TLabs Showcase on travel startups featuring US-based consumer hotel upgrade service Our Upgrade.
Who and what are you (including personnel and backgrounds)?
Our Upgrade gives hotels the opportunity to compete for business stays of ten nights or more.
Hotels match the guest’s allowable corporate rate and bid for the stay with perqs, points, food, drink, massages, golf, free weekends and other VIP services.
Our founder, Andrew Bate, was an analyst in the travel practice of a leading management consulting Firm, where he served many of the industry's leading companies on revenue management and loyalty program improvements.
More importantly, his colleagues looked to him for advice on optimizing their own travel to maximize the benefits from hotel and airline loyalty programs.
Andrew's favorite hotel upgrades have been at the Hotel Pulitzer in Amsterdam, The Westin Dublin and he always has a great stay at the The Westin Bundt Center in Shanghai.
He is surrounded by a team of technologists, travel agents and former hotel managers on three continents. Everyone works together to negotiate the best Upgrades for our guests.
What financial support did you have to launch the business?
We have an incredibly supportive and scrappy angel investor who has helped us get to market efficiently and affordably as well as strong syndicate of like-minded and forward-thinking friends and family.
What problem are you trying to solve?
Hotel loyalty programs reward loyalty decisions and often discount a guest's true value to a specific hotel. This is great for sales people with frequent short stays, but leaves frequent guests at a specific hotel under-rewarded.
Hotel managers are left rewarding guests who do not significantly impact meaningful operating metrics such as RevPAR, ADR, total revenue and profitability.
Our Upgrade allows hotels to easily identify and compete for their most valuable guests.
Describe the business, core products and services?
The Upgrade process is simple:
- Our guest tells us about their upcoming trip, preferred Upgrades and allowable corporate rate. We encourage colleagues to submit a combined Upgrade request to optimize their negotiating power.
- Our expert negotiators spend the next two days finding the best Upgrades from hotels that meet the guest's brand, geographic and quality needs.
- Our guest selects the best Upgrade offer. We book the stay directly with the hotel.
- We remind the hotel of the promised Upgrade the morning of the guest's arrival.
We find that guests highly value bonus points and free weekend certificates, and also appreciate an acknowledgement upon arrival such as a fruit platter or drink certificates.
Who are your key customers and users at launch?
Consultants love OurUpgrade so far. Based on our research, over 60% of consultants at the top firms can reserve their hotel through any reservation channel, and over 80% select a hotel based on the points and perqs they earn assuming the hotel meets their quality and geographic requirements.
Did you have customers validate your idea before investors?
We negotiated upgrade requests for over 200 room nights during our beta testing.
What is the business AND revenue model, strategy for profitability?
Our Upgrade is essentially a travel agency and we earn a typical travel agent commission for paid reservations.
Profitability depends on consistently delivering high-value guests to the hotels and offering superior service and Upgrades to our guests.
SWOT analysis – strengths, weaknesses, opportunities and threats?
- We leverage an arbitrage by matching price insensitive guests who are usually high food and beverage spenders with more of the perqs that drive their hotel selection decision in a low-cost way for the hotels. Both hotel managers and guests are happy with the reservation.
- We are a travel agency and the weaknesses of this model are well-documented.
- The aggregation of demand, even Our Upgrade's micro-demand of 10 – 60+ room nights, is valuable and creates significant opportunity, as Groupon and its peers are beginning to demonstrate.
Who advised you your idea isn't going to be successful and why didn't you listen to them?
- There are many powerful incumbents in the travel industry, especially the online travel agencies, traditional corporate travel agencies, hotel brands and distribution systems. We will likely be more successful through partnerships and collaboration rather than direct competition.
Nobody actually advised us against launching Our Upgrade. Guests who represent a meaningful volume of room nights already negotiate with hotels in an ad hoc manner.
We make these negotiations easier for everyone. At the same time, we certainly appreciate the challenges faced by an alternative corporate reservation channel as well as the operational difficulties faced by hotel managers when adding superior service to a guest's stay.
What is your success metric 12 months from now?
When hotel managers come to us with creative Upgrades they can offer affordably and effectively that uniquely meet the needs of the Our Upgrade traveller, we will be serving all of our customers well.
NB: TLabs Showcase is part of the wider TLabs project from Tnooz.