Hotel Marketing Tech Consolidation Being Orchestrated by Austin Private Equity Firm

Two travel tech companies that offer hoteliers and vacation rental managers tools for engaging with customers, encouraging direct bookings, and collecting and analyzing guest feedback have merged in a deal orchestrated by Serent Capital, a private equity firm based in Austin with $2 billion in invested capital.

Revinate, a San Francisco-based maker of software for guest data management and business intelligence, said on Tuesday it had absorbed Navis, which offers direct booking services. The combined company, under the Revinate brand, will serve more than 300,000 hotels.

“The merger lets hotels get one tech ecosystem where they can target the customer, convert the customer through their direct booking channels, and pull together guest profiles across data sources,” said Abhishek Anjanappa, chief marketing officer of Revinate.

The companies haven’t disclosed deal terms or transaction values. VRMintel first reported on the merger. Navis CEO Kyle Buehner will step aside after leading the company for 17 years. Most Navis employees will remain, a Revinate spokesperson said.

Serent Capital led a Series D round in Revinate in May 2020, during the depths of the pandemic. The round was approximately $8 million and $10 million in size, according to a financial filing.

Separately, Serent provided the capital to acquire Navis and merge it with Revinate.

Serent hasn’t taken majority ownership of Revinate. The startup had raised about $45 million in equity funding before the pandemic. During the early part of the pandemic, Revinate took a $4 million loan from Horizon Tech Finance, in exchange for 615,475 in preferred stock warrants, according to filings. The startup also received a $1.8 million paycheck protection loan from the federal government, according to ProPublica.

“We took action to shore up our position,” Anjanappa said. “But we definitely fared much better and came out ahead of what we thought we would need.”

Serent’s Interest in Software for Hoteliers

In a separate move a year ago, Serent invested in SHR (Sceptre Hospitality Resources), which provides hotels with its central reservation system called Windsurfer, a guest management system called Maverick, and a revenue management system called Wave. The firm’s a co-investor with Rod Jimenez, co-founder and CEO of SHR.

Are there synergies among the three travel tech companies, and is a merger likely?

“No, they’re two separate shareholder bases,” said Lance Fenton, a partner at Serent who leads its hospitality tech transactions. “We’re not going down the path of merging those assets.”

“The Revinate deal isn’t a hospitality rollup,” Fenton said. “This is a compelling opportunity to continue the work Revinate and Navis have done. Our strategy is to pick best-in-class players and help them grow, not just do amalgamations of assets. Without this deal, Navis was going to spend on building its own marketing tool. It makes more sense they invest in the revenue platform under the Revinate umbrella.”

Revinate echoed the comments.

“No, there are no plans,” Anjanappa said. “From our standpoint, what we want to maximize Revinate’s potential. Wherever we feel a fit, we would be interested in playing there. But nothing is going to be force-fit into the Revinate thesis and evolution.”

One of Serent’s co-founders is Kevin Frick, who while at McKinsey & Company worked on the first private equity acquisition of TravelClick, a hospitality tech rollup that was eventually acquired by Amadeus for $1.5 billion.

So Serent’s team has a long history of tracking hospitality technology investments. In 2012, the firm made its first investment in the sector by taking a stake in Knowland, a Washington, D.C.-based company that provides technology, data, and analytics to the hospitality industry and is best known for its cloud-based sales and catering solution and event intelligence tools for selling meeting and conference space. Serent has helped Knowland grow through three mergers and acquisitions since then.

The company first began looking closely at Revinate in late 2018.

“Our survey work found that the number-one CRM [customer relationship management software] in the hospitality market is Revinate, based on customer data,” Fenton said.

Serent first began talks with Navis even earlier, back in 2010. As Navis shifted emphasis from serving vacation rentals to servicing the hotels and as it upgraded its technology, the company became more attractive, Fenton said. Navis intends to continue serving its approximately 140 vacation rental sector clients.

Revinate Bets on Unifying Hotel Data on Guests

Hotels have used Revinate primarily for its cloud-based e-mail marketing and customer relationship management software.

“Revinate brings the marketing products that target the customer, and it helps hospitality companies generate business intelligence from their data,” Anjanappa said. “Navis has a reservation suite that converts customers on direct hotel channels efficiently and with a high conversion rate.”

Where things might get interesting is if it can build a “data lake” that lets hoteliers create a single-view, “golden record” of any guest by integrating data from multiple sources. This year the company announced a product called advanced profile synthesis that attempts to do that.

