Executive Vendor Summit Review: Magnolia Hotel, Houston, Texas - April 12-14, 2010 (Expanded version)

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June 01, 2010
Executive Vendor Summit Review
Kris Burnett

View Magazine Version of This Article

This year, a record-breaking 70 executive-level technology professionals came together at Hospitality Upgrade’s sixth annual Executive Vendor Summit. They came, and many returned, for educational sessions, and more importantly, exclusive quality networking opportunities that they cannot find anywhere else.

“For leaders of hospitality technology companies, nothing else like this exists and it is the best networking event you could possibly attend,” said Dan Hogan of Galaxy Hotel Systems. Sean O'Neill of Newmarket International, Inc., agreed, “This conference is unique in that it affords the senior management of the vendor community the opportunity to interact in a very professional and productive manner. Attending this conference is a very effective use of time each year.”

This year’s summit began Monday, April 12 with a golf scramble. Not only did the summit have record-breaking attendance, but there were more golf participants than ever before with 40 participating. The winning foursome included: Greg Pesik of Passkey, Mike Kennedy of, Bob Magliozzi of Cendyn and Whitney Weiss of The McLean Group. New categories of the straightest drive and longest putt were added this year with Jay Troutman proving his putting skills and Ron Dressin showing that his time at the driving range certainly paid off. Afterwards, attendees had an opportunity to mingle during the always-creative opening cocktail party ice breaker and at the Texas barbecue dinner immediately following.

The main focuses of the education sessions this year included getting your business in alignment whether internally or with offshore or domestic partnerships, and the value of not only the customer, but also the employees – especially good management teams – whether growing a business on its own, merging or as a potential acquisition for another company.

Educational Sessions
The opening session was, Sharpening the Performance Perspective with Dr. Jim Underwood, professor, author and consultant.  Dr. Underwood looked at the performance of organizations and described a business framework to help attendees understand if their company’s organizations, cultures, processes and values are aligned in a way that will maximize the ability of the company to achieve its strategic objectives

According to Dr. Underwood, “No company has ever failed because it could not continue to do what it has always don, companies fail because they can’t change or adjust to change. When you leave here this week, I want you to leave and see the changes you can make to make your organization successful.”

While explaining what he calls the Five Immutable Laws of Sustainable Success, quite a few in the audience were feverishly taking notes. Dr. Underwood described them as: strategy, where a company must align with emerging competition; organization, where a company must be capable of supporting strategy (i.e., CEO, management, culture, structure, decision systems, strategy, creative capacity, technology); character, which must be unchanging and exceptional (including production/process flexibility, values, ethics); values, that must be clear and unchangeable (including recognizing the value of people, excellence; and accountability, which must be unquestionable.

Dr. Underwood then touched on strategic thinking and levels of competition, including how to maximize profit at each level by using strategic alignment. As he explained, “I’ve looked at hundreds and hundreds of studies – we have companies that (think) they should maintain a status quo and we have an environment that demands creativity.” As Dr. Underwood said, “Companies in strategic alignment have ROIs of 100 percent to 300 percent higher.”

THE DSG Diamond Framework he showed the group examined how strategy plus execution is the secret to sustainable performance. One of the most important recommendations he made was that companies should value employees as much as they value their customers. “The big question is, do you have a culture that challenges status quo,” he asked the group. He then gave an example of a company that dared to be different. “The chairman of Costco was challenged (by Wall Street every quarter) to cut pay, benefits, etc. He told them to not touch his people and this included better pay and benefits (health and life). That (Costco) is one of the best-managed companies around.”

Another company example is that of Southwest, a company that does not have a diversity program, when many others do. “Top companies don’t have diversity programs,” Dr. Underwood said. “They are all diverse but don’t need to have a program. (With companies like Southwest), there is no prejudice.”

“If you don’t have values and accountability in place, I don’t care what you say, it’s not going to happen,” he said. “The key is the value. We have to put employees at the top (up with customers)… if you want to have people who would kill for your company, that’s how you do it.”

