JS 91: Reselling Non-Refundable Hotel Rooms with Richie Karaburun Managing Director of RoomerTravel.com

January 6th, 2015 by Jason | Comments Off on JS 91: Reselling Non-Refundable Hotel Rooms with Richie Karaburun Managing Director of RoomerTravel.com

Richie_Karaburan

Got a non-refundable hotel reservation that you have to cancel? Now, rather than wasting your money on an empty hotel room you can’t use, Roomer Travel has been set up as an online marketplace for exchanging unwanted hotel rooms between buyers and sellers. In today’s Jet Setter Show, Jason Hartman talks to Roomer Travel’s Managing Director about the company’s origins, how it works and what sets it apart from other travel businesses.

 
Key Takeaways
01.11 – Roomer Travel is a unique marketplace aimed at saving you money in the event of non-refundable cancellations.
05.03 – Having to negotiate a hotel’s cancellation policy can be tricky, but checking is worthwhile.
07.50 – Find out how it works for yourself at www.RoomerTravel.com
09.42 – Recommend Roomer to a friend, and when they make a booking, both of you get $25 credit.
11.40 – One of Roomer Travel’s great selling points is the ease of access to hotel information.
14.02 – It looks like there are opportunities for Roomer to branch out into wider travel sectors, so watch this space.

 
Mentioned in this episode
www.RoomerTravel.com

Tweetables
Think about it – how often have you cancelled a hotel room and still had to pay for it?
Roomer Travel is unique in its efforts to help out fellow travelers.
If you’re looking for the eBay of travel, look no further: Roomer Travel.

 
Transcript

Introduction:
This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit www.HartmanMedia.com

Welcome to the Jet Setter Show, where we explore lifestyle-friendly destinations world-wide. Enjoy and learn from a variety of experts on topics ranging from up-scale travel and wholesale prices to retiring overseas, to global real-estate and business opportunities to tax havens and expatriate opportunities. You’ll get great ideas on unique cultures, causes and cruise vacations. Whether you’re wealthy or just want to live a wealthy lifestyle, the Jet Setter Show is for you. Here’s your host, Jason Hartman.

Jason Hartman:
It’s my pleasure to welcome Richie Karaburan to the Show, he is the Managing Director of Roomer, and an experienced travel industry executive and destination marketing expert. This is a unique business model, and I think you’re going to like it. It may save you some money in more ways than one! Richie, welcome, how are you?

Richie Karaburan:
Hi, thanks Jason, thank you very much. It’s good to be here.

Jason:
It’s good to have you on. So tell us a little bit about Roomer and what makes it unique? It really is a unique idea.

Richie:
Yeah, definitely. Roomer Travel. We’re a marketplace – we are not like an online agency, we are a marketplace where people who are stuck with non-refundable hotel rooms can actually sell their rooms at the price that they agreed to, and our sellers can actually come in and find a good deal. We’re actually facilitating both sellers and buyers meeting, and in this case, we say we are all about good karma. Every day, tens of thousands of people cancel their hotel room reservations and they’ve got stuff having to pay for an empty room somewhere across the world.

Jason:
That’s one of the things I just immediately questioned when I heard about this business model – how big is the marketplace for this? I just can’t imagine it’s very big. I don’t know that I’ve ever cancelled a hotel room that I had to pay for. I have cancelled rooms, but one way or another, I got out of it and they let me off the hook.

Richie:
That’s because you’re one of the lucky ones. 30% of our overall reservations, in many cases, are non-refundable. It’s a new concept where hotels are actually dealing with last minute cancellations – they offer consumers two different types for one same room. One is the non-refundable, advanced purchase rate, which is generally 15-20% cheaper than the flexible rate where you can actually cancel at the last moment. Based on our research, it’s about 81 million rooms per year in the United States are canceled and paid for. That’s the market we are after.

Jason:
That is a huge market, but I would like to get a comparison. What is the total number of room nights that are booked? If there’s 81 million canceled and paid for, how many are there? What’s that out of?

Richie:
That comes up to 5% of the total room nights, so around 5.2%.

Jason:
Well, that’s a pretty big market, and this is what I love, Richie, about these new Internet business models. They’re really taking all of this dormant supply of so many things in our world, and putting it to good, constructive use. Roomer does that, Uber does that, Lyft does that, AirBnB does that. There are just so many ways that bright people have figured out a way to use all of this dormant supply of everything in the world. It’s wonderful, it really is.

