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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.
The scale of the companies, which are both small, is less impressive than what the merger reveals about guerrilla marketing tactics in online travel.
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For example, Google gives prominence in its so-called metasearch results for hotels to the distributor or supplier that offers the lowest rate, experts said.
Google often sets a minimum bid it will accept for top slots in its rankings. Think of this minimum-acceptable bid as a floor. Google would lower the floor for an agency with the cheapest room rate.
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.
“Without going into IP [intellectual property] issues, there’s lots of technical abilities you can create via distribution tools like channel managers or via direct connection with hotel group systems,” Shust said. “These connections can done almost always without the need of human involvement.”
Splitty has disclosed $10 million in fundraising to date led by Fosun RZ Capital, an investment arm of the Chinese company that owns Club Med and other tourism companies. Other investors have included Techstars Ventures, Cockpit Innovation (El Al Airlines’ investment arm), and 2b Angels.
“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.”
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