Online Travel Agency Kayak Opening Hotel In Miami

This is an unusual direction for an online travel agency to take…

Kayak Miami Beach opening April 2021

Travel Weekly reports that online travel agency Kayak will be entering the brick-and-mortar hospitality space, with the opening of Kayak Miami Beach in April 2021. You heard that right, an online travel agency is opening an actual hotel.

The 52-room hotel will be taking over the space of the former Life House Collins Park Hotel, and it’s in an art deco building that was first constructed in 1934.

This hotel is being opening in partnership with Life House, which is a hotel brand and management group that currently operates over 20 properties around the world. In other words, this property is being rebranded with the Kayak name.

The hotel has started accepting reservations for stays as of April 11, 2021, and rates ordinarily start at $229 per night, but there are promotions bringing the rates closer to ~$160 over some dates.

Kayak Miami Beach exterior

Why is Kayak opening a hotel?

On the surface it seems bizarre for an online travel agency to get into the actual hotel business, so what’s Kayak’s motivation? Well, as it turns out, more than anything else this is about testing new technology. Kayak Miami Beach will serve as a “design lab,” allowing Kayak to test its app and other lodging-related software innovations.

Kayak will offer new app capabilities, including 24/7 access to hotel staff and support, a 60-second check-in experience, and other digital amenities.

The motivation here seems to be that Kayak hopes it can develop hotel software (including a useful app for hotel stays), and then market it to independent properties in need of better technology. The hope is that hotels would choose to use Kayak’s app on-property, and these hotels would also then be highlighted in Kayak’s search results.

As Kayak CEO Steve Hafner describes the plan:

“Even if these [independent] hotels have their own apps, consumers really don’t want to download a new app every time they check into a hotel. What we bring to the party there is that our app has already been downloaded by tens of millions of consumers. It’s consistent. They know how it works. So, consumers will say, ‘Gosh, I feel more comfortable choosing this independent hotel over a Marriott or Hilton because I know exactly what the check-in, checkout service experience is going to be like.’”

There are plans to open additional Kayak properties in order to further refine and optimize this concept, but it sounds like we shouldn’t expect Kayak to become a major hotel group:

“Our intention isn’t to turn Kayak into a hotel brand that competes with chains. But we are going to be looking at different property sizes, different locations throughout the U.S. and abroad and then also different property types, not just hotels.”

Kayak Miami Beach lobby

My take on Kayak getting into the hotel space

Suffice to say that when I first saw the headline about Kayak opening a hotel, I was confused and my mind started racing about what the motivation could be. I have to give Kayak credit, because this concept seems really well thought out:

• Kayak will develop software and an app that independent hotels can eventually use for better on-property technology
• Kayak has the money to invest in this, and also has global name recognition, so hotels could benefit from that
• Not only could Kayak make money by licensing this to hotels, but it could also be a competitive advantage for Kayak over other online travel agencies
• Kayak’s own hotel might perform pretty well, given that Kayak is heavily promoting it when you do searches for Miami Beach hotels, so distribution costs here are virtually non-existent

The one thing I’m skeptical about is how valuable software like this will be for small hotels. The issue with fancy apps is that it’s not just about being able to develop them, but also about putting the resources into making them useful. In other words, if there’s a front desk chat feature through the app, there needs to actually be someone monitoring that.

Kayak Miami Beach room

Bottom line

Online travel agency Kayak is opening its own hotel in Miami Beach in April 2021. Strange as it may sound, the hotel will essentially operate as a “design lab” for new app and software features that could eventually be used by other independent hotels.

The concept is that independent hotels can’t invest as much as the major hotel groups when it comes to technology, so Kayak hopes to come up with a win-win solution — independent hotels can leverage Kayak’s technology, and in turn that will get Kayak more business.

What do you make of Kayak getting into the actual hotel business?