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Hotel Engine's Elia Wallen talks:
Hotel Engine, a no-contract, free-to-use corporate travel booking and management platform that raised $16 million in funding last fall, celebrated its fifth anniversary with a doubling of its executive team, the company announced on Thursday. It also relaunched its loyalty program this month, adding the ability for travelers to earn points in third-party hotel programs. Its database includes about 340,000 hotels in 185 countries. Hotel Engine CEO Elia Wallen on Wednesday spoke with BTN senior editor Donna M. Airoldi about the company's growth, weathering the Covid-19 pandemic and its future plans. An edited transcript follows.
BTN: What led you to start the company?
Elia Wallen: I have another company called Travelers Haven and recently stepped aside as CEO and appointed somebody new. We did corporate housing, so 90-day furnished apartment stays for healthcare travelers and doctors, primarily. Customers said, "Hey, can you book hotels for us?" I was reluctant for a few years. I told them I didn't understand how to create any value for them and how could we make any money. But they were persistent, and eventually we started to peel back a few layers of the onion and understand the hotel space more. And that is what prompted us to build Hotel Engine.
BTN: How does it work? What makes it different from other hotel booking platforms for corporate travel buyers?
Wallen: I didn't know much about the [online travel agency] world, and certainly didn't know anything about the [travel management company] world. We went into this thinking, what is the easiest way to work with businesses to reduce the most amount of friction possible and make it as convenient as possible? Probably some of the not knowing how things worked led us to a business model that has been very successful. It is low-friction, convenient, tries to remove as many hurdles for someone to work with us as possible, and provides a good booking experience with some of those tools that you see some people pay for in a lot of other applications. For us it was about simplicity and being straightforward and giving [customers] what they need to run their businesses more effectively.
BTN: The service is cost-free. There is no fee for membership, and you make your money by receiving a fee per booking from the hotels.
BTN: When you say members get a discounted rate, which rate is that a discount from?
Wallen: Our discounts come from any type of corporate rate that we are negotiating. It depends on the brand and the type of inventory at the time, whether it be distressed inventory that we are selling, or some incentive hotels are running with us that we can then pass through. The savings come in a multitude of ways. Obviously, one being that the platform is free, and saves time and energy. Then, depending on the inventory and the brand, we can pass through savings that are pre-negotiated with hotels.
BTN: How were you gaining corporate clients pre-pandemic?
Wallen: With no contracts, it's very easy to work with us. That's a part of it. But I think the bigger piece is that we don't consider ourselves a corporate travel company. We look at ourselves as more focused in the [small and midsize business] space. And we work with more essential industries. So, the white-collar travel that is the traditional corporate or business travel, that is not our bread and butter. We leave that to the big TMCs to go for. We are working with growing industries that have the unique need that is usually not flights and not rental cars as a part of their business model. Think about infrastructure, construction, energy, transportation, aviation. The larger industries that have kind of a boots-on-the-ground traveling workforce is where we focused and have found success.
BTN: I imagine that has helped you since the pandemic started, because a lot of those industries are considered essential.
Wallen: It has. We've been fortunate to partner with these companies in unique times. And I think because of where we are with things, the travel managers and travel coordinators that worked with us pre-Covid are extremely busy. I think this has allowed people the ability to maybe look at alternatives, different ways to do things while the general travel business might be a little bit slower. We have been able to onboard a significant amount of new business because I think this slower period, and as our clients are ramping travel back up, we've been able to come away with quite a few [clients]. The status quo is our biggest competitor. Getting people to rethink how they do things has been one of our strategies.
BTN: What trends do you see now regarding corporate bookings?
Wallen: We're seeing, coming out of the pandemic, as a whole our business is up about 120 percent year over year. But what we're seeing from more of our existing clientele is about 20 percent growth month over month since Covid. August was a big month for us. [It] was our best month of all time on our core business, and September is beating August. We're starting to see a lot of these businesses start to ramp back up. And that trend, we really started seeing it in July from an existing clientele standpoint.
BTN: Your company has about 25,000 corporate clients, is that correct?
Wallen: We have about 500,000 registered members that are individuals. Those primarily consist of travelers who are employees of these businesses. We have about 25,000 businesses. Not to be confused with what we consider active clientele. Not every business books every month. Overall registered businesses to date since inception is about 25,000.
BTN: What data are you able to provide your corporate clients?
Wallen: It's metrics on their own travel, but we give them insights on everything you could think of. [Average daily rate], what markets they travel most to, what markets even from a reward standpoint, savings, average nights booked, days to stay, a geography kind of heat map, what chains they prefer, where the overall organization books at the most, which brands.
BTN: Do you leave it to clients to see these trends and make changes to programs, or do you tell them, "We've noticed you're booking 50 percent more in Destination X. Would you like us to negotiate a better rate for you there?"
Wallen: We just hired a VP of data, Florent Silve, who has a lot of experience with machine learning. That will be part of his initiative going forward, to do more predictive and suggestive properties when [clients] go to book. To date, it is more passive data we provide, but that will be changing. We really want to get it to a place [where] we can somewhat predict what [a traveler] will choose and be most interesting to them and serve that up first to make the booking process a bit more convenient.
