Report on Hitec

June 24th, 2008 § 0

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.

Marketing Noise in the Hospitality World

June 13th, 2008 § 0

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…)

10 Tips for Raising Capital

June 3rd, 2008 § 0

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.

HDExpo Wrapup – GuestSpan’s Perspective

May 29th, 2008 § 0

Chad and I spent two days in Las Vegas at the Hotel Design Expo (May 14-16, 2008). The convention was housed in the Sands Conference Center and must have included nearly 10,000 exhibiting vendors. Two full floors were devoted to displaying every conceivable item that could possibly be stuffed into a hotel room to improve its design and functionality.

This was our first trip to this conference. I couldn’t believe how many companies manufacture intelligence doorknobs for commercial purposes. Self-locking, personnel-tracking, microbe killing doorknobs were everywhere. (Did you know that they make a doorknob that kills about all of the bacteria and viruses that come off of your hand within 20 seconds? The coating is supposed to last for 20+ years! Jim Pinter or TownSteel was happy to show us how it all worked. With 6 kids, I’m going to install those doorknobs through my whole house.)

There was very little in the way of electronics at the show. A couple of vendors stood out, and I wish I had written their names down to give individual shoutouts. A few phone manufacturers were there. The coolest place we stopped was a virtual reality company that is doing amazing animation to preview cityscapes, design concepts and architectural renderings. The quality of their animations was top notch. (I can’t think of any use of their application in my life, but I’m going to work on it. I want my own virtual reality studio)

Chris’ HD Expo Conference Grades:

  • Shwag: Very Poor
  • Floor Snacks: Above Average (due to a plentiful supply of white chocolate macadamia nut cookies)
  • People: Design Geeks, but pretty cool
  • Variety of Bedspread Colors and Textures: Endless
  • Eye Candy: Overwhelming in color, shape and dynamics (and that’s just the showgirl that was walking the floor for photo ops)
  • Applicability to Our Efforts: Not Particularly

    • We met great people, but unless we’re a vendor there next year, I’m not sure if we’ll get excited enough to see a million shower heads, fabric textures and pillow displays again.

    Technology, Self Service and You

    May 22nd, 2008 § 0

    I don’t talk to librarians anymore. Can’t think of the last time I spoke to someone at the bank. Airline counters are a thing of the past. If I have 10 items or less at the grocery store, I don’t talk to a cashier (unless I have produce. Produce is complicated..). By the time I arrive at the movies, I go right to the concession stand and into the theater. When was the last time I went inside a convenience store to pay for gas? I’d never have to go into the store if they would simply put a drink dispenser next to the gas pump.

    Every one of these areas in my life (and more) provide a self-service option. I am willing to take them up on their offer more often than not (except of course, in the case of produce. I can’t figure out how to ring up the right lettuce…)

    And, judging by the number of growing terminals and the people at those terminals, I’m not alone. User interfaces are simple. The technology works. I can get what I want.

    And, I’m not anti-people. I tend to like people. My wife is a people. My kids are people (in varying degrees). I’m mostly people myself.

    But, I’ll tell you, there are some instances when I’m happier with my self-service experience than others. The library is fantastic. Easy. Quick. Scan a barcode on the outer cover of the book and be off. The grocery store, Wal-Mart and Home Depot are not my favorite. The self-checkout process is complex. Lots of payment options. “Unexpected Objects in Bagging Area?” ARGH!

    Last week, I was speaking with Ram Thakur, PhD who is on top of self-service. He said that simplicity is the key. The more complex the process, the higher level of dissatisfaction. Makes sense to me.

    But, self-service isn’t going away. It is getting smarter and will pop up in almost every area of our life. They don’t make mistakes. They are easy to use. They are less expensive and more consistent than humans and they don’t mind working at all hours without a break.

    (Note: GuestSpan is very concerned with this topic as we intend to put self-service into every hotel room in the world. Hotel guests will get everything they want (food, product, information, service) more quickly than they have every experienced. Watch for us in your next hotel stay.)

