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Finding a third way

February 18, 2013

(Published in TTG 03.10.12)

A new “post-booking” sector is emerging to help holidaymakers auction off their unwanted hotel rooms online – but what does this mean for travel agents? Matthew Parsons reports

Peer-to-peer websites have been around for a long time; originally notorious as being the scourge of the music industry, they are now developing into serious, and legal, business models.

In live music entertainment, there are a growing number of websites being created to facilitate the trade of tickets between users online, such as stubhub.com, where concert ticket holders auction off their tickets. Now this post-purchase or “third step” – after the first step of research and second step of purchase – trend is spreading to the hotel sector, in particular in the US.

Now one Spanish start-up, Hall St, is aiming to offer the “the first free market of hotel room reservations” in the UK.

Hall St founder Alfredo Ouro says the idea came to him after he booked an early-bird hotel room, but then his plans changed and he lost the holiday. As a result he “lost a lot of money” – and the Hall St concept was born.

“A hotel room booking is a perishable good; once it gets past a certain date, it expires,” Ouro explains. “In the current model, the hotel has all the risk. That’s why the hotels will always experiment with new distribution models. They have high distribution costs, when paying commission. It’s becoming more dangerous for hoteliers.”

Hall St connects to hotels via a channel manager, directly, or via an XML feed.

People who no longer want their hotel room, for whatever reason, can use Hall St to auction off their room (see above), setting the price (which cannot be higher than the original, in order to deter touts), and then accepting, or refusing, different bids.

Hotels also have the option of buying back the room, so they do not lose out. Hall St itself makes money by charging users a commission on each room sold. But can agents get in on this “third step” – or are they merely being side-stepped?

Ouro says while Hall St is designed to allow consumers to auction off these unwanted rooms – or even donate them to not-for-profit organisations – the model does allow room for travel agents too. Hall St is already trialling a B2B version with a Spanish agency, and aims to soon open London office. “The UK is a key market for us, due to the electronic culture there,” he points out. “And travel agents need new and innovative ways to grow. They can grow in two ways: by selling more, or by selling better.”

The Hall St system can also integrate this “secondary” market of re-booked hotel rooms into normal room bookings, allowing the agent to book several nights for cheaper rates. This would appeal to agents dynamically packaging holidays.

Hall St officially launched in February 2012, launched its mobile app in April, and has already built up a portfolio of 5,000 hotels. While the start-up will rely partly on social commerce (whereby users sell goods and share the news via social media), the focus will be on getting hotels onboard, and then concentrating on geographical areas to gain critical mass. First Barcelona, then London, Ouro predicts – and in five years it aims to have 15,000 hotels in 112 cities, and five million users.

“There are four trends appearing: cash is king; dealing is cool; buy right now; and peer-to-peer – and more services are developing from this point of view,” Ouro says. By tapping into peer-to-peer technology, Hall St could be heading in the right direction – but success could depend on whether the UK travel trade chooses to embrace this new “post-booking” market.

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