Does this work? After thousands of studies over the course of 20 years, Dr. Underwood has found that companies in strategic alignment have ROIs of 100 percent to 300 percent higher, whereas companies with serious misalignments have higher chance of insolvency. An example he showed, is a former global technology leader that has been ravaged with ethics violations and performance failures and is now in liquidation.

Another recommendation he made was to always think about emerging competition. As he mentioned, using a quote from Hockey star Wayne Gretsky talking about how success and anticipation are inseparable, “Don’t go to where the puck is…go to where the puck is going to be.”

Dr. Underwood recommended that companies should focus on the keys to understanding how to make their organizations successful: emerging competition, strategic alignment, values and accountability.

“I passionately want you to leave here and begin thinking about the pieces of the organization that are either helping or hindering you from doing well,” he said. “(Companies) want people to try Six Sigma, Good to Great, etc. They are all good tools, but the companies don’t implement the changes… If we learn to think differently, we can begin to take the organization into renewal.”

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The next session, Successful Partnering, featured panelists Sean O’Neill, Newmarket International chairman and CEO; Greg Pesik, Passkey International president and CEO; Luis Segredo, MTech president and CEO; and moderator Dr. Jim Underwood. The group examined what successful partnerships look like and why some partnerships succeed and others fail. The panel also discussed various types of partnerships and the decision criteria used to determine if, when and how to partner.

Segredo explained why MTech has established partnerships, “We were trying to deliver value to the customer… (looking at) what the customer needs, making things happen for the customer, and getting the resources to make it happen from a business standpoint.”

Pesik explained a challenge Passkey has had with partnering. “One of our biggest challenges is offshore partner development,” he said. “It was all cultural misalignment; different value structure, how our product was presented to our customer… We recently switched from India to Belarus.”

O’Neil suggested another way to look at partnering. “Pick an area where we can’t grow, a situation we need to respond to,” he said. Five years ago when looking at offshore opportunities, Newmarket built a filtering system for defining partners. “Do we share the same values or are we looking over our shoulder always checking them. Do they have integrity – if you are doing business with someone and they don’t have integrity, (it can come back to bite you.)

“We do talk openly about how we get out (if we need to),” he said. “We have very few of them, but the {relationships) we do are really terrific.”

Segredo agreed with the importance of cohesiveness. “We found a like-minded group,” he said. “We have worked with them for the last 8 years.” But, he said, there are two sides, the geographic side and the corporate culture side.

Hopkins stressed the importance of working together with partners as a team from the beginning. “Once you have offshore partners and the contracts are done, you really have to treat them as employees and integrate them (into the system),” he said “(This is) critical in offshore relationships.”

O’Neill then asked the audience how many used distributors across the world (about 25 percent raised their hands), and asked how many of those had problems. Most of this 25 percent admitted they did.

Ed St. Onge of EZYield.com explained how due diligence on the front end has actually improved EZYield’s partnership success rate. “Most of European business is through resellers. We have to see the marketing and support plan from our potential resellers before we agree. We put together an agreement – how our product will be represented – (and at this point), we have a 65 percent success rate now, when we only had 10 percent before.”

Jules Sieburgh asked the panel about the pros and cons of customer partnerships. O’Neill explained, “I think those are tricky, (but) we have done projects with customers that benefit us both.” Jules added, “On the hotelier side, I have had really good experiences being a partner with a vendor. But I don’t see it much today.”

Dr. Underwood, then asked the panel about partnering with publicly traded companies. “For us, it’s the opportunity vs. the risk of failure,” Segredo said. “You may have only one more shot to get into that market (before a competitor can come in).”

The panel all agreed that regardless of the partnerships, the customer should always be considered in the long run. “I think that is the value of this meeting (the Executive Vendor Summit) – you get to meet with your peers,” O’Neill said. “You won’t be in business long if you don’t have the customer at the top of the pyramid.”

