Skift has recently covered the rise of fintech (financial technology) and insurtech (insurance technology) in travel. We predict you'll also be hearing more about martech, or marketing technology, in the coming year, too.
Travel tech company RateGain, which is on track to go public on an Indian stock exchange most likely by year-end, said late this week it was buying Myhotelshop, a hotel marketing technology vendor based in Leipzig, Germany.
The companies didn’t disclose the deal terms, but said they expected to have regulatory approval within about a month from now.
“This acquisition makes our martech [marketing trechnology] business more holistic,” said RateGain CEO Harmeet Singh. “This acquisition adds more flexibility in a few ways, such as by expanding connectivity to the metasearch platforms and related bid optimization.”
The Myhotelshop brand name will remain after the merger. Since its debut in 2012, Myhotelshop has provided tools to hotels for managing and distributing content and campaigns to metasearch, or price-comparison, resellers, online travel agencies, and other partners.
“The brand supplements the other marketing products we’ve grown since 2019,” Singh said. “We had already been getting better at driving guests via social media to convert and at helping hotels provide more relevant offers via their direct channels. Now we’re able to do that at the meta, digital level.”
Travel Tech IPO in the Works
RateGain, which has minority backing from private equity firm TA Associates, plans to raise approximately $54 million (400 crore rupees) by offering new shares in a public listing.
“Not to get ahead of it, but we see that happening most likely sometime this year,” Singh said.
TA Associates has a 22.8 percent stake in the tech vendor via its affiliate Wagner. They join other investors in collectively owning half the equity in the company before the public listing. According to the filings, TA Associates will sell a majority of its shares, 17 million, in the initial public offering.
Improving Revenue Picture
Today, RateGain is roughly at 70 percent of pre-crisis revenue levels. Looking ahead, around March and April 2022, RateGain expects to have the “run rate of the business” exceeding where it was in the pre-pandemic stage.
In India, the fiscal year for companies ends March 31. The company expects a fourth-quarter pick-up dovetailing with a domestic travel recovery during a peak travel season in India on top of the anticipated resilience in the U.S. and Europe.
“The catalyst of the growth has fundamentally been the expansion of our distribution business,” Singh said.
Relatedly, RateGain has many hotel customers in the U.S., which has seen a faster domestic travel recovery than India and some other markets — partly because of relatively higher vaccination levels.
Singh said he expects supplemental revenue growth from the company’s recently debuted products. Some of its tools have aimed to apply artificial intelligence to analyzing demand trends for individual properties and markets. Other tools have been trying to help hoteliers set rates to more accurately match demand.
Tuning Up Hotel Software
Like many other vendors who help travel companies set room rates, RateGain had to retool its back-end tech in response to the unusual pandemic conditions. Historical data wasn’t predictive of pandemic and post-pandemic booking patterns. So the company brought in data scientists to build and enhance applications, identifying new indicators — outside of the ones traditionally tracked — that were proving more predictive under the current circumstances.
Within the next six months, RateGain will focus on the initial public offering and integrating its latest acquisition.
“After the deal closes, the next 180 days will be about integrating Myhotelshop’s tech and accelerating its sales growth,” Singh said.
“They were already at a double-digit growth rate in Germany,” Singh said. “We look to expand its market across Europe partly by selling into our installed base of customers.”
Singh also said his company would keep its eye out for possible more acquisitions — and these would more likely than not be in distribution and marketing technology.
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Photo Credit: The JW Marriott Savannah Plant Riverside District in Savannah, Georgia, is run by the Kessler Collection, which uses RateGain's technology. Source: Kessler Collection