Staynttouch CEO to challenge hotel technology dominance of Oracle Hospitality
It has never been easier to start a travel technology business, but it has never been so difficult to scale one. Former equity analyst Tom Underwood has become CEO of Stayntouch because he believes the startup can defy the odds.
You might think most hotels wouldn’t try to overhaul their travel technology during a pandemic that is hurting revenue and reducing staff. But that’s not the story of Staynttouch, a manufacturer of hotel property management systems..
To find out more, I CEO interviewed Tom underwood Wednesday at the company’s headquarters in Bethesda, Maryland. Underwood said his business was 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 recurring monthly revenue since its inception in 2013, although the company has not disclosed the amount.
- On Wednesday, the company announced that it had signed Mint house, a new generation hotel brand. He apparently stole the business of Guest, another provider of property management services.
- Other customers include First hotels, Conscious Hotels, Margueriteville, Valence hotel group, and Modus Hotels.
- Most of the rooms served by Staynttouch are owned by traditional, non-boutique brands such as Showboat in Atlantic City, Sage Hotel Group, Village hotels, and Innislibre. 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 residences for the company’s city employees it is building on a campus near Mountain View, Calif. That’s for five properties, totaling 302 rooms. Considering Google’s security requirements for working with partners, this is an interesting endorsement.
Is Staynttouch a serious challenger?
- The business seems small. In 2020, Tyler morse, the impresario behind the American hotel operator MCR developmentt – the owner of TWA Hotel and other properties – raised capital through a fund to purchase Staynttouch from Shiji. The price was $ 46.8 million, a huge change from the $ 4.6 billion Oracle Hospitality paid in 2014 to Micros, which it became the global market leader. Oracle Hospitality.
- Underwood said the price of the Stayntouch transaction did not reflect the full value of the business because it was an unusual forced divestment.
- The Morse-backed fund raised additional capital at the time of the purchase. This gave the CEO the resources to grow. Underwood, hired a year ago, has hired 20 employees, including a revenue manager and a chief technology officer.
the the company appears to be under-capitalized compared to Oracle Hospitality and other rivals. The landscape includes:
Underwood said Stayntouch has an ownership structure that lends itself to other outside investment, which could help fuel its growth.
- “We are an independent company, with all employees having shares in Staynttouch, similar to a VC- [venture capital-] sustained startup, ”Underwood said. “We are a prospect of additional investor capital. “
Underwood has, during his career, oscillated between 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, financial director at business travel agency Lola, Senior Vice President of Orbitz, a leader in consumer e-commerce equity research at Legg Mason, Director of Revenue Management at Price line, and an 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 disclose details. But he said he joined Staynttouch a year ago because he liked the numbers he was seeing and the numbers have improved since then.
- Underwood expects consolidation in the hotel technology industry over a five-year horizon. Tech 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 configuration for operational software in the hospitality industry.
- “Twenty years ago, when I joined Priceline, the exciting change in distribution happened with the advent of online shopping on the Internet,” Underwood said. “The exciting change now lies 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 include a stay with free access to coworking space or offsite gym.
- “The hotel software needs to 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.