Richie:
You’re right, Jason, all the names you mentioned, it’s all about peer to peer marketplaces. It’s all about collaborative consumption, and especially the new generation, the millennials – it’s all about good karma and a sharing economy. In this case, it can easily go to big online travel companies where you make your bookings, but in this case, when I joined this company, the first question I asked was “What problem are we solving?”

You’re right, and in order to make a difference, we need to solve the problem. The biggest problem here is for people who are stuck with their reservations, and that’s why our goal is to make travel tradeable and exchangeable. Just like you would sell something you don’t need on eBay – that’s what we call it. We are kind of an eBay for travel. Why not sell something that you’re not going to use and have someone else actually take advantage of the low rate? You recoup some of your money – not all of your money – and the buyer actually gets the best deal which he or she otherwise wouldn’t find.

Jason:
Yeah, absolutely. So tell us how it works and how much one might save on both sides of the equation – save by getting rid of a room you can’t use. Most hotels, I don’t know, it seems like their cancellation policy is that you can cancel on the same day before about 5 or 6pm, but I’ve noticed with some of them that they have a 4 day cancellation. It’s not like an airline. Even 4 days isn’t that terribly onerous, but first of all, what kind of cancellation policies are you seeing from hotels out there? What do I do if I have a room I want to sell or exchange?

Richie:
Sure. Normal cancellation policy is either 6pm or 24 hours prior to the arrival date, but more and more hotels, based on their occupancy rate, based on the travel trends have cancellations from 3 days to 5 days or even 10 days. In fact, it happened to me on the last trip that I booked in a resort destination in the Caribbean, I didn’t realize that after I booked and I’d seen the little notes where it said “This room becomes non-refundable within 21 days of arrival.” Resort destinations have even stricter cancellations with 7-10 days cancellation. It is getting more and more popular because now with the metasearch companies like Kayak and Hipmunk, and people are actually able to search. It’s a lot more transparent so people can book and cancel any time. This cancellation really works with hotels, and they’re offering a stricter cancellation because they’re giving them lower rates versus the flexible rates.

We tell people that if you can’t make it, you can always Roomer it. If they call the hotel, if the hotel doesn’t actually refund the money, they can always post it. It’s free to use Roomer. We actually charge 15% to the seller once we sell the room. Once the person who’s actually stuck with the hotel reservation (we call them our sellers), they can post their rooms free of charge, they can name their own price. Once they validate, we open this for sale, and once we’ve sold it, our buyers are actually paying Roomer, and Roomer then pays the seller, minus 15%. Everything is seamless, and in this case it’s good karma because the buyer can get up to 47% off, and that’s our average offer based on the current market rate.

Your audience can go to www.RoomerTravel.com and they can see many deals in some hot destinations anywhere from 20% all the way upto 80% discounts. It’s all up to how motivated the seller is to sell the rooms.

Jason:
But what about selection? Again, this is only 5% of the market. I really like HotWire and I’ve used it quite a bit, and they gave me a VIP membership, which is nice because it gives you some privileges – you don’t have to be totally stuck to their exact rules, which is nice sometimes. Sometimes, even on HotWire I can’t find a room I want.

Richie:
Exactly. Mind you, if you book with HotWire rooms, many of their rooms are non-refundable. Once you’ve paid HotWire, you can’t actually cancel it.

Jason:
Right, so with Roomer, you do know the hotel, right?

Richie:
Exactly. You do know the hotel. When you actually look at www.RoomerTravel.com, you can sort out based on the destinations. In order to make it easy, we have general hotspots in addition to last minute deals or amazing deals, and we have the Discover Cities like New York, Paris, Las Vegas, San Francisco. Those are obviously our top destinations based on our Roomer travelers. We have hundreds of thousands of hotels, and this is a global marketplace – it’s not just that you can post a room anywhere in the United States; you can actually see rooms all over the place, including Thailand and the Philippines and Turkey and Greece and Italy. We encourage everyone to sign up at Roomer and like us on Facebook. In fact, we have our ongoing promotion as a $25 credit if you refer to someone and if they book, you get $25 and they get $25 credit, in order to increase loyalty.

