An exclusive Hotelemarketer.com interview with Michal Wrobel, one of the co-founders of Treovi, a recently launched hotel distribution initiative that is causing industry buzz with a unique value proposition for hoteliers…an end to OTA commissions!
[JJ] Treovi has been actively driving buzz in the industry with its promise to eliminate OTA booking fees…can you tell us a little more about your project and what hoteliers and consumers can expect?
[Michal] At Treovi, we believe a disruption was needed in the hotel reservation industry. I think the first question we have to ask ourselves, is: what is the main driver of OTAs? It is the commission system, which is related to a business model that has absolutely nothing to do with web 2.0 and Internet today. OTAs simply used the system that applied to physical travel agents and put it online. Similar happened for classified ads. Now, users can place their ads online for free… same change should have happened in hospitality online. It didn’t. In fact, it even got worse, the position of OTAs is now more and more controversial regarding the tools they use to drive bookings. We can’t really blame them, this is business, although some of the methods they use made hoteliers feel as being hostages of a system they are fed up with. Currently, online products and services available to the travel industry are deliberately reinforcing the old commissions system. We believe it has to change, and one simply can’t do it without disrupting the whole business model. This is what Treovi is about. Hoteliers are able to sell their room nights for free. Forever. We provide them with a fantastic “extranet” interface – we call it hotelier admin panel. We also provide something called “Treovi Hotel Profile” to which a hotel can setup a custom URL in the form treovi.com/hotelname (where hotelname is the chosen by the hotelier), and on which you can book directly a room, without using our search feature. Consumers can expect great interfaces, social media integration, and a lot of surprises. I will come back to that later. Upcoming soon are the mobile app and optional products and services, based on a freemium model.
[JJ] Treovi is a curious name…is there a story behind the choice?
[Michal] It is original and it relates to travel, doesn’t it? There is no particular story behind the choice, but to us it sounds better than bookhotelrooms, traveltohotels, hoteltrip, and similar, which are really generic.
[JJ] So what does the Treovi team look like and how did you come up with the idea? What is your vision for the project?
[Michal] Treovi was founded by four people. All of us are specialized in different areas: design, marketing, coding and programming, strategy and new markets entry, finance and hospitality. I think that answers the question how we came up with the idea. Anyone from the hospitality industry is aware of problems with the commission-based model, and thought at least once “what if selling rooms could be free?” We have a long-term vision, but of course it depends on how fast we will be scaling hotels. We are also focused on mobile travel, as it becomes increasingly important each year.
[JJ] Going commission-free and not passing along the cost to the consumer will mean you’ll need to monetize in some way down the road…does this mean that while hotels won’t pay commissions, they’ll end up paying indirect costs like on-site PPC, display advertising and sponsorship in a bid for visibility?
[Michal] You made some right guesses there. We are going to introduce services that will be based on what you have mentioned, but not exclusively. Although one very important thing has to be highlighted here: all services will be optional. If a hotel doesn’t want to use them, it will be able to sell its room nights for free, forever. We are going to introduce also several optional products, that we believe will change the way users reserve hotels online – and that will make them save money. We believe many new possibilities will appear from the moment hotels don’t have to pay commissions on room nights.
[JJ] What’s the consumer value proposition? Why switch from established OTAs and big brand intermediaries? How does the Treovi team plan to build a consumer / fan base that sticks around and keeps coming back?
[Michal] Treovi is planning on adding a social dimension to the booking experience. We are going to introduce user accounts very soon and we have followed travel-related startups with great attention and have drawn conclusions from their use of social media integration. Mind it, Treovi doesn’t want to be a social network for travelers, although we want to give more interaction in reserving hotels and travelling – and stay longer on Treovi. User accounts will be connected to our Facebook app, so will be the mobile version of the website. We will also come with a social surprise next year.
[JJ] What do you believe are the key weaknesses of the major OTAs today…and do you plan to exploit these?
[Michal] OTAs key weakness is the commission-based business model. It is that simple.
[JJ] Search remains a massive opportunity and battleground…paid search is quite expensive, while natural search rankings require lots of time & effort. What’s Treovi’s take on the search space and its importance for the business?
[Michal] This is a controversial topic. Its genesis goes back to the fact, that from the moment hoteliers were not satisfied with OTAs, they turned to alternative ways to sell rooms online (other channels). One of them is the hotel’s own website, which is a lost battle, giving the amount of money invested by OTAs in google keywords. It is clearly wrong. Now imagine, if a fraction of that money was spent by us to make customers aware of Treovi, and not necessarily spent on search.
