Skift Take

Game on, Oracle. But like everything in the hotel sector, the battle between next-generation hotel tech players and established titans will take years to play out.

Mews, a hotel tech vendor, said Thursday it had raised $33 million in funding from Battery Ventures, a top-tier Silicon Valley firm whose bet represents the first serious validation of a wave of hotel tech startups.

These companies are offering the first property management systems built for the internet era. The property management system provides the record-keeping heart of hotel front-desk check-in, check-out, and payment. The systems are critical for shepherding hoteliers through today’s digital transformation.

Battery Ventures’ Series B investment raises the risk of a reckoning for Oracle Hospitality. Oracle acquired the world’s most widely used property management system in 2014. But the tech titan fumbled the integration. Its rebound depends on mastering more of the high-momentum ways of startups.

Battery’s decision to bet on the hotel tech sector is thought-provoking. The firm was an early backer of travel companies Away, Duetto, GetYourGuide, HotelTonight, ITA Software, Omio/GoEuro, and Trust Group.

“Three years ago, we sat in a room and said we wanted to bet on a disruptor in hotel property management,” said Sanjiv Kalevar, a principal at Battery. “But we couldn’t find a good candidate.”

Mews, founded in Prague in 2012, took six years to develop robust functionality, said Mews founder Richard Valtr. Its ideal market is professional managers of properties with 50 or more rooms.

Is Oracle Vulnerable?

Everyone covets Oracle’s crown. But it’s been safe so far. None of the upstart companies have gotten buy-in from significant hotel groups. For example, Mews has only won smaller customers so far, such as Machefert Hotels, Westcord, Tsogo Sun, Point A, and Carlton Hotels.

What’s more, Oracle Hospitality is also trying to change its stripes. The company has programs underway to move systems from on-premise machines and data centers into internet-based storage for added efficiency.

In the past year, Oracle Hospitality has also taken many steps to become friendlier to developers who build third-party tools and need to interact with its data.

“We have a firm belief that with the pace of innovation we should try to create an ecosystem rather than have a closed garden, and we’ve made great strides here,” said Laura Calin, vice president of strategy and solutions management at Oracle Hospitality, at Skift Tech Forum in June. “More than a year ago, we opened up many of our APIs. We’ve made connectivity easier.”

Valtr at Mews remains skeptical, as you would expect from a tiny competitor.

“I originally wanted to create an app to sit on top of the Micros Fidelio system [since acquired by Oracle],” Valtr said. “But they asked €70,000 ($78,000) to get to look at its API, and you can’t start a business with those kinds of fees. Yes, Oracle has lowered them to something like €5,000 ($5,500), but there are still so many ongoing fees and hoops to jump through. It puts a damper on innovation.”

Protel, which sells a property management system used by 15,000 properties, has similarly said it had changed its business approach, such as by making it easier for developers at other tech companies to connect.

Last year, Sabre debuted a property management system primarily for hotels that are in one-, two-, and three-star segments. Agilysys generated about $34 million last year by providing property management software to about 270,000 rooms. Both companies have advertised the steps they’re taking to help hoteliers put their customer and transactional data to work to create the kind of personalization and automation shoppers are finding online.

An Upheaval in Hotel Tech

The internet has taught a few hard lessons to traditional hotel tech providers like Oracle.

“Given the rise of Airbnb, hoteliers are more willing to innovate on experience to compete,” Kalevar said. “Mews makes it easy for hotels to plug in other innovations like flexible check-ins or smart locks for guest room doors.”

About 275 companies integrate with Mews, including 31 channel managers, such as SiteMinder, which enable hotels to distribute their inventory and rates to online travel agencies and other outlets and otherwise mind guest acquisition.

Last year, Mews raised a $7.1 million (€6 million) round. It hired a sales team, boosting the company’s workforce from about 80 workers to today’s 270. In 2018, Mews boosted its revenue year-over-year by 230 percent to an undisclosed amount. It’s on course to double its revenue this year, it said.

It faces competition on all sides. Rivals include Apaleo, Clock Software, Cloudbeds, and Hotelogix. Public companies that have recently rolled out similar products include Amadeus, Sabre, Shiji’s StayNTouch, and RLH’s RLabs.

“Our theory is that, in the past, you used to have heavy sales and install cycles in the hotel industry,” Kalevar of Battery said. “You used to need experienced reps going door-to-door, with large up-front payments for on-premise software. Now you can sell lightweight, beautiful software that’s billed by subscription and mostly self-service or lightly serviced over the phone. You can sell to a 50-property chain in South Africa or Portugal without having to send someone to do an install.”

The Mews product reminded the Battery team of another startup it has backed called ServiceTitan, which has done well in offering business software to plumbers and other home maintenance businesses.

One X factor is security, which is more paramount than ever, given the increasing number of data hacks. Mews said it doesn’t store credit card data in its property management system but keeps the data in a separate vault. But as a newcomer, the startup may have more to prove to hoteliers than Oracle and Protel, which have had good track records on security.

Mews has raised slightly more than $40 million since its founding in Prague in 2012. It was one of Skift’s Top Startups to Watch in 2018.


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Tags: funding, hotel tech stack, hotel technology, Oracle Hospitality, property management system

Photo credit: Good Hotel, a property in London, uses Mews's property management system. Mews has raised a fresh round of funding led by Battery Ventures. Good Hotel

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