GuestSpan Speaks!

Three days at the show, miles of isles and great people. Plus tons of shwag for the kids. Not to mention the atmosphere of Austin, Texas and barbeque-o-plenty…

Where was I?

Impressions:

1. A $278 billion industry is bound to spawn a few parasitic companies and the hotel industry certainly has its share. Good to see people getting so excited about door locks,

2. Room of 2010 – Interesting ideas. Sign me up for a Wii in every room. I’ll play baseball against anyone in the hotel that wants to take a beating. The mattress-less bed looked intimidating, but must be comfortable. Else, why would they let it be part of the exhibit? And, Sony had a very small 11-inch organic LCD widescreen monitor that was absolutely gorgeous! If you have a HDLCD TV now, you’re going to chuck it out the window when you see the OLCD. (Yet another reason why I still have a TV from 1993. I’ll buy a new TV when the promise to stop inventing cool stuff.

3. The Brand is the Dream – Most of the small to mid-sized vendors in the room are living for that day when a brand says, “You’re now standard install.” We’re part of that group. The real magic is making sure that you have business to keep the doors open in the meantime. Hope is not a strategy. Selling lots of product is.

4. How much can you really fit in a television? – We saw at least a dozen vendors that want to pipe information/content/communications/guestspeak/marketing/stuff through the television. Understandable. The TV is everywhere. All you need is a signal and you have access to the guest.

Of course, I’m glossing over so many hundreds of stories and people we met. There were a couple of competitive vendors in the crowd that visited with us for quite a while. I’ll let their identities remain a mystery, but you’ll know what I’m talking about if you were there.

And, the booth babe from Image Technology Systems was memorable. Holy Cow! What was that red thing she was wearing on Tuesday? I’m not sure what Image Technology does, but they will forever hold a special place in my heart. (I hope my wife isn’t reading this blog entry.)

Chris and I attended the Hitec trade show in Austin, TX last week. It was a very interesting experience after being severely spammed for the previous two weeks by seemingly every technology vendor in the hospitality space. It seems that technology is trying to creep into every space in the hotel. Whether it be using your cell phone as your room key, video concierges in the lobby, new and improved room safes and mini-bars, or super control centers for the entire hotel room there are companies trying to automate every part of the hotel experience. And that doesn’t even begin to cover the number of backend operating, management and tracking systems we say at the show.

Attending this show one might be convinced that the modern day hotel was the bastion of technological advancement. However, reality is quite the opposite. For instance, the hotel we stayed at in Austin offered free internet and even had a digital city guide in the lobby, but that was about the extent of the technology offered. The room key was still a plastic card advertising Pizza Hut, the room safe was still fairly basic and that’s more than I can say about the TV service. All in all hotels are still slow in adopting new technologies. I think that is changing, but not as rapidly as I or my colleagues in the industry would like to see. Our role is going to have to be identifying “stepping stone” technologies that allow hotels to advance technologically without biting off more than they are ready for.

A good example of these technologies was services delivered through the television. Ten years ago this was an innovative approach to guest services. The problem now is that guests are more technologically advanced than their hotel rooms and TV is not where it’s at. With services such as Netflix downloadable movies on demand guests no longer need the TV in their room for entertainment. Not to mention the usage rates are very low. It is now time for the next step in the evolution of guest services technology. This may seem self aggrandizing, but that is exactly the mission of GuestSpan. We are offering a solution that is more on par with what guests are used to and something that hotels can implement and embrace without having culture shock.

It is going to be interesting to see the evolution of hospitality technology. GuestSpan will be there as a part of it for sure.

Next week, the HITEC (Hospitality Industry Technology Exposition and Conference) kicks off in Austin.

We’ll be there.

This will be our first time.

It must be a huge show because hundreds of vendors have spammed me with email and snail mail to get me to visit their booths. With all the hoopla, cocktail party invites, marketing and such, this is going to be big.

But, one mail piece really made me think about marketing to the hotel world.

