Book hotels, earn miles, fly free: Rocketmiles raises $6.5M to expand its loyalty program

Trips to bask on the French riviera, ride elephants in Thailand, and canoe around Antarctica could be yours for free.

Well, sort of for free with Rocketmiles, which announced today that it has closed $6.5 million in funding to fuel its expansion in the U.S. and abroad. 

Rocketmiles powers a frequent flyer plan where you earn airline miles by booking hotel rooms through its site. The basic idea is to book hotels, earn miles, and go on more vacations. You earn an average of 3,000 miles a night for staying in a hotel, which Rocketmiles said is about 10-20 times the typical incentive.

Frequent flyer programs are hardly a novel concept — they’ve been around since 1981 and have proven a powerful way to build customer loyalty. What makes Rocketmiles different is that it offers those miles in order to help sell unsold hotel inventory.

Unsold inventory is a big problem for hotels. They may be full on a holiday weekend or during a conference or big event, but on the average Tuesday, halls of rooms can be empty.

Then daily deals sites like Groupon and same-day booking app HotelTonight came along, which allow hotels to offer their available rooms at steep discounts. Hipmunk also jumped on this bandwagon, along with major online travel agencies like Expedia.

However Rocketmiles said that these “visible discounting schemes” can weaken a hotel’s brand and pricing strategy. Instead of offering price cuts, Rocketmiles offers loyalty points and miles. Hotels get to market their available rooms to customers without seeming desperate, and customers rake in the miles towards their next vacation.

You can earn miles with Alaska Airlines, Hawaiian Airlines, American Airlines, JetBlue, United, Etihad, Virgin America, U.S. Airways, AirFrance, and KLM, and Rocketmiles’ hotel network extends to thousands of cities around the world.

The company claims the typical frequent traveler earns an extra 80,000 miles per year through its program. All hotel rates are refundable, and you won’t pay extra fees or commissions. For business travelers, a core audience, Rocketmiles will attach a PDF receipt with every booking for expense reporting.

Rocketmiles launched less than a year ago. Cofounder and CEO Jay Hoffman was a former executive at United Mileage Plus and Groupon. COO and CTO Bjorn Larsen and Kris Helenek previously cofounded a startup called Edhance together, which was acquired by BuyWithMe, which was then acquired by Gilt Groupe.

Rocketmiles also has number of well-known travel executives on the advisory board, including Scott Hintz, Tom Botts, and Drew Patterson. Hintz cofounded TripIt, which sold to Concur for $120 million in 2011, and before that was an executive at Hotwire. Botts brings experience from the Starwood Hotels empire, and Patterson is the former CEO at Jetsetter and current CEO of hotel search site Room77.

August Capital led this round, with participation from existing investors Peterson Ventures, Link Ventures, and Atlas Venture. New investors include Chicago Ventures and Sam Yagan, CEO at Match.com.

Rocketmiles has offices in Chicago and Boston.