THE JOURNEY TO HOSPITALITY TECH INVESTING

HU: Prakash, tell us about your background and how you found your way to the hotel industry.

Prakash: My induction into hospitality was by chance. I was working at IBM research labs in speech recognition, writing algorithms. I connected with Mr. Tata and ended up at Taj Group of Hotels as senior vice president and CIO in 1999. I never had worked in hospitality before. Over time I learned about the complexity of the industry.

HU: Dave, what drew you to investing in technology and hospitality?

Dave: At age 15, I created a record manufacturing company that put me through college. I sold it in 1974 to get into the computer industry as a programmer. By 1975 I was installing back office programs in 215 Los Angeles businesses. The 215th was a hotel— today’s Fairmont Hotel near the beach, then a Sheraton. I programmed one of the first front office systems for that hotel.

Industry veteran John Pignotero told me if I didn’t do well, I'd never make it in this industry. He became a close friend. That programming effort led me to specialize in hotels and change the company name to Computerized Lodging Systems. We became the leading hotel system in the United States and then the world — 26 offices (nine international), 27 distributors, 2,000 systems, including a 1982 license to Marriott.

Our specialty was running multiple hotels on a single computer located in an office building for consolidated back offices with reduced employees. Marriott used this to create Courtyard. Two years ago, Marriott was using our system programmed in the ‘70s and ‘80s in 4,100 hotels worldwide. Even green screen software can survive. I sold the company in 1990, operated it for the buyer until 1993, then began investing the proceeds into 208 early-stage companies, many in hospitality. I've been in the hotel industry since 1974 and investing in it since 2003. Prakash and I were partners for Wayfair Ventures before I sold my interest to him.

Prakash: Dave is still an advisor on the Wayfair Ventures team.

THE AI REVOLUTION IN HOSPITALITY

HU: As an investor focused on hospitality technology, what makes hotel tech an attractive investment space?

Dave: Today the focus is AI. Turnover, especially in the front office, is so great that training is difficult and expensive. Institutional knowledge is rare. AI can help significantly. Our investments lately have been 50% in AI, including robotics. It'll be a bubble —we’ve identified 3,000 companies in AI. I'm guessing in five years we'll be down to20. I’ve identified five areas: AI and workflow, strategic marketing, corporate protection and security, resource management and robotics.

HU: Prakash, what makes hotel tech an attractive investment for you?

Prakash: Every aspect of hospitality is being impacted by AI. The real crying need is labor shortages. Large groups with captive call centers spend significantly training representatives, and attrition is high.

I’ve seen conversational AI demos where you can quickly train models to replace humans. With an operator fallback, you’re seeing huge paybacks without attrition headaches or training costs. There aren’t many hospitality experts, so regular call center agents need training in hospitality lingo and hotel layouts.

There are huge opportunities in revenue management and pricing. In data cleansing, many hotel groups have dirty customer data that becomes garbage when seeking meaningful insights. Agents can clean that data for a clean database. While AI is perceived as a bubble, this time it’s backed by real revenue models, unlike the dot-com bubble of 1999-2000.

BLOCKCHAIN, ROBOTICS AND EMERGING TECHNOLOGIES

HU: While everyone is focused on AI, what else is happening? Are there other trends hoteliers should watch?

Prakash: AI leads, but other innovations will intersect with it —blockchain, for example. There’s significant activity in sustainability. In Europe and Asia, there’s huge focus on sustainability. You’ll see blockchain applications creating carbon tokens for more sustainable hotels using less energy. These will link to AI through data centers. Blockchain requires significant computing power, as doAI large language models. They converge at the infrastructure level. You’ll see real-world assets tokenized and more blockchain uses in hospitality.

HU: Dave, do you see anything not specifically AI-focused?

Dave: Let me take the opposite side on blockchain. The speed is slow, so it won’t replace credit card transactions. Blockchain will be slow to adopt — I’m staying away from it, like cannabis. Those aren’t mainstream. The call center application falls within AI workflow, but there are probably 25 vendors providing that software. There will be consolidation. In early-stage investment, I must see companies with great management who can pivot and compete in a fast-growing industry that will mature quickly.

Robotics are more difficult and expensive for early-stage companies but more productive for hotels. We’ve seen robotics in maintenance, room floor cleaning, delivery to rooms, front desk experiments, window cleaning. It’s the beginning. Robotics with AI will become important, but it’ll take larger investors, more investment and time for
industry acceptance. Security is important — AI and actual security software. Four or five years ago, Target was hit through a Micros terminal that got into corporate. Everyone has vulnerable access points.