Jason:
How many rooms would I find in, say, San Francisco or Las Vegas, for example, if I want to stay there this weekend?

Richie:
Hundreds of hotels because we have different inventory sources and not only peer-to-peer inventory; we also work with some of our meeting planners and event organizers. When they have excess inventory, they used Roomer. We call it a Roomer Partner Network where if their meetings are cancelled, they get stuck with a lot of group rooms – they can actually use Roomer as a distributing channel as well.

Jason:
Okay, good good. Oh, so the hotels use it too, then?

Richie:
Some of the hotels are using us when they have cancellations and they actually use us. We are basically just a platform for whenever they want to use is. In the key cities, which are the general hotspots, you can definitely see hotels. I’ve just checked while I’m talking to you – in Las Vegas what we have online this weekend is rooms anywhere from $87 for 4-star hotels to $109 for 5-star hotels. This is just this weekend. You can search and find the best hotels for your budget.

Jason:
Good, because I know that either of those rooms you gave an example of in Las Vegas this weekend would easily be double the price.

Richie:
Oh definitely. In exchange, you can see certain market rates, and we give that rate just to give some comparison so our users can see what the going market price is versus the Roomer price. We have the TripAdvisor ratings as well, so if they’re not familiar with the hotels, they can actually read it so they don’t have to log in to different sites. It’s all in one simple booking process.

Jason:
Fantastic. When did Roomer start? How old is the company and who’s behind it? Is it just a start-up or does it have some big company behind it?

Richie:
We actually started about 2 and a half years ago. The company is based in Tel Aviv and we opened the New York office a year ago. It started with two very intelligent co-founders, and then we got the venture capital-backed company, and one of our board members is the owner of Waze. Many of your listeners will know that Waze is a goods application, kind of a social GPS. Google bought Waze for $1 billion. The owner of Waze is in our board, as well as some well-known hotel investors as well as some private equity firms. We are a heavily funded company. It’s about 3 years old.

Jason:
Fantastic. Well good stuff, anything else you’d like us to know about Roomer?

Richie:
Definitely. We would like your listeners to go, whenever they want to travel, and check with Roomer Travel first. It has stuff like New York, Las Vegas, Paris – you’ll be kind of guaranteed that they actually will find great rates, in addition to some other destinations as well. As we say, we are all about good karma. We are not all about transactional travel. You’ll see Roomer users and when they read testimonials, you’ll see how we actually help and solve problems to our users. Definitely like us on Facebook to get our specials and if they find our promotions section, they can get $25 Roomer credit and their friends can get $25 as well for their first booking.

Jason:
I so wish you could do this with airlines. Just out of curiosity, I’m sure that thought has occurred to you – and with cruise ships as well. Do you do it with cruise ships?

Richie:
It’s funny you mention it. I didn’t want to mention that, but it’s our phase two. We are looking at cruises. There is a name-change fee for cruises – anywhere from $150-250. However, when you book a cruise of $2000 and if you didn’t buy any insurance, which to my surprise, many people who buy cruises don’t buy insurance! We are definitely looking into the cruise industry as our phase 2 because our vision is that we want to be the biggest marketplace for travel. We want to be the eBay for travel, so where people can actually find cruises and ski packages and hotels. I wish too that we could do this for the airlines – I am hoping that one day that will happen as well.

Jason:
What is it with the airlines? Is that just seemingly like an insurmountable problem with the airlines?

Richie:
I think it changes with airlines where they would be a lot more flexible, even doing the name-change fees before September 11th. I think September 11th changed some airlines and they went above and beyond in terms of security. Some don’t even allow the name-change for the airline tickets. I am hearing that some airlines are thinking of that, as long as you can keep your return fare. There’s always a change fee, and you’ve got fare differences as well.

Airlines are a little bit more complicated, just like they always have been. It is complicated, and I know some consumer groups are working, lobbying in DC for that to happen so that this can be as easy as the hotels and you can add a name and change a name and everything. We’ll see. That remains to be seen.

Jason:
Well hey, thanks so much for joining us, I appreciate it.

Richie:
Thank you very much, take care. Thank you for having me.

Outro:
This show is produced by the Hartman Media Company, all rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com, or email [email protected]
Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own, and the host is acting on behalf of Platinum Properties Investor Network Inc. exclusively.

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