Sean Schaeffer, a hospitality industry lifer, knows an opportunity when he sees one.
When major resorts had trouble handling the business of bundling hotel rooms and activities into a salable package, he created a solution that eventually became his passion and a company called ZoomAway Travel (TSXV:ZMA, OTC:ZMWYF, Frankfurt:4ZO ).
Just two years in, ZoomAway is a already company that not only strengthens the offerings and independence of of his clients, it creates a better result for consumers as well.
With several key wins under its belt and an expansion planned for 2017, Cantech Letter talked to Schaeffer about what’s next for ZoomAway Travel.
Sean, can you tell us how ZoomAway got its start?
I had spent several years working in the hospitality industry, mainly large casino resorts in the Reno/Tahoe area. During my time working at hotels I was handling Leisure Sales, mainly sporting related groups, golf, ski, etc. Throughout the 1990’s, I worked in these types of positions at several hotels. At each hotel, I would get calls from individual travelers or groups that were too small to send a contract to. Unfortunately, I did not have a mechanism to handle this business. There was no technology or man power to fulfill this need. The more hotels that I worked for the more it became obvious that hotels were just not equipped to handle this “bundle” business i.e. packaging a hotel room with some activity, such as golf or ski. In 1999, I convinced one of my former employers, Circus Circus Hotel Casino in Reno, to transfer their calls to me, I would answer the calls like I was one of their employees, and I would handle everything for the customer from start to finish. The hotel and the activity provider (golf courses, ski resorts, etc.) would provide me with discounted net rates that I could mark up to make some money. The beauty of the system was that the hotel would get the benefit of a specialized labor force at no cost, and I would get the volume of bookings without spending money to market the product. Our products were built around bundling. Hotels and activity providers love the fact that they can be aggressive through us and not have to worry about cheap rates being visible.
In 2014, we started ZoomAway and built our own online room inventory management system, a real-time product to interface with any golf course, anywhere via the web, along with real time ski lift ticketing systems and transportation systems.
What problem does ZoomAway solve and for whom?
Our systems solve a variety of problems for hospitality based businesses, including: labor savings, cutting edge software modules, and specialized destination educated call center staff. Hotels are looking for additional ways to drive more traffic to their properties and hotel guests are searching for activities to partake in once at their destination.
Using our tools:
• hotels are now able to offer not only rooms but also activities, such as ski, golf, wine tours, spa services, helicopter rides, etc to their guests;
• guests are now able to not only book a room directly from the hotel website but also directly book activities from the same interface. By bundling a room with activities, guests are now able to save money as well as the time it would take to separately book everything, individually; and
• hotels can now drive transactions to their facility offerings resulting in incremental revenue increases, while also support other activity providers and strengthen their respective relationships.
The biggest piece of evidence on how the industry feels about OTA’s is the fact that almost every major hotel chain in the world has adopted “Best Rate Guarantees”. The best rate guarantees at hotels state that the best rate available for “room only” will be on the hotel site, not the OTA site.
Isn’t the travel space a crowded one? How do you differentiate yourself?
Although the travel space is quite crowded (hotels, online travel agencies (OTAs), AirBnB, etc), the space is highly fragmented. More people are traveling now than ever and as a result, travelers are looking for savings, efficiencies, and new things to do while at their destination. According to Statista, in 2014, the global travel and tourism industry was $7.6tn, resulting in over $2.36tn in accommodation, transportation, entertainment, and attractions spending. A key differentiator of our software platform is that we provide a white label solution to the hotels that enables their guests to directly book rooms and activities directly from the hotel’s website. The look and feel of the site is kept the same. By bundling a room with activities, directly from the hotel site, guests are able to save money and time.
Unlike with the major online travel agencies (OTAs) such as Expedia, TripAdvisor and Priceline, which spend hundreds of millions of dollars on marketing and advertising to drive eyeballs to their websites, the hotels and activity providers market our tools for us through their own websites. Therefore, no marketing costs needing to be incurred on our end. As service providers, such as AirBnB get into activities, hotel chains will further need to adopt and integrate activity platforms, such as ZoomAway’s, in order to compete and drive more guests to their properties. The travel space is a highly acquisitive one, as evidenced by the $13bn Starwood-Marriott merger and that amongst Expedia, TripAdvisor, and Priceline, they have made over $6.1bn in buyouts in 2015, alone. One only needs to look at these company’s stock prices over the last fifteen years as well as the multiples paid for acquisitions to understand that if you have something unique, that it is often easier to buy you than to develop something similar in-house.
