Travel Tech CEO Series: DerbySoft Prepares for a Hotel Distribution Free-for-All

Editor's Note: This year we expanded our coverage of the technology companies that do the behind-the-scenes work of powering the systems of the world's major travel companies. This is the final Q&A in a series of conversations with industry leaders. Our Travel Tech CEO Listening Series has showcased the industry's top minds revealing where business-to-business travel tech is heading. On any given day, the typical hotel sees between a third and half of its rooms filled by guests who booked their stays via third-party sites such as Booking.com, Expedia, and Ctrip. But the rise of digital distribution didn't happen overnight, of course, and many companies powered the trend. One of the most representative and significant of these companies is DerbySoft, a Shanghai-based vendor of connectivity solutions to hotels. DerbySoft is best known for building custom software for the world’s largest hotel chains, including Hilton, Marriott, and InterContinental Hotels Group (IHG). All of the top 10 largest global hotel groups and all of the biggest online travel companies use its connectivity tools. To be clear, though the company is Shanghai-based, 97 percent of its revenues come from outside of China, and about 80 employees work abroad in a dozen countries. When chief executive Ted Zhang helped to launch DerbySoft in December 2002, his team got their start by building customized enterprise software, which mainly connected into hotel reservation systems and distributed inventory to online travel agencies and other channels. Back then, this was untilled soil. Most hotel rooms that weren't booked directly were booked via travel agencies, who mostly used a handful of technology middlemen, such as Amadeus, Sabre, and Travelport, to process their bookings. During a recent interview, Zhang recalled the moment. He said his team was betting that Internet-based agencies would displace traditional travel agencies and technology middlemen in the distribution chain. Roughly 15 years on, DerbySoft's engineers have been proven partly right, as the rise of giants like Priceline Group shows. That said, technology middlemen still have tremendous power. Looking ahead, DerbySoft is betting that consumer platforms, such as Facebook and LinkedIn, will become as important to hotel distribution as today's travel-specific brands like Expedia are now. "There's no reason why LinkedIn, Amazon, eBay, Alibaba, and so forth won't want to sell travel produ