ReservationHop Makes Money by Squatting Over Something That’s Free

ReservationHop, the new restaurant reservation app, takes a working, functional, free system — calling restaurants and making reservations — and monetizes it.

Specifically, it monetizes the system by calling San Francisco area restaurants in advance, making a number of reservations under fake names, and selling those reservations back to the general public. (To quote CNN: “The going rate for a reservation on the site appears to be $12.”)

The ire is already out. Plenty of people think ReservationHop is unethical and unfair to both patrons and restaurants. It’s the equivalent of ticket scalping, only it’s a bit worse because restaurant reservations, unlike concert tickets, are supposed to be free.

How bad is the ire? TechCrunch ran an article with a giant middle finger. Here are a few tweets that sum things up:

“@bmmayer” would be ReservationHub founder Bryan Mayer, who responded to the outrage with the humblebrag blog post “How I Became The Most Hated Person in San Francisco, For A Day.” (He leads with “I built it over the weekend after waiting at Off the Grid for 30 minutes for a burrito from Señor Sisig.”)

There are a lot of things to pick apart here — what if ReservationHop can’t sell back all of its reservations, what if restaurants decide they don’t want to reserve tables for fake names, what if the restaurants DO really like the idea — but the really interesting part of this story is the idea that ReservationHop is trying to make money by squatting over something that was already free.

We’ve already seen the apps that try to make money by squatting over an inefficient paid service, the way Uber squat over taxis, but ReservationHub is one of the few apps that dares to squat over something free, fill its hands with the free resources, and then make you pay to access them.

Imagine the other services startup companies could monetize. How about LibraryHold: one company puts holds on all the popular library books, then sells them back to you. Or an app that squats in parking spots until you pay them to relinquish the space — oh wait, that one already exists.

If the giant pool of money, to borrow a phrase, appears to be growing smaller, people will start to lay their claim to services that are free. ReservationHop might not have touched restaurant reservations if there had been an inefficient paid service for them to restructure and re-monetize. But taxis, hotel rooms, laundry, etc. were already taken, and reservations were still available.

Photo: Christopher Sessums