Two hospitality technology developers, Travel Trigger and Pegasus, have recently entered into a merger and Accel-KKR, a private equity firm based in the United States, is backing them up to help grow their services.
The companies didn’t disclose the terms of the deal or how much they had previously raised on their own. No investor has a controlling share of the combined entity, said Gautam Lulla, president of Travel Tripper and the new entity.
After the companies fully merge, one of the brands may disappear. Together, they serve about 5,500 hotels and touch approximately 16 million bookings a year. Central reservation systems, a product provided by both companies, sit at the center of a lot of data and revenue generation for hotels.
“Pegasus has always been strong at distribution-facing connectivity,” said George Roukas, a partner at consultancy Hudson Crossing. “Travel Tripper has done a terrific job at building a booking engine that converts very well on brand.com sites, and they’ve got good customer service, and their demand generation capabilities are coming along nicely.”
Both Travel Tripper and Pegasus offer a central reservation system (CRS) for hotels. They will merge the systems, Lulla said.
“Travel Tripper has offerings in hotel marketing, web design, booking engines, and customer reservations systems,” said Skift Research senior analyst Seth Borko. “That means it can handle, and collect data on, almost the full life cycle of a prospective direct customer.”
Accel-KKR grew out of a joint venture between well-known venture investor Accel and private-equity firm KKR. It’s now independent, with about 10 percent backing by Goldman Sachs. It typically invests in midmarket software services businesses. It has rarely invested in the travel sector, except for a 2016 strategic investment in Cendyn, a customer relationship management provider for 30,000 hotels.
Accel-KKR joins other firms betting on roll-ups of tech companies into larger platforms.
“A handful of companies are making a serious run at creating software platforms for the hospitality sector,” said Roukas. “Tens of millions of dollars are pouring in. Look at how Amadeus has spent seven years building a new central reservation system for IHG [InterContinental Hotels Group].”
“I’m not sure if Pegasus and Travel Tripper want to be a platform player or if they have the knack to do it,” said Roukas. “Time will tell. However, even if not, this move should let them be a popular application layer on other platforms much more handily than if they each kept solo.”
Industry players have recently led a flurry of deals.
On the strategic side, last year tech giant Amadeus acquired TravelClick, a hotel business intelligence firm, in a $1.5 billion deal. Shiji has recently rolled up several hotel companies.
Private equity has made bets, too. On Monday, private equity firm LLR announced a majority investment Intelity, which helps hotels communicate digitally with guests and staff. Last year, Warburg Pincus took a majority stake in Duetto, which helps hotels manage their revenue.
The thesis behind the flurry of deals is that hotels have under-invested in tech relative to other sectors. Today hotels may finally have gained the motivation to invest in tech because they now recognize they need it to woo more travelers to book directly, which is cheaper than through online travel agencies that charge high commissions, said Skift’s senior research analyst Rebecca Stone, author of the report “The State of the Hotel Tech Stack 2018.”
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