When asked about exclusivity by Jeff McKee of Jonas Software, O’Neill replied, “We look at it… the potential for our potential parties… we would look at if there is a benefit to being exclusive. (Which most times, it is not in the long run).”

Hopkins recommended starting out small. “Start with some projects, if you like what we do, we’ll go from there,” he said. “Last year, we had eight simultaneous projects… and the Venza Group has been heavily involved… That offshore (experience) put us in command of a project in April. We went live with a corporate Website, 750,000 lines of code, (and it was the quietest we’ve ever done).”

However, Jacob Dehan, of NORTHWIND-Maestro PMS cautioned, “The last 30 years we have been trying partnerships. I think really the principal is very, very simple. The project has to be voluntary… the objective has to be the client (on a project basis). If you try to force a relationship, too many cooks in the kitchen, it doesn’t work.”

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The Partnership session was followed by, What Happened to Our Budget, with Mike Kistner, CEO of Pegasus, and John Burns, president, Hospitality Technology Consulting. The priorities of hoteliers have changed, leaving questions like where is money being spent and why. In this session the speakers examined how organizations can get back into the money.

When discussing whether he has seen any signs of pending restrictions being removed, Mike Kistner said, “There was always a line I drew – this side is what we need to do not to die (the core things to keep things spinning.) In some areas, some (budget line items) are being removed because some things are becoming (necessary) to survive – i.e., social media. Some of these expenditures are necessary just to stay in the game. I think we are seeing some of the walls opening up with regards to spending.” John Burns agreed, saying, “I am seeing the same.”

Burns looked at behavior in CIOS as it relates to the challenges in the industry and shrinking budgets. “(When you hear) we need to cut 10 percent, 15 percent across the board (staffing cuts, etc.) Suddenly, this person is gone, some of their projects are stalled. That’s bad.”

Kistner added, “There are three types of CIOs; there is the one who is going to try and maintain the status quo. The second type, the stone-stepping type, is the one who is looking for his next big gig, and you know he is going to move on in the next 18 months. The third – the one who has a vision and understands where the business needs to go. They have vision, align the business and continue to execute that vision. (There is risk involved with this one.) If you look at it, this is almost always a watershed moment, even though the CIO may not survive.”

Both then gave advice as it relates financial pressures and the conflicting demand to provide more services and handle larger volumes. Kistner recommended starting with higher level objective. “It is not only going to save me money, but is it going to be more efficient,” he explained. Burns said, “Presenting oneself as an organization that is going to be low risk (is important). Commitment, honesty and integrity are core when looking at a vendor.”

Kistner, said companies have been looking at expenses across the board, but explained how they need to stay in the game to not lose their share of business. “Do I reduce operating expenses, do I reduce travel,” he said. “We saw a lot then, reductions, in personnel as a result of the recession. They were not easy, but they were acceptable because of what was happening in the industry. In 2009 people were reading their marketing budgets. Rich (Siegel of our own Hospitality Upgrade) can tell us… those who stayed entrenched. We could either retrench or springboard forward. We went forward.”

Regarding staff reductions, Burns said, “People at every stage – it’s been brutal.” Kistner agreed, saying, “The impact (with) these reductions is, you actually get excitement from a potential company to do a new project, they now have the money… but they don’t have the vision (due to these challenges).”

Another challenge with staff reductions was that of not having the right people in place when a company is ready to do a project, or experienced staff has been replaced by other executives from non-technology-based areas, or cheaper, less experienced individuals. Burns added, “There should be institutional/residual knowledge of the product (in place). There are fewer examples of expertise and this is a problem for companies. One trend in CIOs – in smaller to mid-size companies – is the shift from traditional CIOs to CFOs. They know a good deal when they see it, but they don’t know how it works. They are very reliant on outside experts – this can be good and bad – (one aspect being) a higher degree of functional liability.”

