Bailador confident hotels booking platform SiteMinder will grow enormously as it rolls out new functionality
\nDynamic Revenue Plus to help hotels take advantage of key events like a Taylor Swift concert
\nSiteMinder forecasting to be underlying EBITDA and underlying free cash flow positive in H2 FY24<\/p>\n
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Special Report:<\/em><\/strong> \u00a0Bailador Technology Investments reckons the largest position in its portfolio, SiteMinder, is poised to unlock huge potential upside by adding key functionality for hotels to increase their revenue. <\/strong><\/p>\n Tech-focused capital fund Bailador Technology Investments (ASX:BTI)<\/strong><\/a>\u00a0first bought into SiteMinder (ASX:SDR)<\/strong><\/a> in 2012, chipping in $5 million and was instrumental in its listing on ASX in 2021.<\/p>\n BTI co-founder and Managing Partner Paul Wilson says it has already realised $30 million in cash, with its remaining position in SDR valued at $70 million, with the stock price up ~54% YTD.<\/p>\n SDR has grown to become one of the world\u2019s leading and most well known software-as-a-service (SaaS) businesses for connecting hotels to digital distribution channels.<\/p>\n \u201cIn the industry they\u2019re known as online travel agents or OTAs\u2026 names like Booking.com and Expedia,\u201d he says.<\/p>\n \u201cIf a hotel is on the SiteMinder platform they only have to load up their hotel room inventory and it can be distributed to all those OTAs.\u201d<\/p>\n SDR sells into more than 100 countries, with 40,000 hotel customers paying a monthly fee\u00a0 for access to the platform.<\/p>\n \u201cThey\u2019re the world leader in their space but there are still hundreds of thousands of hotels using old school technology so it has room to grow by doing what they\u2019re doing and adding more hotels,\u201d he says.<\/p>\n \u00a0<\/p>\n Wilson says SiteMinder is working to roll out key functionality, capitalising on its growing hotel customer base and platform with significant amounts of data plus enormous amounts of bookings annually.<\/p>\n He says the Dynamic Revenue Plus (DRP) model has revenue management combined with advanced market and business intelligence.<\/p>\n DRP essentially has functionality to boost hoteliers\u2019 booking revenue and in turn SDR will take a percentage, also boosting their bottom line.<\/p>\n \u201cThere were $60 billion worth of bookings coming through the SiteMinder platform last year and it is developing features hoteliers want and will share in some of that value,\u201d Wilson says.<\/p>\n \u201cEven if SiteMinder gets 1% of the booking value paid to them that would be $600 million, triple its current revenue base so that\u2019s the sort of scope of the prize you\u2019re talking about.\u201d<\/p>\n Wilson says Dynamic Revenue Plus will recognise that hotel bookings are higher than normal for a certain period, know when a big event is in town and recommend a hotelier put up their price by a certain amount accordingly.<\/p>\n \u201cScenario one is when a Taylor Swift concert comes to town and a hotelier might by flying blind not realising the timing of that and a bunch of people book up all rooms,\u201d he says.<\/p>\n \u201cThe hotelier is happy he\u2019s sold all his rooms, but they could have sold them for twice as much.<\/p>\n \u201cAnother is a big wedding, where a whole hotel has been booked out and SDR can let a neighbouring hotel know there is a situation where you have an opportunity to charge more for your rooms.\u201d<\/p>\n \u00a0<\/p>\n Wilson says the second functionality is called Channels Plus, which is a new low effort connectivity initiative allowing hoteliers to connect directly with more distribution channels.<\/p>\n \u201cAt the moment the hotels must have their own commercial agreements with each one of the online travel agents and what SiteMinder provides is a behind the curtain connectivity,\u201d he says.<\/p>\n Wilson says with Channel Plus SDR would have pre-agreed arrangements with all the significant online travel agents.<\/p>\n \u201cSiteMinder would offer an option for a hotel to take advantage of all the agreements they\u2019ve negotiated for, say, 20 different online travel agents,\u201d he says.<\/p>\n \u201cFor x percent of the additional revenue, the hotels can get access to commercial agreements with a suite of partners without having to do it themselves.\u201d<\/p>\n \u201cEssentially it makes it easier for a hotel to get immediate distribution.\u201d<\/p>\n \u00a0<\/p>\n SDR recently released its Q1 FY24 trading update with highlights including a 32.1% YoY increase in annualised recurring revenue (ARR) to $191.6 million and underlying operating cash flow of $600k for the quarter.<\/p>\n The company reiterated guidance for organic revenue growth of 30% in the medium term and to be underlying EBITDA and underlying free cash flow positive in H2 FY24.<\/p>\n \u201cSiteMinder has given guidance it will be profitable in the second half of the year which is great, but even more exciting is it has set itself up for long-term success with new product developments,\u201d Wilson says.<\/p>\n \u201cWe\u2019re confident that SiteMinder is going to grow enormously off the back of additional features and functionality for its existing hotel customer base.<\/p>\n \u201cSiteMinder has been a great investment for us, and we continue to expect it to be great.\u201d<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span>\ufeff<\/span>\ufeff<\/span>\ufeff<\/span><\/span>\u00a0<\/p>\n This article was developed in collaboration with Bailador Technology Investments, a Stockhead advertiser at the time of publishing. <\/em><\/p>\n \u00a0<\/em>This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n <\/span><\/p>\n The post Bailador likes Siteminder\u2019s strategy to take advantage of \u2018Swiftflation\u2019 events<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Dynamic Revenue Plus to take advantage of Swiftflation-like events<\/strong><\/h2>\n
Channels Plus<\/strong><\/h2>\n
SiteMinder forecasts cash flow positive in H2 FY24<\/strong><\/h2>\n