    Kimpton Show’s Confidence

    May 13th, 2008 § 1

    According to an article in Hotel Business Magazine, Kimpton Hotels is making a big bet in what many would consider a bad market. Kimpton has raised $800 Million in funding for new projects to be invested in the next three years. The article states:

    While much of the hotel investment community awaits further clarity on where true asset values currently are before making another move, Kimpton…has made a bold statement of faith in the market, the boutique sector, and more significantly, its own brand.

    Indeed Kimpton’s strategy is bold. I think it also speaks to the real state of the market. Companies that are nimble such as Kimpton can benefit from the lowered asset values and expand their hotel portfolios. Kimpton CEO Michael Depatie is quoted in the article as saying,

    “while there isn’t a lot of current activity, we expect that will change in the coming months. We’re very bullish.”

    He continues,

    “So in 2009 and 2010 there will be a moderation of new supply and if the economy comes back at that same3 time, that will bode well for asset values.”

    It is as simple as buy low sell high. Kimpton is poised to take advantage of a lagging market and, what’s more important, they have the confidence in the resurgence of the market to do so. Further elaborating on how the company is approaching this, Joseph Long, Executive VP of Acquisition said,

    “No one knows where the market is on the downward scale and whether it’s down 20%, 30% or 50%. And there is a dearth of deals getting done because the values are not being validated due to the lack of financing. But at some point that will change and it may be in about six months.”

    I like Kimpton’s confidence in both their brand and the status of the market. In an era of negative media about the economic outlook it is good to see a company with a lot at stake taking risks to further their brand and their market position.

    Stranger in a Strange Land…. Why?

    May 8th, 2008 § 0

    Terry Jones, founder and former CEO of Travelocity, told a major hotel brand:

    “People don’t like to stay at your hotel. People like what they can do when they are at your hotel. That may be a business meeting, getaway or trip to see Grandma. They didn’t come to your hotel to stay at your hotel.”

    Mr. Jones’ comment was not what the brand wanted to hear, but was true.

    And, this thought applies to business travelers as much as anything. When I am on the road for business, I want to be a member of the local community. Those first couple of nights, eating at the close diners rather than the good restaurants, are not as enjoyable as they could be.

    That’s why GuestSpan is creating a system that puts hotel guests right into the local scene from the minute they arrive.

    I’m not just trying to create self-promotion in this post. I’d appreciate readers leaving comments about what they would like out of their travel experience. What information are you lacking that would help you make the most of a stay in a new city?

    Also, take 3 minutes to be part of our survey audience. If you travel for business, take our 9-question survey by clicking HERE.

    We are going to make your next hotel stay much better than you might have imagined.

    Cornell Center for Hospitality Research roundtable on service innovations

    May 6th, 2008 § 0

    The Cornell Center for Hospitality Research recently hosted a roundtable discussion on the risks and rewards of technology service innovations. Some of the topics hold a particular interest here at GuestSpan. Particularly in the area’s of using technology to create a better experience for hotel guests and improve the performance of hotel staff. A point one of the panelists made was:

    “Regardless of how the innovation is implemented, it must be embraced by staff and management, and guests must see the changes as valuable.’ When innovations are meant to cut costs, for instance, both employees and guests may need an explanation of the innovation. One example that roundtable participants cited is the addition of self-service kiosks in some hotel lobbies. Employees regarded these with suspicion and guests were slow to adopt kiosks in some cases. Several participants suggested that the moral of that experience (and of other technological innovations) is that technology needs to be balanced with personal service innovations.

    This is a good bit for any company or hotel looking to technology as a solution to service. If you are going to roll something new out you need to have the entire staff involved in educating guests on how this new technology will improve their stay.

    Another are of discussion where GuestSpan shines is when it comes to ROI:

    Measuring the return on the innovation investment presents an additional challenge. One logical approach is to measure customers’ responses to the change, typically with focus groups or surveys. Roundtable participants who have used focus groups said that they are not always reliable. Moreover, many customers do not want to be questioned.
    Instead of taking surveys, managers could observe customers’ actual responses to the innovation-what they do, rather than what they say. Observing customers’ loyalty, or, for that matter, employees’ loyalty, could be one gauge of an innovation’s success. Other participants suggested that financially oriented measurements, such as share of wallet, might make more sense. In many cases, the most successful innovations are based on customers’ suggestions.