Cindy Estis Green then asked, “With a purchase decision, as an industry, we tend to under invest in technology. A lot of the systems are not centralized. Are you aware of any outreach to owners and ownership groups? They don’t have the knowledge… we haven’t had any formal outreach or better information flow. Burns acknowledged the challenge, and said, “The asset managers are painfully unaware of how technology can affect their business. I think it is improving, but there is a long way to go.”

Sieburgh added, “This topic and this downturn give us the opportunity to showcase our products. Vendors do a very hard job of explaining their products, but leave it to their customers to understand the ROI… I know there is an opportunity for the vendor to help the customer… (like saying) I can help you minimize risk, or we can affect very few properties and we can be easy to work with… I don’t see a lot of this.”

Kistner said, “I agree, even if you are not selling SAAS, sell the service, sell the benefit. Here’s the investment and what you can get back from it. From John’s (Burns) point, getting a bigger ROI.

Burns added, “Are they going to be able to train us, support us… who will be training the thousands of employees and be there for the long haul. What happens when things go wrong? They want to make sure the vendor will be there, and will be an active player. (This is largely a problem brought on by vendors, and vendors are not good at addressing this.)”

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What vendors are addressing more and more lately, however, is social media. Marc Freedman, founder and CEO of Blue: The Business Network/DallasBlue lead the next discussion, Digital Conversations: The New Marketing Paradigm, and focused on ways companies can utilize tools like blogs, Facebook and Twitter as customers are no longer just using the Web to search for information – their behaviors are changing how companies think about marketing.

Freedman explained how valuable social media has become today. He said, “Focus on how your companies can use social media. Social media companies have as much or more value than old-school media companies.” With consumer reviews and other consumer-driven content, he said, “Tell your story, or have it told for you… The new paradigm is media abundance instead of scarcity.”

He described what he calls new marketing. “A powerful global conversation has begun,” he said. “Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets (people) are getting smarter – and getting smarter faster than most companies. The new kind of marketing – branding is the aggregated version of your company. Increasingly external – not just the press, but what people are saying about it to their friends.”

Freedman explained that “social” includes: group conversations (discussion mailing lists, forums, bulletin boards); social networks (Facebook, LinkedIn, Meetups); publishing (blogs, microblogs (Twitter), Wikis, directories); media (photos, video, podcasts, games); location (GPS, maps, travel); and talk (comments, reviews, ratings, polls, bookmarks, tags).

Freeman asked those in the room about their social media usage. Every person in the room answered that they were on LinkedIn, 30 percent use blogs; and 20 percent use Twitter.

He explained how the hospitality and travel industries are a perfect fit for social media. “With Twitter, type in a search and save it,” he said. “If you can have customer service tweet comments back (someone who complains), it becomes a positive experience… Ideally, most would rather complain about a problem to their friends than contact the company or Tweet.”

Jacob Dehan explained how good customer service can trump any social media potentials though – good or bad. “We cannot control social media – the public is,” he said. “Just do and serve the clients well, and that is all you need… the secret to preventing bad exposure is… be proactive (because these comments) can be after the fact.”

Marc Freedman agreed, but suggested the audience think more broadly because of the reach of social media. “Look at your company and your asset,” he said. “There are literally thousands of social networks today. You have to think, how strategically can I (integrate/use) social media into my product.”

RedRock’s Ron Dressin asked about LinkedIn and if there is a value for the many contacts most have on LinkedIn. Freedman said you really can’t use it as much now as in the past. He said, “It was originally developed as a social network for CEOs and investors where they could have a very private network. Twenty to 30 years ago, we all had much smaller networks than we do now.”

Don Hay of Digital Alchemy asked what the group thought about TripAdvisor. Cindy Estis Green responded, “I work with several clients who suffer at the hands of bad reviews on TripAdvisor. There are management functions on TripAdvisor where they (managers) can respond. It can be constructive, with good ideas. If your property is a dump (or someone says it is), you need to do something about it.” She suggested companies encourage their customers to write good comments when they have good experiences. In post-stay surveys, she recommended adding a link to TripAdvisor – where she said, in most cases (80 percent to 90 percent) would be good comments. She said, “You can encourage customers to put in the most good comments you can (from good experiences), and you can address the bad.”


