Trivago, the Expedia Inc-affiliated metasearch brand, officially said today that it has taken a majority investment in a Swiss startup, Base7Booking, which offers a cloud-based property management system (PMS) for hotels.
The move was a poorly kept secret, but the companies are now revealing the contours of the deal.
This year, Trivago plans to fuse its direct connect platform, Hotel Manager, with Base7Booking's PMS platform, Cloud-PMS.
That will enable hotel managers to push their rates into Trivago -- which claims 120 million monthly users -- from the Base7Booking PMS.
The sales pitch is that 1) the listings are for metasearch direct bookings, which incur lower third-party costs than ones via online travel agency channels, 2) Base7Booking has a mobile-first website that enables hoteliers to keep tabs on their marketing while on the move around their property, and 3) the integration will cut out a few steps and make it faster to update listings on Trivago.
Pulling on the long tail
Base7Booking's CEO Frank Martin told Tnooz that his startup will continue to operate autonomously. It will keep a separate sales and marketing team.
Trivago will not do a marketing campaign to promote Base7Booking's subscription-based service to its list of partner hotels. But it will let the startup piggyback on some of its efforts, such as sharing booths at trade shows like ITB Berlin.
The startup will continue to rely on Google ad campaigns, customer referrals, and other strategies to get the word out.
Martin said his startup does play in the same space as traditional PMS players. But he mainly sees his company's competition as other cloud-based PMS providers.
He expects to make hefty gains by converting the (estimated, roughly) 30% of hotel owners who are still using paper-and-pencil to manage their affairs.
Base7Booking's typical customer's median hotel size is between 1 and 75 rooms in size. That leaves aside larger properties, which have tended to already opt for more traditional PMS tools, with servers housed at the property.
The startup says its monthly fees are less than those charged by traditional PMS systems, which often require the installation of on-property hardware that incurs installation costs.
Base7Booking's fees starts at Euro 69-a-month for 1-to 7-room properties, rising to Euro 300-a-month for properties with more than 50 rooms.
For the smaller properties, part of Base7Booking's pitch is about how its mobile-first system unchains people from a desk. "The reception desk doesn’t need to be as big anymore," noted Martin. "You can act as a receptionist with an iPad or tablet anywhere."
He adds that one of the company's clients is the highest elevation hotel in Europe and accesses the system via a 3G connection because there is no internet access at its location.
The PMS has integrations with restaurant points-of-sale, various channel managers, and some other third-party tools, such as revenue management systems. But there needs to be a more extensive set of integrations, such as with accounting systems, for it to lure many larger properties.
Martin said his company has invested on a development team to work on an application programming interface (API), which will enable it to integrate more easily with key online partners.
A winding path
Two years ago, Tnooz profiled Base7booking. At that time, it had seven partners and three employees.
Today the startup has 34 employees. With the fresh funding, it is hiring for development, sales, and multi-lingual customer sales support.
It is also using the newfound investment to help improve its technology. For example, next week it will roll out a fresh user interface.
Base7Booking is only one of several cloud-based PMS solutions that have come to market in recent years.
Martin said its secret sauce is that he created the product first for the small hotel he owned with his wife. He perfected it for nearly five years before trying to commercialize it. It was tested in fire of actual operations and idiosyncratic situations, he said.
"As a hotelier, you have a certain logic. At our company we understand that. So we have decided where to put buttons, etc., in a way that's intuitive to hoteliers in their workflows."
Hiring hoteliers is another of its rare tactics.
"Being a Swiss company, we've been able to hire stars from the region's famous hospitality schools. Their expertise and understanding of operational nuances are reflected in our products."
The two travel industry beasts, Priceline Group and Expedia Inc, are increasingly investing in the B2B side of the hotel IT business -- a trend Tnooz anticipated in the summer of 2014.
Exhibit A: A year ago, Priceline Group bought cloud-based hotel property management system Hotel Ninjas, among other hotel IT acquisitions that have been rolled into its BookingSuite division.
How far will the two conglomerates rummage through the bin of hotel IT tech before the only thing left is a Myanmar-based channel manager? It's unclear.
Specifically, one wonders if the swarm of hotel revenue management systems, which have been having a heyday lately, will be next on Expedia's and Priceline'd acquisition and investment lists.
Digital marketing tools is another likely target. Many non-chain hotels have very poor websites, especially when viewed on mobile devices. They may need outside help to re-skin their sites to drive more direct bookings and communicate what they are about in a non-commoditized way.
As for startup founder Martin, the Trivago acquisition is a pleasant milestone. He reflected:
"I laugh now to think I built this product over five years while at the same time was running a hotel, having never run a hotel before either. We took five years before bringing it to market.
Looking back, I see the risk was really insane. It paid off. But I don't know if I'd do that again."