[JJ] Distribution via social media and referral marketing are still nascent tactics in the industry…do you believe these will offer you some measure of success? Looking past weak “F-commerce” stats (supported by claims that users don’t visit social media sites to shop), do you believe social media networks offer a viable capture point for Treovi?
[Michal] As I have explained in the previous questions, social media is part of our marketing. Now, regarding the second part of your question, I believe people have high hopes regarding Facebook and overall social media, and still do not understand what it can be used for. While people are spending a lot of their time on Facebook, this doesn’t mean Facebook is a platform where they can do everything, even though Facebook wants to portray it that way to its business clients. First of, Facebook offers interaction with your contacts and with fan pages – recently they became simply “pages”, as fans became “likers”. It is a very useful communication and marketing tool at the same time. It helps to build awareness too, hence the rise of timeline applications, through which users can perform actions that go way beyond simply liking something. As for F-commerce, let me first bring you the businesses view: I think Facebook is moving too fast for traditional businesses to adapt themselves to the changes. Before timeline got introduced, smart businesses had “shop” tabs on their fan pages, but on the other hand many others were not aware you had to make a fan page, and not a user profile to show your business on Facebook. Now, after the timeline switch, the way to shop via Facebook is to create an f-app that allows users to do so. For a small business this is just insane, it simply cannot follow. For the user, Facebook helps to convert, but can’t be really seen as a commerce channel. My point of view is users have to be engaged to do shopping while doing something else on Facebook, and that is something not every business can achieve. For a better F-commerce, Facebook has to change, not businesses. Regarding other social media, Twitter is an excellent communication tool, and it seems that Pinterest is on the rise regarding conversions, I believe it is one of the most powerful social media shopping tools, at least in the US.
[JJ] What are the challenges you face scaling your hotel inventory? Are there plans to partner with popular hotel channel management solutions out there?
[Michal] As of this week we started working on our API to integrate channel managers. We estimate it should be ready within a couple of weeks.
[JJ] Launching a startup can be immensely tough and rewarding…would you have any words of advice to other entrepreneurs based on your own experience so far?
[Michal] Work hard until late, study the market, create many scenarios (it can always go wrong, it is good to have at least a draft for a B-option), strategize, think ahead of the behavior your clients/users can have… and believe firmly in your project.
Editorial Note: Treovi has just launched it’s 100% commission-free hotel booking engine to hoteliers in July 2012 and the public in early August. The travel startup is based out of Geneva, Switzerland and can be contacted at email@example.com or on Twitter @Treovi. The site is live at www.treovi.com. So far the team is focused on building its base of subscribed hotels, which will be vital to gaining traction with consumers in a very cluttered and competitive hotel distribution space. The team has also done a brilliant job of leveraging ePR to the site’s advantage…when marketing & ad budgets are limited, social media and industry PR buzz can be a powerful (and high performing) substitute for brand building and traffic generation. Wishing Michal and team the very best of luck with their new startup and OTA (a misnomer in this case?) / Hotel Distribution model…this one will be an interesting one to watch, as it scales and evolves. – JJ
The Treovi concept is going nowhere. They are re-inventing the wheel. Commission-free booking is like a free directory listing for hotels, something which already exists .There are thousands of free directories on the internet from which visitors can simply find a hotel and make a booking resulting in zero commission paid by the hotel.
The fact still remains that you get what you pay for. Commission-driven advertising is more aggressive, competitive, and creative because of the financial rewards, and it will always reach a wider audience that Treovi can only dream about.
The second fact is that there is no free lunch, there is nothing for free in this world. A company whose goal is not to make profit will not survive. If you look at Treovi, it looks attractive to hotel owners because there is no commission fee for them, but it’s not attractive to a traveller or visitor.Treovi will have to make a case to a visitor on why it’s better than established and trusted booking giants like Booking.com, Expedia and TripAdvisor.Predictably, it’s a futile case.
Since Treovi free booking is no different from a free directory listing, it means hotels will not get much exposure. In the end, hotels will be required to pay to get the top spot, which is no different than using a commission-based OTA. It also means hotels will stick to proven methods of getting a consistent flow of clients i.e. making use of OTAs, affiliates and PPC.
In the end, only the one who is making money will survive and win, and Treovi is a company that under-estimates profit making.
OTAs will always be there, because they do what they do best – marketing and attracting customers. It also goes that hotels that make use of OTAs, affiliates and PPC will always be ahead profit-wise that those who don’t.