Ric Leutwyler: That was about the time when Choice Hotels contacted me and said they wanted someone to come in who has experience in hospitality and technology and also has entrepreneurial interest. They thought I may be a fit for that and I remember walking out and texting my wife that this was a dream job. This is a startup that’s not a startup because what Choice Hotels was saying is, “We want to give you a platform we built over the last 10 years or so and rolled it out to 5,600 hotels. We want to give you the people that built it, implemented, and supported it. We want to give you ourselves as a customer at around $30 million a year and we want you to take this into the marketplace and sell it to everyone else in the industry so you create greater shareholder value for Choice’s shareholders.”
Sramana Mitra: Was it a spin-off that they were trying to create?
Ric Leutwyler: Exactly. We were given freedom to do almost everything. We had the opportunity to create from scratch. What are we going to call the company? How are we going to brand ourselves? How are we going to position ourselves in the marketplace from the product, pricing, and corporate personality standpoint? What do we need to do to be less of a big multi-billion dollar hotel company and more of an entrepreneurial tech startup type of a company. We carried with us this very rich proven platform and team to help build it out.
I joined at the end of October of 2012. Now we’re up to a little over 200 people – a lot of them in the area of continuing to enhance the product. We also now have sales and marketing to really drive it in the marketplace. We’re in our own building and feel there’s a lot of momentum in the marketplace. It has been a fast and furious ride, but it’s also been a rewarding one.
Sramana Mitra: This subsidiary is now called SkyTouch?
Ric Leutwyler: SkyTouch Technology.
Sramana Mitra: What’s the structure of SkyTouch? Is it 100% owned by the parent company?
Ric Leutwyler: Correct. Today, it is 100% owned by Choice Hotels. We’re just a separately operating division of Choice Hotels. As Steve Joyce, the CEO of Choice Hotels, has stated on earnings calls, “There are certainly many ways in which that can proceed including a spin-off or varying kinds and separate publicly-traded stocks.” Right now, we’re 100% owned with a forward looking view of the real valuation increase for Choice Hotels becoming fully separate.