Rocketmiles and its competing business model

Rocketmiles is a new platform that allows travelers earn or accumulate frequent flyer miles when booking a stay at a hotel.
Launched in the spring of 2013, the venture is led by Jay Hoffman, Groupon‘s ex-CEO, who during his tenure at United Airlines was instrumental in developing business partnerships for its MileagePlus frequent flyer program.
This experience allowed him to gain a new perspective on how the travel industry operates, mainly how an airline’s frequent flyer mile programs works.
Its co-founders are Bjorn Larsen and Kris Herenek, other industry veterans.

The concept is simple for the consumer; upon choosing a departure date, destination, number of passengers and selecting the frequent flyer program one belongs to, Rocketmiles displays participating hotels where travelers may earn automatic frequent flyer miles when booking through the site.

Rocketmile’s business model is the following: it purchases hotel rooms at reduced rates and resells them at an increased cost, thus allowing the company to make a profit in order to purchase frequent flyer miles from the airlines.
Its goal is to be able to offer a considerable amount of frequent flyer miles per reservation. Consequently, the site focuses on properties where one could accumulate a minimum of 1,000 miles for every new reservation.|
The platform received the support of less than a dozen airline frequent flyer mile programs; it is supposed to reach a dozen by the end of February 2014.
Furthermore, Rocketmiles has has increased the amount of participating hotel chains, going from 300 during its opening to reaching 5,000 of the best destinations for business travel. 78% of its user base is comprised of business travelers, and the service has experimented a 30-40% rise in reservation volume in the past four months.

The company has plans to expand its services on a global scale, and has begun to develop a product specifically conceived for companies, allowing them to book hotel rooms in bulk for corporate events and other forms of business travel.

In addition to the development of this product and its international expansion plan, the company is studying the possibility of obtaining further financing in order to acquire new customers.
“The tide had turned – initially we were trying to convince the airlines that this was a great thing for them, and nowadays we’ve got the evidence that it’s been very well-received by their customers.”, explains Hoffman.
Clients perceive a difference in service in comparison to other OTA’s, which could mean that the industry is facing a new player in the hotel distribution market.

The following link gives a clear demonstration on how the platform works: http://youtu.be/3ggWm09IgAU.