by Mike Ford
We work in an exciting industry. Each day brings something new in the world of online hospitality and, last week, it was AccorHotels’ acquisition of Availpro, one of our European competitors.
It’s a well-deserved outcome for the Availpro team, which has created a substantial business serving a meaningful segment of the French hospitality market.
A CONTINUING TREND
Consolidation in the hotel tech industry continues its march and in the last few years we have seen a significant number of deals.
Here are just some examples:
- Buuteeq, PriceMatch and Hotel Ninjas acquired by Priceline Group (owner of Booking.com)
- Hetras PMS, SnapShot and ReviewPro acquired by PMS company Shiji
- Itesso acquired by Amadeus
- Trust International and Genares acquired by Sabre
- Revcaster acquired by the Rainmaker Group
- Guestfolio acquired by Cendyn
- Serenata acquired by HeBS Digital.
And, of course, FastBooking and Availpro acquired by AccorHotels.
While their recent acquisition is, I’m sure, a welcome outcome for the Availpro team, it also continues a trend of independently-owned hotel tech providers falling under the control of large corporates like booking sites or hotel chains. Given most of this tech is cloud-based, it is not only the software that the new owners come into possession of, but all of the guest data, transaction history, and future-looking rate and availability information of what are ostensibly competitor hotels.
Hotel tech providers that are independently-owned and operated are becoming increasingly scarce, as a number of players (including some of SiteMinder’s competitors) have been swallowed by industry giants. The motivation for these tech acquisition varies by player, however one of the main drivers for acquisitions of tech by booking sites and hotel chains is undoubtedly the battle for hotel supply. Booking.com has acquired hotel tech in what could be interpreted as an effort to gain control over the hotel room availability and rate supply source while Expedia is building its own hotel tech to engage the hotelier deeper with their extranet (read: the place where inventory and rate is captured). In the case of AccorHotels, they need hotel supply outside of the AccorHotels brand in order to drive more consumer choice on the AccorHotels booking website, aimed at capturing some of the OTA bookings through the brand’s direct channel.
Herein lies the problem for the acquired businesses, and their hotel customers, when they lose their independent ownership.
These once fast-growing, innovative, customer-focussed companies that lived and breathed to make better product every day for their hotelier customers are now caught up in a larger machine that likely has a completely different agenda from the one the company had when it was born. Pre-acquisition, they existed to delight their hotel customers and build features that mattered to them. Now, their actions are heavily driven by the agenda of the larger entity that owns them. It’s unlikely companies like AccorHotels and Priceline are looking to meaningfully boost their revenue through the sale of this tech to independent hoteliers, as this opportunity is negligible in relation to revenue from their main business. What the acquired tech can do is deliver gold to these companies in the form of hotel room supply and analytics of the data coming from the supplying hotels.
This may naturally present inherent conflicts of interests to the hotelier using these acquired technologies. Some may be apathetic or be unaware of the possible implications, but many hoteliers do not want to give over control of their technology and data to a single booking site, nor do they want to cede control and access of their valuable inventory, pricing and guest data to a competitor hotel operator.
WHAT WILL THE FUTURE HOLD?
It’s not surprising that some hotel tech companies decide to sell early on in their lifecycle. It can be a very tough business building and selling technology to hotels. In the case of distribution and connectivity providers, it is particularly tough as you have to deal with huge transaction volumes, have high availability, instantaneous updates, and vast integration options to all manner of channels and property management systems. This only works really well at scale, which is why I suspect many companies in SiteMinder‘s own sector choose to be acquired when they hit a few thousand customers. It is really hard to scale the business from 5,000 to 25,000 customers and not everyone has the desire to take that on.
As for the remaining independently-owned tech providers, interesting times lie ahead. Will the future be one where the only choice for hotels is to buy their technology from large hotel chains or from the booking sites they list on, or will smaller, independent technology developers thrive in an environment where open platform integration and technology innovation will make them a more attractive choice to hotel?
When we started SiteMinder, the tech supplier industry was fragmented with many small players. These days, some very large corporates have taken their place or absorbed them. With the pace of acquisition and consolidation, the face of hotel tech is changing fast.
What will the future hold? Who knows. But like I always say, there is never a boring day in online travel!
