Imagine getting a room during second week of November at San Francisco's Parc 55 Wyndham in Union Square for $387 a night -- 24% off the $510 retail rate.
Or Miami's Four Seasons for $312, or a claimed 32% off. Or New Orleans's Omni Royal for $179, or a touted 34% off.
These are some examples of discounts that were recently available via HotelPower.com, a new online travel website focused on hotel discounts that's backed by a large Florida travel agency GTI (Global Travel International).
HotelPower requires that travelers become members before they can see the discounted rates, which it backs with a "low price guarantee." Membership is $50, though there is only a $5 fee for a 14-day trial.
Until December 1, memberships are free. Additionally, non-members can still see low rates after December 1 without membership through the public portal booking engine.
The new brand says its rates come with no additional booking fees or additional cancellation fees and that it has inventory with 400,000 properties worldwide.
HotelPower also offers freebies. Consumers earn credits, typically the equivalent of 5% of a booking cost, which can be used toward saving on valet parking, eating, drinking, wifi, spa, and other perks.
The benefits come from hotel agreements and contracts - they're guaranteed based on each hotel's specific freebies.
In one catch, the brand notes: "Oftentimes, because of the hundreds of dollars of savings and benefits, bookings will not be considered for a hotel chain's loyalty points program, supplier dependent."
Tell us how you founded the company, why and what made you decide to jump in and create the business.
Loyalty doesn’t exist in travel the way it should. We set out to create a company that put consumers in the driver’s seat when purchasing travel and getting the best deals so that travellers would develop trust, the key element of loyalty.
We knew that we could leverage existing buying power and relationships to benefit consumers in ways that current sites and deals providers were not able to.
Despite what some consider an overcrowding of hotel booking sites, we wanted to prove to consumers that real benefits exist both in front of the curtain and behind it – in a public site and a private membership club.
We give consumers the ultimate choice on how they want to save.
Size of the team, names of founders, management roles and key personnel?
Ten people, including Randy Warren and Michael Gross, who are co-founders. They are supported by staff who have other roles within the parent corporation, GTI.
Funding arrangements?
Using existing capital and infrastructure, estimated at $500k for launch.
Estimation of market size?
Global hotel sales for leisure and business combined are expected to reach 100MM in 2015.
Competition?
Many sites offer hotel bookings, but many are overpriced and don’t offer the types of benefits that Hotel Power offers.
Hotel Power competes with OTAS, corporate booking tools, flash sale sites, membership clubs and sellers of lodging inventory.
Revenue model and strategy for profitability?
We are member based so we look to membership fees and transactions from hotel bookings. The model seeks to actively grow the recurring membership base and secure bookings from members overtime.
What problem does the business solve?
We solve the pain of shopping around and guarantee the best savings unless you work for the hotel company. We aggregate the largest and most broad selection of deals and benefits for global hotel bookings.
Includes rates and benefits normally part of disparate groups and sites making it easy for travellers to be loyal and ALWAYS get discounts instead of sometimes or based on limited inventory.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
We are a membership based travel company and sought out to create another membership product that could really help people save money on their travel. As I sat down with by business partner of 20 years the answer was clear… Hotels.
The online hotel space has this thing called “pricing parity”. The thing is 99% of the rates you find on 99% of the travel sites are the same 99% of the time.
The margins on these rates are big, and our goal would be to slash these margins and pass it on to our members.
We then had to figure out how to do that. Fortunately, our company has access to incredible pricing and value added benefits on hotels, but we have always struggled to find a way to promote and distribute the inventory.
We initially promoted some of these deals in our email, social media, and by word of mouth. The good thing was that everybody loved the rates, but the problem was that our customers could only take advantage of these deals by calling into our call center and not book it themselves online.
We searched the industry for a technical solution, but no one could put all of the pieces of our inventory puzzle together to make it easy for the customer to book online.
We got burned by a couple of outfits early on that we contracted with to build out the project. Eventually we had our internal I.T. team hire and work with an offshore development house to build the engine from scratch.
It’s been painful, but we are now seeing the fruits of our labor. We also towards launch time decided to offer a public access area of the site with lowest rates, minus the membership benefits.
We wanted to extend our collective buying power into the lodging only space because we have only seen others tackle small pieces (flash sale, GDS only inventory, lists of culled deals only available for certain dates).
We set out to create the first public and private site combined so that travellers could make the distinction between room rate savings and extreme benefits that help save hundreds on every trip.
Why should people or companies use the business?
You are tired of overpaying for hotels and the things that make hotel stays even more expensive; food, bar, wifi, parking, spa, and related expenses.
What is the strategy for raising awareness and the customer/user acquisition?
a. PR for organic media coverage, radio
b. Advertising, cpc
c. Newsletter
d. Customer referral program with cash bonuses
e. Promotions and incentives with Power Bucks
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
We are a membership product so first and foremost we have to show the consumer there is a significant value for joining.
The online space is crowded and we will be vying for shelfspace, but we think our product is unique.
Our goal and struggle will be to continue to provide our members with access to steep discounts and benefits so they keep renewing.
We will also have to continue to invest in I.T. to keep up with some of the incredible technology advances that make the booking process easy and convenient.
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
a. Lack of loyalty
b. Distribution chaos and confusion forcing consumers to shop around
c. Hand-picked or limited selection vs. aggregated global deals 365 days a year, 24/7
d. Fees and extras that are passed on to consumers
What other technology company (in or outside of travel) would you consider yourselves most closely aligned to in terms of culture and style... and why?
We have great employees and a relaxed atmosphere and an innovation focused ethos. Since my business partner and I don’t have Jumbo Jets and a campus I wouldn’t call it Google, but we take great pride in being one of Orlando’s largest companies by sales.
Which company would be the best fit to buy your startup?
A large entity that wants a large and loyal base of customers who travel frequently and who consider travel the best use of their leisure time and disposable income. A large corporation who wants to secure and re-distribute rates to small and medium sized businesses.
An online player who wants both the negotiated contracts, the customer base and the technology that aggregates multiple feeds into a platform that gives consumers the most breadth and choice for 365 day-a-year unbeatable deals.
Describe your startup in three words?
Can’t-beat prices
HotelPower has created a Vine to capture its concept in 6 seconds:
Tnooz view:
One tried-and-true formula for a modest but solid business is the membership club.
A club segments an audience. That's necessary to persuade suppliers to give discounts without compromising rate parity agreements with other intermediaries.
It also creates a pool of more qualified buyers: If they've paid a fee, they're more likely to shop.
Clubs face a problem in the social media era, though. They have to figure out how to discourage members from sharing too much information with non-members about what exactly what's on offer.
Word-of-mouth is good, of course. But being too transparent is bad. The reason? It can lead to comparison shopping, which may compromise the delicate balance of exclusive rates or spark a price war among hotels.
It'll be interesting to see how GTI performs this balancing act with HotelPower.