Accel-KKR, a technology-focused private equity firm based in Silicon Valley, said on Tuesday it had upped its investment and become a majority owner of Cendyn, a Boca Raton, Florida-based tech company.

The companies didn’t disclose the terms of the deal. In 2016 Accel-KKR said it took a minority stake in the privately held vendor, which helps hotels manage group sales as well as automate their digital marketing.

Cendyn makes cloud-based software that focuses on streamlining the cost for hoteliers and other travel companies to market and provide services, especially for group sales. More than 30,000 clients, such as Loews Hotels, The Standard hotels, and Rosewood Hotels, use its services, which include customer relationship management software.

For example, a front desk clerk checking in a leisure guest could click to see details pulled by Cendyn from multiple third-party systems to highlight a few things the clerk may want to talk about with the guest, such as welcoming the guest back if the person has previously stayed with the chain.

Private Equity Play

Accel-KKR has other travel sector interests. Earlier this year it underwrote the merger of two hotel tech providers, Travel Tripper and Pegasus.

“The odds are high some of this money will be used to slam together Cendyn, Pegasus, and Travel Tripper into one holding company and fund new products, hires, and other initiatives,” said Sundeep Chanana, of Horatio Partners, a technology investment bank.

Charles Deyo, president and CEO of Cendyn, has stepped aside after co-founding the company 23 years ago with his wife, Robin. Tim Sullivan, formerly chief revenue officer, has become president.

“As far as Accel-KKR’s investment in Travel Tripper and Pegasus goes, we see potential synergies, and we’re always looking for opportunities to partner to help those companies grow,” said Sullivan in an interview at HITEC, the Hospitality Industry Technology Exposition and Conference, on Tuesday in Minneapolis.

Private equity companies have reputations for stripping companies for short-term gains. However Sullivan said Accel-KKR doesn’t fit that mold and that it is investing for growth.

“Accel-KKR has an operations team drawn from industry experts that come in as consultants to help strategize in growing a business, not just a finance team,” said Sullivan. “Historically they’ve held companies for about maybe five years, sometimes as long as 10.”

Cendyn’s headcount of about 350 will rise modestly, said Sullivan, as the company deepens its coverage in its European and Asian markets.

A Bet With Risks

Accel-KKR’s bet on Cendyn faces some perils.

First, Cendyn has diret competitors in the customer relationship management space for hoteliers, including NextGuest CRM (formerly Serenata) and TravelClick Guest Management (acquired by Amadeus last year).

“We believe our differentiator is integration,” said Sullivan, who claimed Cendyn led the field on this score.

“With CRM [customer relationship management] as the core of our company, we’ve been doing middleware for more than a decade,” Sullivan said. “We have more than 200 connectors with all the popular property management systems, central reservation system platforms, and point-of-sale tools. On the group sales side, we plug into Amadeus’s Delphi and MeetingBroker, for example.”

Cendyn may come to face indirect competitors too. Software giants like Salesforce, Adobe Marketing Cloud, Oracle Responsys, and SAP may have an opportunity to take the lessons they have learned from providing customer relationship management in other industries worldwide to enter hospitality in a focused way.

“There’s no reason why the core CRM product from Salesforce or one of the other horizontal players can’t work for hotels,” said Patrick Bosworth, CEO of Duetto, a hotel revenue management startup, when asked to comment on a hotel sector his company doesn’t operate in.

“But you need to normalize data and have reliable, timely data, which right now isn’t often easily extracted from many hotel property management systems. You need middleware that can clean up the data before you feed it into Salesforce, Adobe, or whatever another horizontal player, because otherwise, the results won’t be good.”

“Maybe a startup like Hapi can do that,” said Bosworth. “Or maybe if you pour a lot of money in to retool an existing, purpose-built hotel CRM, you can do that. I don’t know exactly how the industry gets there, but I suspect there’s a gravitational pull to the horizontal players like Salesforce, SAP, Oracle, etc.”

Attempting to Stand Apart

Cendyn believes it can navigate the tricky waters ahead.

Sullivan claimed Cendyn excels at plugging into property management systems and other software to collect and transform data to make it actionable and push it to where it’s needed.

A year ago Accel-KKR took majority control of SugarCRM, a vendor that works closely with IBM. The private equity firm helped the customer relationship management provider acquire Collabspot, which sells email integration products, and SalesFusion, a marketing automation service.

Photo Credit: A view of a junior suite at the Fontainebleau Miami Beach hotel, which is a customer of Cendyn, a travel tech firm that has received additional investment from private equity. Fontainebleau Miami Beach