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How an Israeli startup wants to help hotels up their online booking game during crisis

08/13/2020| 1:27:59 PM| 中文

Splitty has stood out from typical online travel services by offering “mixed rate” hotel deals.

Splitty, a Tel Aviv-based startup, has been telling hotels it knows how to raise their online booking game while boosting guest satisfaction. For a year-and-a-half, Splitty has been knitting together different reservation types to build the cheapest deals for consumers. But the company has had next-to-no marketing savvy and has remained a niche brand.

To help overcome its marketing gap, Splitty recently acquired the assets of Cancelon, a Boston-based company. Cancelon processed a half-a-billion dollars in hotel bookings last year thanks to its digital marketing chops. But pandemic-related losses bankrupted it in March.

Cancelon is the first worldwide marketplace where you can buy and sell unused hotel reservations.

The scale of the companies, which are both small, is less impressive than what the merger reveals about guerrilla marketing tactics in online travel.

Most price-comparison search companies, such as Google, Kayak, Trivago, and TripAdvisor, typically put their thumb on the scale in their ad auctions to favor an online travel agency quoting the best hotel rate. They do this even if the company lacks a big budget and can’t afford to spend more than giants like Booking Holdings or Trip.com Group.

Cancelon became good at guessing when metasearch ad auctions presented higher-than-usual chances of getting the best average return on the company’s digital marketing budget. It perfected a kind of ad auction arbitrage.

Having acquired that savvy, Splitty hopes to apply those techniques to help juice up sales under its brand. It will take until October to set up, said Eran Shust, CEO and co-founder of Splitty.

The under-booking crisis

Splitty has stood out from typical online travel services by offering “mixed rate” hotel deals. When a traveler seeks a booking across multiple days at the same property, Splitty pieces together a mix of rate types from one or more sources, which the consumer can book with one voucher. It claims it can provide offers for about a half-million properties worldwide.

In many markets and types of properties, the hotel sector faces a crisis in vacancies due to stay-at-home restrictions, border restrictions, and confusing signals by authorities.

Given that hotels face what you might call an “under-booking” crisis, or the inverse of overtourism, many might welcome any tool that can help put heads in beds affordably. 

But not everyone is convinced at the durability of the concept of split rates.

“From a revenue manager’s perspective, while for sure today hotels are looking for occupancy any way they can get it, I think a company like Splitty could be dangerous for long term profits, certainly,” said Kelly McGuire, managing principal of hospitality for ZS. “Customer confidence and value perceptions must also be considered with this or any other deal-seeking, third-party app.”

Splitty is considering adding to its mix of products Cancelon’s signature of letting consumers “resell” their non-refundable reservations but not until next year if it all.

A case in point is Tripadvisor-owned Tingo, a brand that had let customers track rates and rebook them if they dropped. Tripadvisor closed Tingo last year. Cancelon rival Roomer has raised $17 million to date but has yet to become a household name. On the other hand, startups like Airbnb, Hotel Tonight, and Hopper show that paths to global scale can be found.

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TAGS: Splitty | Cancelon | mixed rate
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