Bootstrapping to $20 Million with Intelligent Financial Engineering: Tim Hentschel, CEO of Hotelplanner.com (Part 5)

Sramana Mitra: All the business model is entirely predicated upon the hotels paying your fees and not the consumers. What are the key segments where you do business? Are we talking weddings? What are the top segments in which your business flows?

Tim Hentschel: Sports teams is big for us. It’s great to have a relative that had a lot of connections in pro sports as an owner of an NFL team. We’ve been doing pro sports team travel for 10 years—Los Angeles Clippers, San Diego Chargers, Washington Red Skins, New York Jets, and Brooklyn State Warriors. Over here in the UK, we work with AFC Wimbledon.

Sramana Mitra: What percentage of the business is now sports team group travel?

Tim Hentschel: 30% of our business is sports teams. It’s a pretty big portion. That’s youth club, adult, pro, and semi-pro. We have 70 universities under management, so a lot of college group travels and sports team travels.

Sramana Mitra: What’s the next big segment after sports teams?

Tim Hentschel: Corporate group travel and government group travel. After that would be weddings and other miscellaneous social groups like family reunions.

Sramana Mitra: What percentage is corporate?

Tim Hentschel: Total corporate is 40% of our business.

Sramana Mitra: What are the range of the business today and how do you report? In the top line, do you report the commissions you get from hotels or do you report the actual sales of the hotel rooms?

Tim Hentschel: We’re on referral fees. We only record our fees.

Sramana Mitra: What you report as revenue is not gross hotel room fee but referral fees that you get from that.

Tim Hentschel: Correct. We couldn’t record that number because customers pay the hotels directly. That’s not cash that we ever touch.

Sramana Mitra: What scale are you at now? You seem to have done very intelligent financial engineering such that your company is completely employee-owned.

Tim Hentschel: We’re on $20 million right now and growing. We just made the Inc. 5000 list last year for fastest growing privately held companies. We’re forecasting 25% growth this year.

Sramana Mitra: How do you manage the business? What are the principles of how you manage the business? Do you manage it as a highly profitable business or do you put all your profits into growth?

Tim Hentschel: We’re investing in growth right now and we always have because we’ve always grown organically. Our angel funders made considerable double digit returns on their investments.

Sramana Mitra: They’re out now, right? The angel funders are all out. Now you have full control of the business, don’t you?

Tim Hentschel: Right. I’m just saying that cash has been returned multiple times over back to those investors. All the cash that’s fueling the growth of the business is money that we’re making. We reinvest it all.

This segment is part 5 in the series : Bootstrapping to $20 Million with Intelligent Financial Engineering: Tim Hentschel, CEO of Hotelplanner.com
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