Stayntouch CEO to challenge Oracle Hospitality’s hotel tech dominance

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Skift grip

It’s never been easier to start a travel tech business, but it’s never been harder to grow one. Former stock analyst Tom Underwood became Stayntouch’s CEO because he believes the startup can defy the odds.

Sean O’Neill

You might think most hotels wouldn’t try to overhaul their travel technology during a pandemic that’s hurting revenue and cutting staff. But that’s not the story of Stayntouch, a maker of hotel management systems..

To find out more, I CEO interviewed Tom Underwood Wednesday at the company’s headquarters in Bethesda, Maryland. Underwood said his business is growing.

  • Hotels use Stayntouch’s comprehensive property management system to manage 65,000 rooms, up from 40,000 in March 2020.
  • December marked the company’s best quarter for new monthly recurring revenue since its inception in 2013, although the company did not disclose the amount.
  • On Wednesday, the company announced that it had signed mint house, a new generation hotel brand. He apparently stole the company from Guest, another provider of property management services.
  • Other customers include First hotels, Conscious Hotels, Margaritaville, Valencia hotel group, and Modus Hotels.
  • Most of the rooms serviced by Stayntouch are owned by traditional, non-boutique brands, such as Showboat in Atlantic City, Sage Hotel Group, Village hotels, and innisfree. But the company expects strong growth with emerging hospitality players similar to Mint House.
  • google will use Stayntouch’s property management system to help manage its hotel-style residence halls for corporate city employees that it is building on a campus near Mountain View, California. That’s for five properties, totaling 302 rooms. Given Google’s security requirements for working with partners, this is an interesting endorsement.

Is Stayntouch a serious challenger?

  • The company seems small. In 2020, Tyler Morse, the impresario behind the American hotel operator MCR developmentst — the owner of the TWA Hotel and other properties – raised capital through a fund to buy Stayntouch at Shiji. The price was $46.8 million, a modest sum compared to the $4.6 billion paid by Oracle Hospitality in 2014 for Micros, which it turned into a global market leader. Oracle Hospitality.
  • Underwood said the price of the Stayntouch transaction did not reflect the full value of the company because it was an unusual forced divestment.
  • The fund defended by Morse raised additional capital at the time of the purchase. This gave the CEO resources to grow. Underwood, hired a year ago, has taken on 20 employees, including a chief revenue officer and a chief technology officer.

the the company appears undercapitalized compared to Oracle Hospitality and other rivals. The landscape includes:

Underwood said Stayntouch has an ownership structure that lends itself to new outside investment, which could help fuel its growth.

  • “We are an independent company, with all employees having shares in Stayntouch, similar to a VC- [venture capital-] supported startup,” Underwood said. “We are a prospect for additional investor capital.”

Underwood has, over the course of his career, oscillated between being an equity analyst and an operational decision-maker in online travel agencies. So he has an analyst’s overview of the hotel software industry.

  • He was previously CEO of Room 77, CFO at business travel agency Lola, Senior Vice President at Orbit, a leader in online consumer action research at Legg Mason, Director of Revenue Management at Price line, and equity analyst at Morgan Keegan & Company.
  • He said the two most critical metrics for evaluating hotel software companies are growth momentum and gross profit margins.
  • He declined to divulge details. But he said he joined Stayntouch a year ago because he liked the numbers he was seeing and the numbers have since improved.
  • Underwood sees consolidation in the hotel technology sector over a five-year horizon. Technology categories, in general, tend to see a few players dominate thanks to economies of scale.
  • “There will be absolutely fewer players with a bigger market share,” Underwood said..

Industry figures debate the right setup for operational software in hospitality.

  • “Twenty years ago when I joined Priceline, the exciting change was in distribution with the arrival of online shopping on the internet,” Underwood said. “The exciting change is now in the content, so to speak. The product is evolving into new alternatives away from the traditional hotel, traditional vacation rental, etc.
  • Examples include hotels now selling multi-night stays without housekeeping and hotels selling packages that bundle a stay with free access to coworking space or off-site gym.
  • “Hotel software should be flexible enough to adapt to the evolution of the product,” Underwood said. “The PMS and the CRS [central reservation system] converge to meet the challenge.
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