Room 77 Inc., an online travel startup backed by Expedia Inc. (EXPE), hired industry veteran Drew Patterson as chief executive officer to take on Kayak Software Corp. (KYAK) and Google Inc. (GOOG) in hotel search.
Patterson, 36, a former vice president at Kayak joins as part of the company’s acquisition of CheckMate, a hotel check-in application he started, Room 77 said in a statement today. Prior to CheckMate, Patterson co-founded Jetsetter, a travel-deals service that was bought by Gilt Groupe Inc.
Room 77, based in Mountain View, California, has been operating without a CEO since it was founded in 2009 by Brad Gerstner, a hedge-fund manager and entrepreneur. Gerstner has managed the company with the help of Chief Operating Officer Kevin Fliess, raising almost $44 million in venture funding, including a $30 million round in January led by online travel agent Expedia.
“The table is open for who is going to be able to create leadership in the hotel search space,” Patterson said, in an interview. For Room 77, “it’s a question of taking the product to the next level and building a brand.”
The Room 77 hotel search engine opened to the public last year, and as of January, hundreds of thousands of room nights had been booked using the service, according to the company’s Website. Like Kayak (PCLN), which Priceline.com Inc. agreed to buy for $1.8 billion, and Google’s Hotel Finder, Room 77 is a metasearch engine that scans prices and availability from numerous online travel agents. The company gets a portion of revenue for driving traffic to those sites.
While going up against such big competitors is a daunting task, Room 77 has gained enough traction to get Priceline’s attention. In the Norwalk, Connecticut-based company’s annual report, Priceline mentioned Room 77 and other startups, including Hipmunk Inc., as competitors that have developed “new and differentiated offerings that endeavor to provide savings on hotel room.”
With the acquisition of CheckMate and its four employees, Room 77 now has more than 30 employees, Gerstner said in the same interview.
Room 77 has deep roots in the online travel market. Gerstner, through his Boston-based investment firm, Altimeter Capital Management, is an investor in Priceline, TripAdvisor Inc. (TRIP) and China’s Ctrip.com International Ltd., as well as multiple airlines and rental car companies, according to a regulatory filing.
Gerstner touts Room 77 as a faster service than its rivals that’s easier to use while finding bigger discounts. He’s also focused on allowing users of smartphones to book the hotel from his site so they don’t have to use multiple apps.
“We’ve done all the hard work of passing data to Expedia or the hotels so you don’t have to link out,” Gerstner said. “On mobile devices, which is where a huge percentage of searches are occurring, people don’t want to link out. They just want to close the transactions.”
In the press release announcing its stake, Expedia CEO Dara Khosrowshahi said that “metasearch is an increasingly important model.” The investment is being used in part to speed Room 77’s expansion internationally, a strategy that’s helped Priceline outperform almost every U.S. stock in the past five years.
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