Sramana Mitra: Does the team at SkyTouch have ownership? Are there options?
Ric Leutwyler: The compensation is a mixed bag. There is some level of ownership but there isn’t anything to own yet of SkyTouch because there isn’t a separate entity to have valuation in. Our plans to create that kind of equity opportunity for team members is still not something we focus on.
Sramana Mitra: Let’s get into the business. What is the business of SkyTouch? What do you do?
Ric Leutwyler: SkyTouch provides a cloud-based service that gives hotels the tools they need to run their properties. When you walk into a hotel and check in, they’re using property management system (PMS). All the details of your checking in and billing for the food or movies are fed into this property management platform.
Historically, that has been a premise-based system. You needed servers, expensive hardware, and software to run the computer. Then you needed the software that was the PMS. There were also maintenance agreements. What we have done is take all that to the cloud. We provide all that functionality and more in a cloud-based solution and you simply subscribe to that.
Sramana Mitra: Whom do you compete with in the market?
Ric Leutwyler: In our industry, there are literally hundreds of PMS providers. When we came into the market, we said, “That’s the marketplace but who do we directly compete with?” I think that’s such an important thing for people to figure out. For one, we compete with those providing premise-based solutions, but we compete with the advantage of knowing that everybody is looking to move into the cloud. We’re already ahead of that.
I’d say there’s probably about five or six that we consider our real competitors. There’s one in particular that has the largest market share of any property management solution, but a very small percentage of that is cloud-based. I guess to put it in perspective, if you add up all of the cloud-based users of all of our competitors, they would have less users than what we have by ourselves.
Sramana Mitra: The competitor that you were just talking about, who is that?
Ric Leutwyler: That’s MICROS. It’s an organization that has been around for quite a while. They actually got their start in the retail side with POS. Then they started to expand and they’ve been around for quite some time. Recently, there was an announcement of them being acquired by Oracle, which is an interesting part of what’s going on in our industry. There’s a lot of interest from investors and strategic buyers about what can happen in this marketplace because they see this highly substantial move happening from on-premise to above-cloud.