Tech Startup: B2B Booking Platform Provides Pathway to Lower Rates
One-stop shop, Hotel Engine, offers travel benefits and great prices, appealing to business customers big and small
FOUNDED: November 2014
INITIAL LIGHT BULB:
As the founder of Denver-based Travelers Haven, Elia Wallen built a business around long-term housing solutions for corporate clients. But most business travel involves shorter trips than Traveler Haven’s 30- to 90-day focus, so he started a second company to focus on stays as short as a night based on customer demand.
The premise: Hotel Engine fills a gap in the booking market. “Small- to medium-sized businesses don’t really have any negotiating power when it comes to hotel rates,” says Wallen, Hotel Engine’s CEO. “They’re getting the same rates consumers are.”
IN A NUTSHELL
In lieu of B2C portals like Kayak and Expedia, Hotel Engine’s B2B booking platform offers a “pathway to lower rates,” Wallen says.
Available by request, an invitation allows companies to access Hotel Engine’s free booking system and enjoy wholesale-level pricing. “We are on average 26 percent below public rates,” he says.
It’s not reinventing the wheel, he adds, but rather porting a proven model to a new market. “It’s very similar to Hotels.com,” Wallen says, noting that the business model is commission-based. “We make money per booking.”
The market is responding in a big way. In three years, Hotel Engine grew its customer base to 12,000 businesses and 120,000 users and its staff to about 40 employees. Revenue grew 303 percent from 2015 to 2016 as business users and bookings grew by 475 percent and 563 percent, respectively.
After initially focusing on smaller businesses, Wallen realized Hotel Engine could be offered as a benefit to employees of large corporations. “We developed a perk page and a sales pitch, and it grew pretty quickly,” he says. After launching this initiative in 2016, about 20 Fortune 100 companies are now customers, including Ford, Pepsi, General Mills and Tesla.
Denver-based Modern Market was an early customer. Before turning to Hotel Engine, the company was “rewriting our hotel policy every few months,” says Rob McColgan, co-founder of the 26-location restaurant chain.
As Modern Market opened eateries outside of Colorado, traveling employees used consumer booking sites. “They had to book them and pay for them and get reimbursed,” McColgan says. “It was very fragmented and difficult to manage.”
Conversely, Hotel Engine “is a one-stop shop where we know people are getting great prices,” he says. “It allows our teams to book on their own and not have to pay.” Savings are “tens of thousands of dollars.”
Another Denver customer, Booyah Advertising, started using Hotel Engine after trying other solutions that didn’t offer a comparable combination of pricing and reporting features. Rates are “15 to 20 percent better than a layman and 2 percent better than a good shopper,” CEO Troy Lerner says.
Booyah also lets its 80 employees use the system outside of work. “I’ve opened it up as a perk for personal travel,” Lerner says, noting that it gets more use in that area than it does for business bookings.
Wallen says Hotel Engine continues to improve the platform. The company recently launched a rewards program, and an auto-rebooking feature is in the works. “If we find a cheaper rate, it will automatically cancel and rebook,” he says.
Hotels are a huge, worldwide market. “It’s hundreds of billions,” Wallen says. “We’re now in most major countries.” In 2018, he adds, “We’re going to continue to expand our territory.” Beyond the Denver headquarters, Hotel Engine has a small office in New York and is looking to open international sales offices.
Wallen self-financed Hotel Engine’s startup. “No outside investors,” he says. “It’s currently not on the schedule. We’ll grow for as long as we can [without outside capital].”