Reverse Auction Concept Still Valid, Despite Vendor Demise

Following the demise this month of ProcurePoint, a third-party provider of hotel reverse auction software, industry sources told Business Travel News that other vendors are attracting an increasing number of corporate clients. None of ProcurePoint's senior management were available to comment today.

As recently as October, ProcurePoint raised $4 million in venture capital, but it was not enough to keep the operation afloat. According to sources, the company had shopped itself to more than one large technology company to no avail. ProcurePoint's plans for its transient program intellectual property are unclear. One source indicated the company is exploring selling its technology.

ProcurePoint debuted in 1998 as EventSource, a hotel directory and electronic request for proposal engine that grew into a business that offered meeting auction and corporate meeting data consolidation services. EventSource grew rapidly throughout 1999 and 2000, reaping millions of dollars in venture capital funding and forming alliances with attendee management and housing and registration firms. However, competing for corporate customers in that era yielded little, as few corporations were ready to move significant portions of meetings management operations online. When attendee management and event registration began to emerge as the most attractive online meeting applications, EventSource, which did not offer these services itself, switched its primary business model to provide online meeting and transient auctions. The company changed its name to ProcurePoint in early 2002 and had little success attracting meeting buyers.

Travel buyers use reverse auctions, in which prices are bid down, to source their transient room nights in a given city. Hotels' most serious concern about the technology has been that all the properties invited to participate in a given auction will not be at the same service level or price point.