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Speak Your Mind! was the next session, an interactive session moderated by attendees and using an anonymous automated response system. Topics included: HTNG and the time, effort and money that goes into it; compensation and benefits trends; and ideas for capturing and sharing more information about the products and services being used by the hospitality industry and how vendors can use this information to make more effective business decisions.

Moderators of this session included: Ed St. Onge, president of EZYield.com Inc.; Tim Tiller, president of Multi-Systems, Inc.; Richard Siegel, event host and president and publisher of Hospitality Upgrade;
And Bob Bennett, president of Starr Technology Consulting.

Technology Implementations:
The first segment covered gathering more information for the industry and was moderated by our own Richard Siegel, along with Bob Bennett. Seventy percent of the audience agreed that there is not enough information available to hotel companies/owners regarding technology implementation to make truly informed decisions about technology purchases. Siegel suggested however, “If we can identify properties by category, companies can narrow the results to identify your competitive set.”

Next they asked if hospitality technology vendors would benefit by having actual market share and installation trend information available to hotel companies/owners. The responses to this question were split down the middle. Bruce Humphrey with MIWA Lock Co. Ltd., agreed with the idea, but cautioned, “It may not help them make decisions themselves. A lot of people make decisions based on the name other than the product. They are making the decision on the marketing.”

Ed St. Onge wasn’t sure, and said, “With a company like ours, we get a lot of benefit by flying under the radar. We work with clients where (we sometimes) need to keep it confidential.”
Tim Tiller of MSI explained that he already has access to this type of information through the restaurant industry and has reaped its benefits. “We sell heavily in the restaurant industry,” he said. “They have this type of guide for retail POS and restaurant POS.”

Seventy percent did say that they, hospitality technology vendors, would probably like to see a customer satisfaction rating included as part of an installation survey. And Bob recommended a blog for both hoteliers and vendors to respond. However, only 16 percent of those polled thought that hotels, brands and management companies will actually be willing to share their technology installations information and will faithfully enter this information each quarter.

Compensation:
In the next segment of this interactive session, Tim Tiller asked the audience how they are currently trending in compensation. The response was that 75 percent utilize a pay-per-performance system.

When that group was asked how many incentive-based goals their associates focused on at a time, 55 percent said one to two, and 45 percent said three to five.

While 45 percent said their current incentive-based program consists of cash, zero said non-cash, and 55 percent said a combination of both.

When asked how much annual revenue is invested into the companies’ salary and wage expenses, 21 percent said between 20 percent and 40 percent of revenue, 33 percent said 41 percent to 50 percent of revenue, 17 percent said 51 to 60 percent of revenue, and 29 percent said 61 or more percent of annual revenue.

The audience was then asked if their companies provided merit increases across the board or just high performance in 2009. This cross-section was encouraging in the industry. Twenty-nine percent said all associates; 68 percent said just high performance; and 3 percent would have a pay cut.

The 2010 plans regarding cash merit increases include: 48 percent said all associates, 50 percent said high performance only, and only 2 percent said employees would receive a pay cut.

HTNG:
In the next segment, Ed St. Onge discussed HTNG, an organization trying to set some standards, but one where there are some mixed feelings about it in the industry. Sixty percent of the attendees are members of HTNG. (Four in the room had attended the conference and 72 percent said customers do not ask about HTNG certification. Only four of the vendors in the room were HTNG certified.)

Bas Blommaart of Hotel Concepts asked how many were not going to renew their membership, especially with the fees increasing. Quite a few said they would not be renewing. And, most of the group (76 percent) did not think HTNG improved their ability to connect with hotel groups quickly.

However, Don Hay said it has been beneficial, “HTNG gave us the possibility of talking together. It got us talking and got something started. HTNG is the vehicle that got it started.”

