saleability of rooms on our platform.
We can share that the average customer's likelihood of re-selling a room in Las Vegas on any given night is about 70%. For a room in New York City, the chance is about 50%."
Ben-David says that about one in five users are coming through mobile, even though the company hasn't done mobile marketing. The new funding round could help with optimizing the rising demand for last-minute bookings.
Word-of-mouth marketing has been important. About one in four users share on social media about their Roomer experience, the company says.
The company also enjoys favorable cross-marketing, such as with a blog post last week from bus metasearch site Wanderu.
Supplier benefits
Ben-David says his startup's offer to suppliers is "pure value, mathematically."
"The one thing revenue managers care about is RevPAR, or revenue per available room. We increase that and the occupancy rate, too.
We don't charge any commission--which is very different from what every OTA does.
Our managing director in US is Richie Karaburun, former president of Kuoni's GTA and is well known in the industry. He would love to be in touch with any supplier."
Beyond leisure travelers
Most of the buying and selling of rooms--similar to a market in re-selling concert tickets--is done by individual travelers. But Roomer sees more and more meeting and convention planners uploading inventory, a trend it plans to encourage.
The startup is also testing business travel options for some small businesses with lightly managed programs.
Roomer thinks that the opportunity to use the same budget outlay to get what may often be a nicer room than what's available for retail on an online travel agency will appeal to corporate travelers.
Looking ahead
The secondary market for hotel reservations could be large. Ben-David claims that every day, more than 200,000 rooms are canceled in the US alone.
Other potential verticals that might someday have thriving travel resale markets include vacation rental stays. The cruise industry has so far resisted such markets. Airlines have resisted, too.
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