Israeli startup Roomer, which enables people to offer bookings on hotel rooms when they have had to cancel their reservations at the last minute, has raised $5 million. Tal Barnoach's Disrupt-ive fund led the round, together with the Barkat brothers BRM fund, which already invested previously in the company. Including the current round, Roomer has raised $7 million to date. The current round will enable the company to continue its growth, improve its mobile application, and penetrate new geographical regions.
Roomer was founded by CEO Gon Ben-David and VP business development Ben Froumine, two graduates of the Zell Entrepreneurship Program at the Herzliya Interdisciplinary Center. The company's product is designed to save money for people who have reserved an overseas vacation, but were obliged to cancel it, and are eligible for only a partial refund. Through the Roomer website, roomertravel.com, the user can offer his hotel reservation at a significant discount, thereby creating a win-win situation, because another user can also find a worthwhile vacation deal, while the user who had to cancel does not lose all his money on a reservation he does not use. The company explains that the hotel also profits on the deal - the fact that someone is staying in the room can theoretically increase the hotel's revenue from accompanying services for its guests, such as room service, a mini-bar, VOD services, etc. Roomer says that 40% of a hotel's profit comes from services related to a person's physical presence in the hotel.
The mostly automatic procedure for advertising a room reservation on the site is so simple that the seller does not even know who the buyer is. In the first stage, the seller is asked to send confirmation of the reservation from the hotel or tourist website through which he ordered the room. The website's automatic system verifies the reservation within a few minutes, and then advertises it on the website, while automatically adding pictures of the hotel, maps, and a rating from the Tripadvisor website. As soon as a buyer is found, the website changes by itself the name on the reservation at the hotel. The seller receives the proceeds within 10 business days from the buyer's checkout date at the hotel in order to prevent fraud, similar to the model used by the popular airbnb website. The proceeds can be obtained by transfer to a PayPal account, a bank transfer, a check, or credit card. Roomer says that reservations for 81 million hotel rooms are canceled every year in the US alone.
Ben-David says, "The company's service 'generates' a unique inventory of previously unavailable hotel rooms. Our goal, among other things through the current financing round, is to expand the service and the value that we create for our users." Tal Barnoach added, "At Disrupt-ive, our mission is to identify and support forward-thinking, groundbreaking opportunities. Roomer is exactly that. The Roomer team has proved their model. They have the experience, know-how, and passion to shake things up, and we're certain their new model will become the essential, go-to platform for those seeking travel value."
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2014
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