Hotel technology provider SiteMinder hails from Australia. But during the past two years it has booked a majority of its revenue in Europe.
The digital distribution start-up's next target is North America. The company is using part of the $30 million it raised in January to establish a beachhead in the US.
In late spring, SiteMinder opened a Dallas office, where it intends to hire about 80 sales and support employees within the next year. The expansion will add to the company's 300 employees in Sydney, London, Bangkok, and Cape Town.
Since November 2013, the company claims to have brought on 4,000 hotel customers, boosting its client list to 14,000. Recent wins include Red Lion Hotels, Grand City Hotels, Dorsett Hospitality, and Derag Livinghotels.
Direct distribution tools like SiteMinder's are becoming more popular as hotel owners become aware of the need to better control their distribution, such as by building direct relationships with guests in distant markets.
SiteMinder's software-as-a-service tools helps hotels sell their rooms on dozens of popular booking websites worldwide, such as Expedia, Wotif, Booking.com, and Agoda.
Rather than have hotel staff update inventory on each site, they can use SiteMinder's channel manager as a single interface that communicates with the third-parties and with the hotel's property management system (PMS).
Tnooz caught up with founder and managing director Mike Ford to inquire about the company's plans.
He seems sprung from Central Casting for his role as the Aussie CEO: someone who is plain-talking and affable, but not someone who is easy to play against in a competitive sport.
You've been on a hiring spree. How do you make sure all these people you're hiring, and who are are scattered worldwide, maintain the company's DNA?
That's an excellent question. We've hired 70 people since January. It's a eye-opener.
What happens is, unless you hire the executive level in line with that, you find your current executive group gets too stretched. It's about having the right ratio of top-level with the general staff.
In terms of culture, we're good about traveling to train and work among our offices, for cross-pollination -- our execs, included. We also use collaboration technology to stay in touch.
Is there anything different about selling in the North American market compared with elsewhere?
I think North American hotels are, in some regards, behind Australia or the UK -- from the perspective of booking-site presentation.
Online booking channels in North America have traditionally been dominated by a few major players.
Whereas in the UK and APAC, there has been a lot more diversity, more last-minute type sites, which made those markets ripe for us early on.
But in North America, the distribution space is becoming more diverse, with the entry of Booking.com, Trivago, and the mobile channels. As the array of channels diversifies, our product becomes more attractive.
What's a major misconception about SiteMinder?
There are a few. We tend to get pigeonholed as a channel manager. But we're more than that. We have a great booking engine. Nearly half of our hotel clients use our booking engine on their own websites to generate direct bookings.
We're building some other products in that vein that touch on other aspects of the hotel experience. So we expect hotelier's expectations of us to broaden in the next 12 months.
Another misconception is that journalists like to call us an Australian company. But really we're a global company. In two years' time, we expect to have about 70% of our revenue coming from EMEA and the Americas.
That all represents what SiteMinder is. What is the company *not*?
We’re a product company, not a services company. We won’t go in, like a TravelClick, and build a website for a hotel, bespoke. We'll instead offer a product that's great out of the box.
We won’t go in and build anything from scratch or consultancy or design campaigns. We’ll provide great products that will have friendly analytics.
What are your main objectives for SiteMinder in the next year?
We want a more global footprint. We want to get as many hotels as we can using the system. We're adding 400 to 700 hotels a month, depending on the season. We want to double that pace within the next 18 months.
Another objective is that we are more looking beyond offering online travel agency (OTA) connectivity and booking site connectivity.
Where we've become more focused lately is on better providing direct distribution for hoteliers.
We see ourselves as a platform that allows hotels to connects to their guests via the web in any manner. So we're paying more attention to the booking engine side of things, as well as third-party distribution to OTAs and booking sites.
Our third objective is to boost the scalability of our platform. We're focusing on PCI compliance, scalability. In the past year we processed $7 billion (US) in hotel transactions. Volume like that requires lots of rate and availability updates every day.
From a governance perspective, we want to make sure our systems remain fast and robust. We have to make sure our platform works really well, and that our customer service scales up, too.
An aspect of scaling up is connecting with a lot more channels. Our reach is becoming broader in terms of emerging markets in China and Latin America.
We'll also use some of our capital raise for R&D, to invest in code and product.
What problem is keeping you up at night, so to speak?
Our problem is not getting customers. Our problem is ensuring scalability.