When asked if HTNG has enabled their companies to expand globally, a whopping 95 percent said no.

Patrick van der Wardt of Brilliant Hotel Software asked about the relevance of OpenTravel Alliance, to which the vote was similar – most of the group responded the same.

Gregg Hopkins expressed a concern over whether HTNG can keep up with emerging technologies, while Ed St. Onge agreed, and said, “But is it our fault.”

One attendee said, “Lagging behavior is a problem too. We worked on a product, waited for code for seven months, when they could have written it ourselves (in less time).”

Frank Pitsikalis of ResortSuite said, “The customers need to be asking for it. It’s just so expensive to build to HTNG specs. Like Dan said, it has made a lot of vendors think about how they are doing things.”
Only four of the vendors in the room were HTNG certified.

Dehan did point out the benefit of working with HTNG though and said, “They are important as a long-term (partner). Some things they have developed actually work pretty good.” Rich agreed and said he came out of the HTNG conference “thinking they were onto something great.”

“I think this year they have made some significant changes,” Sherry Marek said. And Bernard Ellis with IDeaS agreed, saying, “We get everything we need from HTNG. We are heavily involved and are founding members.”

Par Springer-Miller’s Larry Hall said, “15 years ago, everyone was complaining about the lack of standardization. Maybe we need to send a message to HTNG that they need to do a better job in a shorter amount of time.” But he added, “At the end of the day, it’s all we really have.”

Debbie Hawkins, of Infor said, “We were founding members of HTNG as well. It’s been a long haul. I was hearing all these negative things and came back from the conference with a good feeling too. We thought about whether we should stop, but it is better than anything we have today or had before.”

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Continuing the theme of lthe importanceof good leadership, Tuesday night’s gala dinner concluded with a presentation by Philip A. Bossert, Jr., Colonel, United States Air Force, Commander – Air Force ROTC Detachment 003, Professor of Air Force Science at the University of Houston. He is responsible for recruiting and preparing officer candidates for Air Force commissioning through a comprehensive college program, and discussed the qualities of leadership.

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On the final day, the first session was The Turnip Economy with John Rovani, managing director, travel and hospitality investment banking services, The McLean Group, LLC. The McLean Group is a fast-growing, privately owned U.S. financial services firm headquartered in Northern Virginia serving middle-market companies - $5M to $500 M in revenue. Its primary businesses are M&A and capital formation advisory, and business valuation with litigation support. The company’s key areas of expertise include: travel, hospitality and food service; government contracting; and technology and telecommunications.

In this session, Rovani, with the help of Ed St. Onge, discussed the impact of the economic downturn on the financial markets and suggested ways for getting access to capital – even in a down economy. He explained the criteria and metrics financial institutions are using to determine who gets approved – and highlighted some recent client success stories that demonstrate that it is still possible to get access to capital.

According to Rovani, he equity markets have rebounded and the economy is growing again with Q1 2010 real GDP expected to show a 3 percent to 4 percent annual growth rate. “The economy credit markets – leveraged loans, which are a large funding source for PEG acquisitions, are again gaining interest from investors,” he said. “The economy capital markets – publicly traded B2C companies (Priceline, Orbitz, Expedia, Ctrip.som, Hotel.de) and B2B companies (Anite, TRX. Concur, MICROS, Agilysys, Radiant, Epicor) serving the travel and hospitality industry have outperformed the S&P and NASDAQ over the past year.”

Rovani pointed to the potential benefits of a merger. “(A company could) start with 7.2M, but if it had merged, it could have a value of $21.6M,” he said.

Ed St. Onge has gone through this type of merger. He said, “We started with $1,000. We never took on investors, and now we have grown into quite a big company.”

Rovani and St. Onge said, “M&A isn’t about your exit strategy at all, it is about how you are going to grow your company.”

