Choice Hotels’ recent 2013 earnings call revealed just how well the markets have received its SkyTouch cloud-based property management software platform. On the call president and CEO Steve Joyce said, “The interest level is high, and we are matching it with distribution capability—which is one of the big things that people were asking for. If you look at how these things tend to go, the fact that we had a strong existing business that we’re growing, we really like our opportunities there and so far we really like the reaction from the market.”
At last month’s ALIS Conference, Joyce summed up the situation. “When we first introduced SkyTouch, the market didn’t quite understand. People asked us ‘Why are you going into the tech business?’ and I’m like, we’re already in the tech business. It’s a $30 million business. We have 4,000 customers and 6,000 hotels. I think people are starting to get that now.”
Joyce recognizes that SkyTouch isn’t Choice’s core business, but it’s a business the company has been in for over a decade. He says SkyTouch is in dialogue with thousands and thousands of hotels—everything from very large brands to individual independents. “It’s a bit tricky because buying from us is a little sensitive. And we get that. We’ve said that [SkyTouch] can’t be part of Choice long-term. We’ve established a separate division; it’s in a separate building. It’s a legitimate, independently operated entity. But we get that Choice owning it is problematic.”
Joyce is careful to predict when the division will be profitable, however. “There is $30 million in revenues today, which is essentially a break-even situation, because it is what we’re doing internally—it wasn’t a for-profit shop,” says Joyce. “Our salesforce is being built up in a big way. It wouldn’t surprise me if by the end of this year we had a dramatic number of independent hotels and one or two brands signed up for SkyTouch.”
Joyce says that Choice could spin out SkyTouch, merge it with another software developer, or sell the division. “When you size the opportunity, it looks pretty good,” says Joyce. “When you look at the product, nobody else has it. SkyTouch is dramatically cheaper and dramatically safer than other software platforms. It is much more PCI compliant, so credit card issues are much less of a problem. It’s a SaaS-based environment that the hotel industry doesn’t have.”