BTN: How has the company invested its $16 million in funding received last fall?
Wallen: We've been pretty fortunate. Frugality is one of our values here. We believe it breeds inventiveness and resourcefulness. We are not one of those companies that raises money and has plans to spend it all or burn it in the next year and raise again and raise again. … It has certainly allowed us to invest in talent. We've added four new members to our executive leadership team in the last six months. Three of the four have been in the last couple weeks. It's allowed us to go upmarket on talent. We've pretty purposely flown under the radar as long as we could, but we were starting to get constraints of people not knowing who we are. It helped with some visibility on the business. And certainly helped us attract more experienced senior talent. [The new executives announced Thursday include Silve as well as VP of sales Danielle Press, VP of product Valerie Dolejsi and VP of business operations Anoop Kumar. The company also plans to move into expanded headquarters offices in downtown Denver in 2021.]
BTN: How many are now on the executive team?
Wallen: It brings us to seven, count me as eight. We doubled the team.
BTN: What about the size of the company?
Wallen: One of our quotes internally is we don’t get points for headcount growth. We get points for results. There are key departments we will double, maybe triple or more than double at least, primarily around data, engineering, product and sales. Then you have some departments we will try to find ways to automate to make everyone's jobs easier. So certainly growth, but not quite doubling. Key departments will be doubling or more.
BTN: Regarding the relaunched loyalty program, you have 15 partnerships that include the major hotel companies except for Marriott. Members can earn third-party rewards points and Hotel Engine points, but they can redeem only Hotel Engine points on the platform.
BTN: When did that launch?
Wallen: About two weeks ago. It had been in beta for about a month.
BTN: What led you to create the program and partnerships? Requests from corporations? Travelers?
Wallen: A combination of both. What we are trying to build is a platform that you don't have to sacrifice or compromise on. Obviously, loyalty is very valuable to a lot of these brands. If they are willing to allow us to let our members earn, which makes sense to us, then so be it. For us it's really removing restrictions. … They can't redeem the points here, so will go to those other sites and redeem those points eventually. That's ok with us. We're trying to make this open and easy for many. I know we are not built for everyone, certainly not big corporations for full travel. I don't think any of the TMCs need to worry about us. But for any of the companies that want more frictionless, easy-to-use, no-strings-attached platform, a self-serve thing, we want to make it as powerful as possible. And loyalty points in almost all travel segments is very important to people, and we want to be able to provide that if the brands are willing.
BTN: You also provide group bookings for nine or more. Do you provide only the hotel rooms or also meeting space? Ts that handled by someone at the company?
Wallen: Today, it's not a self-serve tool. That comes into our system and the projects and business team handle those. We are willing and able to book some meeting space and some banquet stuff. But we are not actively marketing that. That team is very busy, and we're really trying to find ways to make it more automated and more self-serve for our customers. It's a big part of our business, actually, and we see it growing. We need to find ways to make it more efficient internally as well as externally before we really add any additional services or publish it or market it any harder than we are.
BTN: What does the future roadmap look like for Hotel Engine and its services?
Wallen: The roadmap, we're working on some cool things around check-in and check-out verification. There's a lot of workforce that travels that may check-in a day late, may check-out a day or two early, and a lot of time the businesses don't know because they are just assuming the check-in and check-out. So part of the roadmap is going to be built on verifying truly when somebody is there or not so businesses can make more informed decisions around how they book and how long they book stays for. Maybe we can offer credits if somebody checks out early, there might be the ability to get some money back. We ran a pilot and saved one customer about $20,000 per month In unused stays. Which was, obviously a very large customer, but it was pretty shocking to see. Then if you extrapolate over a lot of our customers in the same industries, they all have this concern. Outside that, it will be [adding] more booking methods. We want text, Slack, any modern communication channel for people to be able to book so it's not just on the platform. … That will roll up into the company program. Machine learning stuff, more predictive selection of where we think [a traveler will] want to go, what chain [they] want to stay in.
BTN: What is your prediction for the future of business travel?
Wallen: Based on trends that we've seen in the industry, like the adoption of mobile, we can certainly say that trends are going to move off of these more traditional platforms, and we believe it will go beyond mobile. It will go to probably bots that are helping suggest hotels to stay at so you don't see 300 search results knowing there are only a few you are interested in. You've seen a few things on working remotely from [Apple CEO] Tim Cook and [Netflix CEO] Reed Hastings, having very different opinions, with [Cook] saying it's actually effective, and [Hastings] saying it's the worst thing that's ever happened. [Covid-19] accelerated the remote work transition by probably a decade. There is going to be less business travel in general, but we've recently done a few trips to see some key customers, and for us there is almost no comparison. At the end of the day, humans aren't robots. There is so much in body language and so much in, "You took the time to get on a plane and come see us. Wow, that matters to us, because time is so precious." Though some trips will be reduced, there still is a very essential part of human connectivity that matters, so I think business travel will bounce back, albeit it might look a little bit different.
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