But accurate data integration is a tough nut to crack.

“The big hotel companies have been trying for years — decades? — to get CRM/CDP, RMS, and CRS to work together to create personalized offers targeted at the individual level,” said George Roukas, a partner at the consultancy Hudson Crossing. “But, for one reason or another, they can’t seem to make it work.”

“If Revinate and Navis are going to start rolling up resources to have a go at it, then great!” Roukas said. “I suspect Serent has further plans on the horizon to bring in the rest of the pieces of the puzzle.”

Serent believes the stars have finally aligned for customer relationship management software and customer data platforms to excel.

“Yes, people have been trying to crack this problem for a long time, and it has especially been a big issue in the hospitality industry,” Fenton said. “But things have come a long way in the past several years.”

The broader opportunity could be significant as the pandemic is slowly tamed.

“In Europe, and Greece in particular, I would say that many hoteliers talk about leveraging digital marketing, but few actually do,” said Minas Liapakis, founder of Eyewide, a hotel digital marketing agency based in Crete, Greece. “That appears to be changing. Obviously, because of the pandemic-related turmoil, many hotels are investing in internal teams or are hiring external partners with key expertise.”

Revinate will spend the next few quarters doing a phased integration of its systems with Navis’, and the company anticipates many cross-selling opportunities between the two companies’ customer lists.

“Our goal is to follow the traveler across the journey, from researching, to booking, to the stay itself, to post-booking, so a hotel can continue to engage with a guest and re-target them to win them back for a future stay,” Anjanappa said.

“We also want to move the balance of power back to hoteliers from the online travel agencies, so that hoteliers make better use of their own data and convert bookings on their more cost-efficient direct channels,” he said.

First-Party Data Is a Hot Topic

The backdrop for Revinate’s work is a bigger picture trend, as Google and other companies join Apple in limiting the access of advertisers and other third parties to customer data collected via their products.

“In a world where you can no longer use third-party data, you have to use only your own data as a hotelier to figure out your customer journey and customer profile,” Fenton said.

Revinate, hoteliers, and other travel players increasingly need to rely on first-party data, or information that consumers volunteered to companies, to do digital marketing well.

“We’re moving toward a first-party data world,” Roukas said. “We’d better work out how to take advantage of it.”

Do Hotels Need This Software?

Is hotel digital marketing that targets individual guests necessary in most cases?

Tech vendors often use the example of trying to convert online travel agency bookers to book directly or to get past guests to book again and directly. But many individual properties have many guests who visit only one time over the course of, say, a decade. So is it worth it to re-market to such guests?

Anjanappa argued it is worthwhile for hoteliers to understand who their guests are because even if individual guests don’t become repeat visitors, they are likely to represent the interests and preferences of similar people who will be visiting.

“Suppose a hotel in a specific metropolitan area,” Anjanappa said. “Why do people come to the hotel? If the hotel company analyzes the data it has on its guests, it can make its marketing more efficient when attracting new ones who have a similar profile.”

“You can identify the attitudes, behaviors, and interests,” he said. “You can then use that intelligence to run more effective marketing campaigns to target a larger audience of new guests.”

Private Equity Interest in Hotel Tech

Additional private equity interest in the travel sector is expected.

Earlier this year, Accel-KKR, a private equity firm based in Silicon Valley, supported Cendyn’s merger with arch-rival NextGuest. Cendyn’s offerings overlap with many of Revinate’s and SHR’s.

While several travel startups have distressed prices right now, it may take a return to post-pandemic normalcy in hotel revenues for hospitality tech companies to produce stable growth rates and prodigious cash generation that will attract the interest of top-tier software buyout specialists such Thoma Bravo and Vista Equity Partners.

When they come to shop, they will have many possible options.

Competitive Space

On the fronts where Revinate and Navis compete as a combined company, they face competition, to varying degrees, from other tech players focusing on hospitality marketing, guest engagement, and direct booking conversion, such as Cendyn, TrustYou, GuestRevu, Avvio, RateGain‘s BCV Social, Sabre’s SynXis Enterprise Platform, SiteMinder, and Amadeus’s TravelClick.

What’s more, other software players with more generic offerings also compete for overlapping aspects of hotel software business, such as Zendesk, NetSuite, HubSpot, Medallia, IBM’s Silverpop, Guestware, and Salesforce.

“Generic players won’t deliver the specialized, customized solutions that hoteliers need for their distinctive products and services,” Anjanappa said.

UPDATE: Story was updated to clarify a comment by an executive.