Does the hospitality industry feel that Online Travel Agencies (OTAs) such as Priceline and Expedia have too much power?
Yes. The proof is obvious -just look at the Marriott’s emphasis on marketing their own platform and Hilton’s campaign to “stop clicking around”. The biggest piece of evidence on how the industry feels about OTA’s is the fact that almost every major hotel chain in the world has adopted “Best Rate Guarantees”. The best rate guarantees at hotels state that the best rate available for “room only” will be on the hotel site, not the OTA site.
We have built out some new products such as our RMS (Registration Management System) that provide us with our first recurring revenue model. This product has an annual contract/subscription element as well as transaction based fees.
Give me an example of a recent customer and how ZoomAway improved its business.
We have a new client in Pebble Beach Ca., Poppy Hills Golf Course. They not only have one of the world’s most prestigious addresses, but they also have one of the most impressive customer databases as well. By working with Zoomaway, we provide them:
• A “Stay and Play” interface to provide their customers with an easy option to come to their destination;
• Metrics and reporting for any marketing they do;
• Enhanced content and more interaction for their website; and
• Improved partnerships in the entire destination as they are now driving business to their hotel partners, not just the other way around
How does your business benefit the consumer?
Easy. Price savings (because we bundle and hide rates, our partners can be more aggressive) and convenience. Via our white label tools customers can customize their complete package (room and activity) in just minutes and at the end, only pay one bill.
How does ZoomAway make money?
Our hotel and activity providers provide us with confidential net discounted rates. We mark up these rates to make our margins while saving the consumer money!
On the white label product, margins are typically between 17-24%. As we expand and start working with prestigious destinations, the room rates alone provide us with some great opportunities.
Is there a recurring aspect to the revenue stream?
We have built out some new products such as our RMS (Registration Management System) that provide us with our first recurring revenue model. This product has an annual contract/subscription element as well as transaction based fees. Although currently in its early stages of penetration, this product has already provided services to large clientele such as Vail Resorts. An example of how this platform works, is that if a company had a corporate event or wedding at a specific destination, guests would be provided a unique URL customized to their group function. Once on the site, the guest would then be able to choose the type of room they want, whatever activities they want to participate in, food & beverage choices and other options such as extra nights, etc. Group customers pay for their activities and extras in a private secure environment and the group leaders workload is drastically reduced.
What kinds of margins do you see ZoomAway commanding once it scales?
On the white label product, margins are typically between 17-24%. As we expand and start working with prestigious destinations, the room rates alone provide us with some great opportunities. Historically, we have been focused in the Reno market, where room rates are approximately $82/night. As we expand into other higher priced markets, such as Las Vegas ($149/night) and San Francisco ($306/night) we anticipate that we will generate the same gross margin percentage while enjoy higher gross margin contribution due to higher value sales.
Is there a typical ZoomAway client or does it vary?
It varies greatly. We have always been in the business of solving problems for a wide variety of clients. From hotels to golf courses, ski resorts, spas, special events, entertainment venues, bowling centers, transportation companies, convention bureaus’, chambers of commerce, etc. Hypothetically speaking, any destination where there is the potential to package a room with some sort of activity, presents an opportunity for ZoomAway.
How do you intend to expand the business? Is the focus a geographic one?
Our immediate focus is on year-round (non-weather dependent) markets and removing any seasonality from our business. As we continue to expand we look for markets that provide a wide variety of activities that appeal to the masses. In 2017 we will continue to finish our expansion into Las Vegas and Northern California, then continue into Southern California, Arizona, Hawaii, and the Pacific Northwest, and Western Canada.
What do you want to accomplish in the next 12 months?
Throughout 2017 we hope to expand into new markets, have our interfaces embedded in a minimum of 150 client websites, continue to improve and expand our current technology offerings, create new partnerships, joint ventures, or potential purchases of companies that help us achieve all of these goals.