“We contracted the McLean Group,” St. Onge said. “We are in an aggressive situation with a China reseller and had talked about an eventual merger. We each owned our own part of it. John and the McLean Group created valuation terms for both parties – i.e., here’s how a private equity company would look at you, here’s how a public company would. A year later, after the merger/as soon as the merger was announced, I was contacted by (several) private equity groups. We got noticed.”

“We were able to create a brand new product and bring it to market one and ½ years earlier than we had planned and we are expanding our global footprint,” he said. “We now have offices in Asia Pacific. When John met us, we were in a strip mall because that’s all we could afford. (We have) increased cash flow and have improved our margins,” said St. Onge.

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The final session was Let’s Make a Deal with Max Chee, principal, Millennium Technology Value Partners, L.P., and Bob Post, president and CEO of TRAVELCLICK. Acquiring and selling companies in today’s economy presents both challenges and opportunities. Chee and Post shared their insight on these challenges and opportunities – Chee from the private equity view, and Post from the company owner perspective.

Chee said, “We are investing for growth, but also investing for liquidity. It normally takes 11 years to go public, five to 10 for an exit.”

Millenium looks at what it is that you are doing that is different; is there a catalyst to your market that could propel your business; and what does the future exit look like for shareholders. Management experience is key as well, according to Chee. “We want to work with people who have successful management experiences,” he said. “The industry is very cyclical; it depends on the ups and downs of the economy.”

The reason Bob Post was also in this session was for added perspective on both sides. "We had both a 'recent equity event' and are a strategic acquirer,” he said. “If you are really going to sell your company, you need to know this information (30-second elevator pitch) – you need to know your addressable market.”

When selling, Post said, “This is a difficult process. You have to know what you want, what you can live with and are not willing to live with – management control, ongoing role, retirement.”

If you want to sell, he said, “You’ve got to run your business, you’ve got to grow your business, you’ve got to fight off your competitors – all while trying to do this... The quality of the management team comes into play.”

The process for TRAVELCLICK took about a year, from choosing an investment bank to the closing 12 months later.

Lessons learned by TRAVELCLICK include: get a clear understanding of the goals and expectations of the potential buyer – growth capital, late stage equity and strategic buyer; your company performance is really all that matters no matter what you are told; and valuation, the great unknown frontier – precedents, self delusion (avoid it if you can).

“Figure out who you trust,” Post said. “You need that knowledge, that experience of an investment firm. (You can’t do it yourself, no matter how financially/investment savvy you think you are.)

“Don’t go down this path if you aren’t ready,” he cautioned. “We wanted our story before we went to market… Clean contracts, do you have your financials in order, etc. You have to have this all locked down… We picked two companies and negotiated. We did our due diligence. It will get frustrating, but at the end of the day, it’s just business and you have to go through it.”

What are the lessons TRAVELCLICK learned as a buyer? Post explained, “If we’re going to buy something, it’s really going to have to work. If it doesn’t fit into our product vision, we’re not going to invest in it.”

What characteristics did they look for? “Quality in management team – track record of success, vision and desire; does it ‘feel right’ to both companies and teams; does it ‘connect’ with our hotels or is it ‘evangelical.’”  Post explained, “We need somebody to drive it.”

He admitted, “You need to know what it is you want to do. Do you want growth, do you want an exit.”

St. Onge asked where Post saw himself as a buyer. “M&A has always been part of our strategy,” Post said. “We are always in the market and looking. We’ve got a list of companies we’d love to pick up down the line.”

Chee explained how TRAVELCLICK’s 2007 timeline was textbook and asked how much was price a factor. “The golden rule on the other side is price,” Post said. “We took a number of companies out that we didn’t like from a management perspective. (The remaining ones, price was a factor.)”

As Post noted, “The business model, the execution – all of it has to be there. Venture capitalists look at all of that.”

The general program themes this year focused on the value of employees – your own or those of companies you are interested in, especially good leadership – and getting your business in alignment. As always, networking was king and the sessions were queen. Cindy Estis Green of The Estis Group said it was a “great opportunity for vendors to learn what developments are happening in their own niche or in related technologies that may influence what they do with their own products/services.”