On the postcard, the following claims were made:

-Add incremental revenue streams
-Enhance your guests’ experience
-Increase operating efficiency and productivity
-Help reduce overall operating costs

These are almost the very same things that we have said about our product since we solidified the concept. Since these are the driving value propositions in the hotel industry, it’s not uncommon to hear them from multiple sources.

But, the part of this that troubles me is the fact that these statements were made by Brother, a company that sells label makers, printers and fax machines.

Holy Crap!

If every peanut butter maker, horseshoe-er, mail carrier and window washer is using these value propositions to try to sell to hotels, I’m going to guess that most hotel execs are almost tone deaf or snow blind to those words. In fact, when a vendor says that they provide incremental revenue streams, the hotel suits must go running for the hills.

I mean, they want incremental revenue, but if one more manufacturer or maid carts tells them that they will add incremental revenue streams, they’re going to start splattering on the pavement below their lovely corner office windows.

Just for the record, Brother makes fine products. I haven’t ever owned one, but they sell a bunch and some people like them.

But, to market to this group of hotel decision-makers, we’re going to have to show value rather than just talk about it. That’s the only way were going to make a splash.

And, thank goodness for the great people that have allowed us to connect, drive us to the right guys and advised us along the way.

That will end up being much more important than all of the hyperbole on trade show postcards.

(Ask us about our research about the connection between fax machines and enhancing guest experience. In brief, there isn’t one…)

Yesterday Chris and I attended a coaching session put on by FundingUniverse in preparation for their speed pitching event on June 4, which we will be participating in. Kent Thomas, CEO of CFO Solutions, made a presentation on how to handle deal specifics and offered his 10 Tips for Raising Capital. I thought they were good so I am posting them here for your enjoyment.

1. Use Your Own Money First-even though the prevailing thought for some time has been to build a company on other people’s money it is a sign of confidence and preparation to investors that the entrepreneur has some skin in the game as well.

2. Friends & Family- If mom won’t invest in you why should others? Now, there may be many reasons that friends and family don’t invest ranging from their financial situation to holding dilution to a minimum, they should at least be approached.

3. Act Like It’s Your Own Money- Kent said that during the dot come bubble entrepreneurs were spending large sums of money irresponsibly. That is the reason the bubble burst. Being able to give investors a detailed report of where any money to date has been spent will tell them if you are treating the money as your own.

4. Market Research- This is a big, big problem for entrepreneurs. Know your market. There are many free or cheap options out there to allow companies to conduct some basic market research that will give them valuable insights into their market. For instance, Chris and I have launched a survey to travelers asking for their feedback on our idea and have spoken to and continue to speak to hoteliers to get their feedback.

5. Cash Flow Projections- If someone were to invest, how long would their money last? Knowing your monthly burn rate and how long money will take you is key. If you are wrong or worse, don’t know, then it is likely these same investors are going to have to put more money in or help you raise more much sooner than either of you expected.

6. Valuaton-Get Real- Something Kent said repeatedly was “Put yourself on the other side of the table.” Investors are looking for a 10x return on their money. To achieve that they are going to need to end up with a substantial enough equity stake so that even if they are diluted by future rounds of funding they still hold enough to realize that return. He said the sweet spot for most investors is between 20% and 40%.

7. You’re Responsible- In running a company entrepreneurs can delegate a great many things. But one thing they cannot delegate is fundraising. Investors want to see a dedicated, passionate entrepreneur behind their investment.

8. Smart Money- Look for money that comes with more than just dollars. Investors that bring expertise or insight into your particular industry are the best ones. Also, just as investors will be checking you out, make sure you check them out before accepting anything.

9. Accounting Records- Know your books. It is very frightening to investors when entrepreneurs are in the dark when it comes to accounting. There are smart people and services out there to help out those who aren’t financial geniuses, but don’t neglect this part of your business.

10. What’s the Offer/Instrument?- Come to investors with a deal in mind. They aren’t going to negotiate against themselves so don’t ask them for a number, they will just move on. Know what amount of equity you are selling for their money or what type of instrument you are looking to use to raise the funds.