When the Priceline Group (now Booking Holdings) acquired OpenTable in 2014, many doubted the synergy between the business. What could an online travel agency do with a restaurant booking site?
In the years since the acquisition, the market has devalued the partnership. Booking CEO Glenn Fogel continues to place his faith in the company, though he admitted in September at Skift Global Forum that they haven’t made the moves they should on OpenTable. The reservations platform went through a round of layoffs last June and OpenTable’s CEO, Christa Quarles, left the company in October.
Now under Kayak CEO Steve Hafner’s leadership, OpenTable introduced a change that seems positioned to set a precedent for control of all-important customer data.
On Friday, the Wall Street Journal reported a change in the OpenTable client agreement contract. As of March 15, restaurants can no longer share access to OpenTable with any unapproved third-party system that has the intent of using that data for use on their own service. This change seemingly takes direct aim at at least one competitor, SevenRooms, a reservations and customer relationship management software company.
In an email to OpenTable customers, the company stated, “In order to maintain the security of our systems, diner and restaurant data, and to ensure compliance with applicable privacy laws, we’ve clarified concepts regarding unauthorized third-party access to our software and systems.” The email cites recent implementation of GDPR, the California Consumer Privacy Act, and “recent interest by regulators in third-party access to certain social media and technology platforms.”
A second email, signed by Hafner, followed. “We can’t afford to wait,” it stated. “Public and regulatory scrutiny of privacy and data sharing practices has never been higher.” In the WSJ report, Hafner cited diner privacy as the reason that OpenTable was implementing this new, closed-door policy on its data.
Now, the WSJ reported, OpenTable will charge its clients who also use SevenRooms $250 per month for the data — but new clients who want to use both platforms can expect to pay $1,000 per month for the same ability.
“Restaurants own their reservation data, guest notes, and any diner data that consumers have either given them directly or who have ‘opted in’ to share to the restaurant via OpenTable,” Hafner told Skift Table. “Nothing has changed here, and they have always been allowed to download that data and give it to their vendors to use.”
This seems to contradict the most jarring part of Hafner’s Wall Street Journal interview. “That information is absolutely not the restaurants’,” he said in the piece, referring to OpenTable customer data. The difference, he clarified, has to do with so-called unauthorized vendors.
“The only nuance now is that unauthorized vendors who may not have respected diners’ wishes to ‘opt out’ will no longer have access to OpenTable systems,” he said via email.
Who Owns the Diner Data?
Competitor Tock’s CEO Nick Kokonas has been openly fighting OpenTable’s strategy for years, calling it detrimental to restaurants. A core piece of Tock’s product offering — and marketing strategy — is that restaurants on the Tock platform own their data. SevenRooms also uses this direct connection to customers to market itself to businesses, as noted in previous Skift Table reports. The difference is that many SevenRooms customers who use the software for customer relationship management also use OpenTable to accept reservations, a different model than Tock, Resy, or Yelp Reservations.
Understanding how the companies differ is key to understanding this situation. SevenRooms founder and CEO Joel Montaniel explained his company’s mission in 2017. “Our idea was, instead of trying to recreate another consumer booking platform, let’s be the first company that actually plugs into as many of the channels as possible where discovery and booking is happening,” he said. “With most of the other platforms its always been an ‘either or’ philosophy. With our model, it’s ‘and and and’.”
It’s this philosophy that’s targeted by the policy change at OpenTable, and their message is clear: if you want to use our data, you’ll have to pay.
What This Means for Restaurants
In theory, OpenTable’s new client contract will affect any restaurateur that shares OpenTable data with other technology service providers deemed “unauthorized” by OpenTable. Hafner characterized authorized partners as those who “have agreed to accept our terms and conditions and we have a formal partnership in place.” They also receive direct API integration.
Arthur Li, the chief financial officer of New York City-based Altamarea Group, which owns eight fine dining restaurants and is a client of both SevenRooms and OpenTable, said that shutting SevenRooms out of OpenTable’s data will be detrimental to the restaurants that he oversees.
“Our restaurants are utilizing SevenRooms to discover new key clients based on guest profiles and spend data, deliver tailored hospitality, and cross-promote our sister restaurants,” Li said in an email to Hafner, which SevenRooms shared with Skift Table. “Most importantly, the SevenRooms team (from ownership to sales to customer success to account management) has spent quality time with us to understand our needs, pain points, and objectives, then nimbly and methodically deploy our suggestions into their product and technology. Candidly, we have never had even close to that level of support and relationship with anyone at OpenTable.”
Now that the new fee structure is in place, SevenRooms clients can share diner data gathered through OpenTable — as long as they shell out up to $1,000 per restaurant for the ability to do so. Hafner estimated that the change will affect about 400 restaurants that use both OpenTable and SevenRooms’ services.
“[The affected restaurant operators] are paying slightly more for their current vendors but will receive a superior experience,” Hafner said. “SevenRooms, for example, will now talk directly to our systems via a direct integration instead of relying on bots. Data will be more realtime, accurate, and responsive to diner opt-out requests.”
For partners that have formal agreements with OpenTable and use the company’s API integration to facilitate data sharing, the contract changes shouldn’t affect their businesses.
Outside of the particular grievances between OpenTable and SevenRooms, the big question here is: How will this change set a precedent with other businesses?
“The war over customer data between the restaurants themselves and third-party services such as delivery (Grubhub) and reservations (OpenTable) is a real risk to the livelihood of restaurants who are being disaggregated from their customers,” said Zach Goldstein, founder and CEO of restaurant marketing platform Thanx, which facilitates reservation bookings on its apps but doesn’t currently integrate directly with OpenTable. “The recent move by OpenTable will make it harder for restaurants to identify their top customers and communicate with them directly which in turn makes it harder for the average restaurant to compete.”
Hafner maintains that the decision to crack down on unauthorized data usage was for the sole benefit of customer privacy. “Our intent with this program is to protect consumer privacy and new and upcoming regulatory standards — not to make money,” Hafner said.
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