Building a Cloud-Based Property Management Platform, Ric Leutwyler, President of SkyTouch (Part 6)

Sramana Mitra: What is an average deal size for you?

Ric Leutwyler: For independent hotels, which average 80 rooms per hotel, the deal size is $5,000 a year or more. If you’re talking about a Choice hotel as a group, it is around $25 million. It depends on whether we’re selling to independent hotels, small group, or giant companies.

Sramana Mitra: So there’s no bias in there. It’s all over the place.

Ric Leutwyler: We have intentionally targeted each of what we call tiers. We’ve broken them into five tiers, but they could be broken into as many as you want. Tier one comprises the largest accounts. They have thousands of hotels and they take a long time to make up their minds about making the change because it’s significant. We’ve got to be talking to them now, because as they work towards this change, we want to be part of that discussion.

All the way down to tier five, which is one hotel to five hotels, we have people on our sales team that are targeted to each of those different tiers so what we’ve got that momentum building in each one of them. We do have some more resources targeted towards some than the others. Some of it is based on how good of a fit we are. If we’re a great fit, we put more emphasis on that. If we’re a less good fit because of some gaps that we would want to fill for that particular customer’s requirements, we still want to be talking to them. We just might be pushing harder on the ones that are a greater fit.

Sramana Mitra: Currently, you’re a subsidiary. You want to go public. What’s the time frame? Where is your revenue level right now, and what is the horizon?

Ric Leutwyler: I’ll clarify that going public is one potential outcome, but there’s a lot of different ways in which we could continue to evolve. That is a subject for Choice Hotels to decide because we are, pretty much, their asset. We don’t have a specific timeline. We don’t have a specific revenue for that. It’s based, in part, on what we see happening in the industry, what the momentum is, and how many of the groups of customers across the tiers are signing up.

Right now, we’re much more focused on continuing to enhance the platform and bringing on more customers. There’s always a discussion about it, but we haven’t set a timeframe. We haven’t set a specific path. We’re trying to focus on creating a very strong business with outstanding customer relationships so that the valuation is there no matter what path you take or when you decide to pull a trigger.

Sramana Mitra: Great! Thank you for your time.

This segment is part 6 in the series : Building a Cloud-Based Property Management Platform, Ric Leutwyler, President of SkyTouch
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