BLOCKCHAIN AND PAYMENT INNOVATION

HU: Prakash, you have talked about the opportunities of blockchain. Could you share more?

Prakash: We missed one good robotics transaction. On blockchain: over two years, crypto market cap went from $1 trillion to $3.77 trillion. With recent SEC and Trump Administration regulatory announcements, you’re seeing democratization of stablecoins. I'm alluding to blockchain usage not physically within hotels, but your whole payment infrastructure changing significantly.

Today with credit cards, you’re paying 2% to 5% to the card company. With stablecoins, that friction drops to one-tenth or one-hundredth. The first manifestation of blockchain applications in hospitality and service industries will be payments and payment rails. You’re still transacting U.S. dollars via stablecoins pegged to fiat currency. Walmart, Costco and major hyperscalers like Amazon are developing stablecoin solutions. If they eliminate credit cards, they save $20 billion to $30 billion on their P&L. Those are massive opportunities in payments with blockchain. Blockchain penetration is increasing —it’s at $3.77 trillion now.

WHAT INVESTORS LOOK FOR: BETTING ON THE JOCKEY

HU: What factors beyond the technology itself determine where you invest?

Prakash: As Dave always says, we bet on the jockey, not the horse.

Dave: That’s right. It’s the management, the founder, the CEO’s vision. Everybody pivots. An early-stage company is never the same after meeting the marketplace. AI is overwhelmingly the present thing — a series of trends with such depth it will continue. Next is robotics. We haven’t fully explored revenue management. Using AI for projections of future occupancy through revenue management, we’ll make more money from the same resources. That’s where investment will go, beyond security.

DOMAIN EXPERTISE VS. BROADER VISION

HU: How important is it for hotel technology startups to demonstrate understanding of hotel operations and the complex distribution ecosystem?

Dave: It’s important to see that the startup solved a need, not a want. Usually someone has an idea — say, a maid cart system for routing maids efficiently. Four or five companies are competing on this today. If they’d sit with senior or middle management at a hotel, management company or chain level to find the pain points, then develop the product and prove they’re answering an established need, I’m much more impressed and willing to invest.

Prakash: While domain expertise is important, it can box you into horizontal thinking. We want people who understand hospitality nuances but think bigger about where they can deploy technology. These technologies should have adjacency — migrate from hospitality to assisted living or cruise lines, expanding the canvas. The person should solve a very significant pain point that also solves problems in other industries.

Dave: We look for the total available market — very broadly — and the serviceable available market, perhaps a single hospitality application as the initial effort. We look for the extension Prakash mentioned into the total available marketplace, because it’s always much bigger.

Prakash: Looking at our investment track record, we’ve done iconic transactions — Cloud Beds and ResortPass. But peeling through layers, there aren’t enough purely hospitality-focused transactions. We started going broadly. That brought investments like Igen, ChargeNet Stations, parking company OCRA — one of Dave’s favorites.

Dave: I coached the founder at the beginning of his company and invested a small amount.

Prakash: It has tangential application for hospitality, but it’s outside.

FINAL THOUGHTS: NEEDS VS. WANTS,TENACITY OVER BRILLIANCE

HU: Before we wrap up, please share a final thought for our audience—whether they're hoteliers evaluating technology, investors building in the space, or anyone
passionate about technology in hospitality.

Dave: Investors can be led by shiny objects rather than attracted to management teams who can pivot and find the right solution to critical needs. In this industry, there are critical needs. Most revolve around labor — the highest hotel expense — and competition, which is intense. Solving problems related to labor savings and competition effectiveness are our top priorities. The tools are AI and blockchain. Investors should be aware of the needs, not the wants.

Prakash: I agree wholeheartedly. As you evolve your investment thesis in this industry, it’s always about the team. They may have a marginal idea, but if they have tenacity to iterate and overcome insurmountable difficulties, those are the people to back. You don’t want extremely bright people with quick ideas who quit halfway. Innovation and entrepreneurship is 99% sweat, only 1% inspiration. Many are attracted by shiny objects. But when it comes to real work, they realize the difficulty and drop the ball.‍

HU: Thank you both for your time and insights today. We hope this conversation has given our readers a clearer lens on what innovation looks like when it's backed by smart capital and industry understanding.