    If you instituted a technology service solution that was aimed at increasing the orders in room service wouldn’t the best way to measure that be whether or not there were an actual increase in room service orders? I think that results will ultimately be the best gauge of success for any service innovation.

    Does a Human Being equal Good Service and Relationship?

    May 1st, 2008 § 0

    Hoteliers chant the refrain, “Our people (guest service staff) make the difference to our guests.”

    Great.

    But, not necessarily true.

    I won’t spend time today talking about most of my business travel and the decline in guest service staff I have experienced.

    Instead, let’s examine an article by Kate Leggett of KANA (A multi-channel client service company). Ms. Leggett talks about her experience of trying to build a relationship with a bank. After years of being a customer at her local branch, she realized that the bank didn’t know her any better than they did the day she opened the account.

    In brief, when starting a home remodeling project, she opened a home equity line of credit. Nobody at the bank told her that a cash-out refi would have been less expensive. Shortly thereafter, a family emergency took her out of town and because she wasn’t thinking about her bank account, she incurred $250 of overdraft charges, even though there was plenty of money sitting in a side account. These events led her to think:

    “After 10 years of working with my bank and being consistently disappointed, I considered what I valued in my interactions with my bank. Yes, having a personal relationship was important, but what was more important was that the bank help answer questions that I had, and to recommend basic financial plans tailored to my situation.”

    She ended up finding an online bank that provided all the services she wanted, answered all of her questions and seemed to “know’ her better than the service people at the local branch. Kate’s concluding thought provides a lot to think about when considering the idea of service:

    “I used to think that a long interaction for each service issue led to a better relationship. But now, I am not so convinced. A short, fulfilling interaction where you get what you want by looking for it yourself can be as fulfilling as one in which you are held by hand.”

    To me, the message is that we have to rethink how we deliver meaningful service to clients, guests, patrons, etc… The presence of a person is less valuable than providing answers, no matter the interaction method.

    Just something to chew on for those that claim that their people make the difference. You’d better have really good people if you’re going to beat technology.

    People and Fundraising

    April 28th, 2008 § 0

    We have had a busy couple of weeks meeting with people and raising funds. I thought it would be appropriate to provide an update on our activities:

    Kent Millington: Kent Millington has become a mentor of sorts for our venture and has been an invaluable source of advice and direction as we move the process along. We have had several meetings with him revising and editing our business plan based on his feedback. He helped us become a lot more specific in some of our projections and estimates.

    Larry Stevenson: We met with Larry Stevenson last week at his office in Provo, UT. He works for the LDS Church in the Employment Services Department. If you have not checked out this resource we highly recommend it. I was surprised at the level of resources they are connected to for budding entrepreneurs like us. He put us in touch with a number of resources provided by the SBA such as SCORE as well as the Utah Technology Council.

    In addition he gave us some great council on using a business plan as more than a large brochure for investors. He used an interesting analogy, he said it would be more powerful if when somebody asked for a copy of your business plan you reached into your bag and handed them the old dog-eared copy you have been referring to over and over again. That shows that you use it often and live by it. A very good bit of advice.

    Business Ignitor Event: We attended a recent Business Ignitor Event put on by Grow Utah Ventures and featured a panel discussion on “How to approach Angel Investors.” The panelists were Alan Hall, Brad Walters, and Brad Angus. The discussion was good and provided some good insight into the thinking of the investment community in Utah.

    The event also provided a great opportunity to reconnect with past associates as well as make connections to new relationships. Networking and relationship building are really the key to what we as entrepreneurs are doing. Whether it’s relationships with customers, employees, or investors it is those connections that will largely dictate how far we go. I firmly believe that if you can forge key relationships and deliver results there is no limit to what you can accomplish.

    Fundraising: We have also been busy on the fundraising front. We have received commitments for $320k in funds so far and are seeking an additional $280k-$500k. These funds will carry us to through the first 12-15 months, through beta and to our first few installs. We are grateful to those who have shown their confidence in us and our ability to execute on our plan to make this leap of faith. Perhaps equally as important as the money is the expertise and experience these gentlemen bring with them. Both have successfully started and operated profitable companies an their advice and council will be invaluable.

    In summary, things are moving forward at a breathtaking pace here at GuestSpan. We continue to seek investment as well as talent to help us make this venture a success.

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