Jacob Dehan of NORTHWIND-Maestro PMS agreed, and said this was “the best summit to-date.” On that note – we will see you next year, with creative networking, timely sessions and most importantly, great company.


We would like to thank Microsoft, HFTP, TRAVELCLICK, Venza Group, The McLean Group and HP for making Hospitality Upgrade’s sixth annual Executive Vendor Summit possible.

- Kris Burnett, editor - Hospitality Upgrade
 

©2010 Hospitality Upgrade
This work may not be reprinted, redistributed or repurposed without written consent.
For permission requests, call 678.802.5302 or email info@hospitalityupgrade.com.

 

Performance values according to Dr. Jim Underwood:
1) Unquestioned integrity
2) We are a team
3) We value humility – no ego trips allowed
4) Innovation is the rule
5) You are empowered to fix what’s broken
6) (The biggie!!!) Everyone is accountable to our values
7) We have fun! (organizations that succeed are a lot of fun)
8) Seek the best for others
9) Transparency (Kingston – no closed doors)
10) Exceptional is always the goal
 
 
 
 
Social is real…today: market valuation –
Vide YouTube $1.6B…NBC TV $6B
Phone: Skype $4.1B…Qwest $9B, 30K employees
Publishing: Facebook $4.0B…NY Times Co. $1.7B
 
 
 
 
Cluetrain Manifesto, 1999, Locke, Searls, Weinberger & Levine:
“These markets are conversations. Their members communicate in language that is natural, open, honest, direct, funny and often shocking. Whether explaining or complaining, joking or serious, the human voice is unmistakably genuine. It can’t be faked. Most corporations, on the other hand, only know how to talk in the soothing, humorless monotone of the mission statement, marketing brochure, and your-call-is-important-to-us busy signal. Same old tone, same old lies. No wonder networked markets have no respect for companies unable or unwilling to speak as they do.”
 
 
 

Seven secrets for CEOs – Social Media Dos and Don’ts:
Don't:
Don't be corporate
Don't control
Don't talk
Don't sell
Don't force customers
It's not a technology
It's not a program

Do:
Be personal
Facilitate
Listen
Brand. Build trust.
Follow your customers
 
 
 
 
What the vendors said about compensation:
Bruce Humphrey of MIWA said, “The classic pattern is where sales is down, there is a negative impact on morale.”
Jacob Dehan of NORTHWIND-Maestro PMS said, “Our compensation is related to skills gained to deliver services to the client.”
Kristin Intress of InnLink said, “Noncash incentives create more of a team-oriented goal.”
Ursula Rhode of Genares said, “Other things than cash, like an extra day off. A lot of things that employees really like that aren’t cash.”
Sherry Marek of Datavision Technologies said, “We give a lot of noncash items throughout the year – we give them something right then instead of end of year. (Reward them right then.)”
Frank Pitsikalis of ResortSuite agreed with Sherry’s idea, and said that especially with gen Y, they respond differently. They want instant feedback.
Ed St. Onge of EZYield.com said, “We find with younger employees, it’s better to surprise them. Reinforcing a positive habit when they don’t expect it.”
 
 
 
 
What Should You Be Looking For in an Investor?
- Reputation and investment expertise: aligning yourself with the right type of investor is important to validating the company’s strategy and to gain access to the right set of strategic and financial resources.
- Flexibility in investment capabilities and formats: financial savvy ranging from the ability to lead follow-on financings and recapitalizations to the ability to manage minority investments, ability to structure debt or equity vehicles to provide liquidity to appropriate constituents, and ability to remedy liquidity issues and to bridge divergent interests within your shareholder base
- Long-term partner: financial expertise including capital markets, M&A, valuation, accounting and strategic planning; value-add contributions including strategic guidance, board participation and business development initiatives.

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