Over 25 million Americans participate in frequent-flyer programs that allow them to earn airline miles through flights and credit cards. Today, Chicago-based Rocketmiles is launching a service that will allow those travelers to earn miles just by booking rooms from select hotels, which Rocketmiles serves up directly on its website, and soon, on mobile, too.
Rocketmiles was founded in November 2012 by former Groupon exec, Jay Hoffman, who also previously ran partnerships at Mileage Plus for United Airlines. Co-founders Bjorn Larsen and Kris Helenek also have a background in the travel industry.
Hoffman says he knows first-hand what it’s like to be a frequent traveler, having spent four to five days per week on the road earlier in his career when he worked with The Boston Consulting Group. He learned a lot about frequent-flyer programs and the needs of businesses travelers in general through this experience, which he now brings to Rocketmiles.
Like the partnership programs with credit-card companies, Rocketmiles also buys miles from the airlines which it then ties to stays with its partner hotels. Prior to today, these deals were only available to a couple of hundred private beta testers who could search across eight cities in the U.S.
As of the public debut, however, Rocketmiles now supports 15 cities in the U.S. and plans to expand to even more markets over the next few months, adding about one to two cities per week.
What’s different about Rocketmiles, besides the fact that it’s a new way to accumulate miles, is that it’s also focusing on delivering a hand-picked selection of premium hotels that appeal to business travelers, as opposed to the hundreds of search results which aggregators offer, while also offering the same prices. The company gets its hotel rooms at a lower rate and resells them higher, leaving behind enough revenue to purchase more miles and generate revenue.
“You’re getting the same rate that you would have paid any place else,” explains Hoffman, “and you’re getting a gigantic incentive for booking through Rocketmiles.” The service appeals to the hotels, too, he adds. “If you think of this as an alternative to booking through Priceline or Hotwire, the hotels love this because they’re not publicly discounting their price,” Hoffman says. “Sometimes the hotels look down on the Priceline or Hotwire customers as being ‘deal seekers.’ We deliver to them a business traveler who’s a lot more likely to buy Wi-Fi or order room service…it’s going to be the kinds of people the hotel wants to work with.”
While the company isn’t disclosing transaction numbers during its pre-launch period, Hoffman did say that the average transaction is about 3,100 miles per night, and the service is focused only on stays where at least 1,000 miles can be earned. The per-booking average was 7,000 miles. Hoffman notes that the average business traveler taking a dozen or so trips per year could end up with an extra 80,000 miles per year using the service.
Though the company is targeting the travelers themselves, it’s also beginning to work directly with companies who want to offer Rocketmiles as an option to benefit their employees. A few consulting and tech firms have already begun to pilot this program at their own companies, we’re told.
Going forward, the plan is to continue to expand across the U.S. and prepare the launch of the Rocketboom mobile application, which has already been through a beta of its own. Rocketmiles has been self-funded until recently, but is now closing a round of seed funding north of a million, expected to be finalized in a few weeks’ time. [Update 4/29/13: Rocketmiles has now closed on $2 million from Atlas Venture, Link Ventures, and Peterson Ventures and several angel investors.]
Interested travelers can sign up to try Rocketmiles today for hotel stays in the following 15 cites: Atlanta, Boston, Chicago, Dallas, Denver, Honolulu, Houston, Las Vegas, Los Angeles, Miami, New York City, Philadelphia, San Diego, San Francisco and Washington D.C., with more to come.