Market Overview

Hotel Reservations Pioneer Bob Diener Talks Growth, Innovation, and New Beginnings

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Before broadband, before social media, before most of the world had signed online, Bob Diener was there, exploring the future.

Diener is responsible for building the world's leading hotel reservation websites. He is most well known for co-founding Hotels.com and Getaroom.com, but his career spans many other creations – and a whole other profession.

“I started off in the legal career as an attorney,” Diener (who recently spoke to Benzinga's Hilary Farrell on a wide variety of topics) revealed. “I practiced law for a couple of years. I was in the airline consolidator business. In 1991, I saw a great opportunity for hotels because we were in a recession and the hotel situation was similar to what it was a couple years ago, where occupancy rates were low and hotels were looking for new sources of business, and people were much more focused on value.”

From there, the Getaroom.com co-founder and president said that he started the concept of the Hotel Reservations Network.

“In 1995, a friend of mine knocked on the door and said, ‘I have a new technology to show you,' which was the Internet,” Diener recalls. “Of course, no one was using it at the time except for some college professors. We actually built our first Internet site in 1995, it was called hoteldiscount.com. And we put it into service at the end of '95.”

One year later, the website accounted for five or six percent of the Hotel Reservations Network business. “It was incredibly slow,” Diener said. “And there was no interactivity. Somebody would make a request for a hotel room and it would take two or three days to respond back and forth just to get it booked.”

In October 1997, things began to change. “[That] was really the industrial revolution for us,” Diener said. “That's when the IBM (NYSE: IBM) mainframe system became connected with the Internet, and the Internet became interactive. That totally changed the world for us. Our business, which was growing at 20% or 30%, started growing in triple-digit rates. We started moving much of our business to the Internet. It was an incredibly efficient and low-cost way to expand the business.”

In late 2003, the Hotel Reservations Network merged with Expedia (NASDAQ: EXPE) and Ticketmaster, prompting Diener to sell the rest of his interest in Hotels.com. “[And then] I was forced to sit on the beach, and not compete with Hotels.com [for five years],” Diener recalls.

As if we all could be that lucky!

“When the five years ended, and we happened to be in the middle of one of the worst recessions ever, especially in the travel industry,” Diener adds, “I saw a great opportunity to [jump] back in and create some new models.”

The result was Getaroom.com, a site that was born out of the idea that call centers still matter. “Pretty much all of the industry moved their call centers and customer service to India, Philippines, and other places around the world,” Diener said. “And I saw this as a great opportunity to build a great call center business around the Internet because…many people are frustrated if they get an agent that can't speak good English. People need assistance with reservations, and people want to know if there is a real call center. So we built a call center that is 100% U.S.-based.”

Building a call center, however, was only part of the process. “We went to hotels, we told them what we were doing, and we said, 'We need lower rates for the call center,'” Diener said. “‘We can hide them and we don't publish them on the Internet, but if you give us 20%, 30%, 40%, 50% off the rate, we'll move a lot more rooms, and we won't publish it online.'”

That promise – and the prospect of selling more rooms – was very intriguing to the hotel industry. “Now we have a couple thousand hotels participating all over the U.S. and major cities in Europe,” Diener continued. “It's been incredibly successful. We're expanding in a great way. We have no competition on it. We're the exclusive provider of unpublished rates. Consumers can now shop online – most consumers will go to a few sites, do their homework, and they'll find the best rate. And we'll tell ‘em, ‘Find your best rate and call us.'”

Word-of-mouth takes care of the rest, Diener said. “People book with us [their] first time [and] say, ‘Wow, this is great!' And they get on Facebook and tell all their friends. So it goes viral.”

Follow me @LouisBedigian

Posted-In: Bob Diener Getaroom.com Hilary Farrell Hotel Reservations NetworkEntrepreneurship Success Stories Startups Tech Best of Benzinga

 

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