If you're referring to independents, when you're on-boarding, you have to make sure the independents are trained. They need solid good onboarding process. So we’re working on scaling our support, to keep up with sales.
It's a constant balancing act between ramping up sales and scaling up your support. Along with that, we have to make sure we don't drop the quality of onboarding.
I'm not saying that's a big problem for us. It is merely something I'm currently spending a proportionally larger amount of time thinking about than sales and the other issues.
Is North America going to be a tougher sell for you than Australia and Europe because it's more heavily dominated by global chains instead of independents?
No, there are a lot of chains with about 100 or so properties in the US, and that fits squarely into our sweet spot.
There are roughly 150 or so chains in the Americas that fit that market. Not all of those chains make central tech decisions for the entire brand. Plus lots of independents, too.
We still believe the big chains, like Marriott, would benefit hugely from our technology. We already work with a couple of big chains. Our platform can scale from a mom-and-pop up to a global.
Why would a chain the size of, to use an example, Marriott -- with its own enormous, in-house resources -- need your help?
Chains of that size tend to have very brittle CRSs that are based on older technologies and that don't integrate easily with online booking channels.
They can't keep up by having direct connects, because direct connects don't give them the access to all markets, like Australia, they need as global brands. So what they start to do is use other solutions to get those extra channels.
A chain might use three other providers or the channel manager that's used in a local market, to plug their geographic gaps. And each of those channel managers may not be integrated in the CRS.
What SiteMinder does is have one single connection with a global chain, and then we hold all the rules and complexities that essentially marry the global's CRS to the channel. But we shield the CRS from having to morph into handling the particularities of every channel on its own.
The giant chain CRSs often can't handle high volumes in real-time, but our tool can do that, on their behalf.
Yet while the need is there, there's a political fight, as big chain IT departments defend their turf.
It sounds daunting to be tracking long-tail sales, with independents, all the way up to the major chains. How can SiteMinder, a tiny fish in the sea, gobble up all of the crill?
Once we establish a brand in a market, we get a lot of inbound requests. We're very happy with the inbound flow right now.
Who would you say is in SiteMinder's competitor set?
We have a lot of competitors in name only. There are not many competitors out there where we go, "Wow, their technology is robust, and hotels are thrilled with their service."
If you look at a market like Italy, there's a channel manager on every corner, working out of their garage or whatever. But each one may top out at 100 hotels being managed. So they are viable competitors but not global, full-service players.
There are a half-dozen global players that have channel managers, but generally the channel manager is just one part of what they do, like Sabre Hospitality Solutions, eRevMax, RateGain, TravelClick. There are regionals like AvailPro in France, etc.
We stand out for having a focus on the strong technology for channel management and digital distribution. Many of our rivals are more interested in digital media marketing.
Going all the way up to 30,000-feet: If you were looking at the hotel B2B tech space broadly, not just at channel managers. What do you see?
At the HITEC conference this year, I was very struck by there being a lot of new technology vendors being promoted more obviously. I saw a lot more niche technology players around the floor, providing some really useful and exciting tools.
But if I'm a hotelier, I look at these technologies and say to myself, they may all seem like great little things but it can be back-breaking to integrate all of these niche things. Hoteliers are feeling vendor fatigue.
Direct distribution is the one area that hotels seem most interested in and that seems most viable for start-up success. Upselling, developing pre-arrival relationships with a guest -- those are all hot, and I expect those to rise to the top.
What's next for Priceline? It seems increasingly interested in hotel B2B tech. In June, for example, it aquired hotel digital marketing firm Buuteeq, which earlier this year integrated your channel manger into its portfolio. Is there any chance Priceline might get into the channel manager business?
I'd be very surprised. Everyone talks about Priceline wanting to own the entire direct stack. I think it's a possibility but I don't think it would be a great fit for them. It's an expert in selling, but does it make sense for the company to go into the back-end infrastructure side of things?
There's also a conflict of interest question. If one of its brands like Booking.com owns the channel manager, bigger hotels won't trust it with their data. But it's also a conflict with the other channels.
What about for TripAdvisor, which is also broadening its hotel B2B services?
Same thing for TripAdvisor. Does it actually want to get into a line of business that doesn't generate as much money?
We spent all this time building up PMS and CRS integrations. They could do that, too, but would it add much benefit to them on margin? I doubt it.
NB: As usual, questions and answers have been edited for brevity and clarity.
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