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Could DreamCheaper become the hotel booking industry’s most hated startup? – Tech Crunch

Berlin-based DreamCheaper, which has been operating quite stealthily until now, may soon become the hotel booking industry’s most hated startup. It operates a service that aims to ensure that you never overpay for a hotel room again, even if you (miraculously) get the best deal available at the time of booking but the price has since dropped.

Specifically, DreamCheaper leverages the “flexible booking” option typically offered by hotels, canceling your hotel reservation on your behalf once its algorithms locate the same type of room, at the same hotel, for a price. cheaper and made a replacement reservation. During this time, the service continues to work on your behalf, until the day before check-in, canceling and modifying the reservation if and when a better offer arises.

The hotel booking industry, dominated by aggregators such as Hotels.com, Booking.com and Trivago, is opaque to say the least.

And it usually is. The German startup estimates that customers typically save 15% off their original booking price. This is because hotel room prices fluctuate widely depending on factors such as supply and demand, discounts offered by hotel booking aggregators and the hotels themselves, and sometimes due to tactics more sleazy, such as geo-targeting, which are designed to drive up prices. The hotel booking industry, dominated by aggregators such as Hotels.com, Booking.com and Trivago, is opaque to say the least.

Additionally, despite the somewhat convoluted tactics that are employed behind the scenes, from the customer’s perspective, DreamCheaper’s user experience couldn’t be much simpler. After signing up for the service, all you have to do is forward your hotel booking confirmation email to the startup and the price comparison process begins – a process that, according to the CFO and co-founder of the company, Nathan Zielke, is already highly automated, employing minimal human labor, so DreamCheaper’s model can scale.

There is no point in leaving money on the table.

Zielke is also candid that hotel booking sites and meta search engines will likely hate his startup, noting that they depend on affiliate revenue and therefore have a vested interest in driving up prices.

In contrast, DreamCheaper generates revenue by taking 20% ​​of any money checked in, which means that it always has an incentive to find the cheapest deal, although it also sometimes generates affiliate revenue as a pure side product and secondary to its business model. There’s no point in leaving money on the table after all.

Could hotel booking sites block DreamCheaper, should it get too big? It’s possible, Zielke concedes, although the startup has ways around it, such as further developing its payment system so that every subsequent booking is technically made by the individual customer. This would make it much more difficult to stop the service.

Finally, Zielke and his co-founder and CEO Leif Pritzel say DreamCheaper is good for the hotels themselves. Similar to Triptease, it could help increase revenue by ensuring more customers book direct, helping to wean hotels off of large hotel booking aggregators that squeeze margins due to the high commissions they take.