Challenging the Bundle Ecosystem in Hotel Tech
I wrote before a “controversial” article about the startup opportunity to unbundle Siteminder who is currently the market leader in hotel distribution.
You can find that here: https://medium.com/channex/unbundling-of-siteminder-the-big-startup-opportunity-928a7856a53a
That was March 2020, funny how 9 months changes so much. Corona has kicked the teeth in on hospitality businesses, they are suffering still.
Question: Is the big expensive bundle still worth it?
Bundling is supposed to lower costs right? I mean you buy one product for a vendor and you have a relationship together, and they can bundle the other bits you need and the cost is cheaper than using a 3rd party system.
Companies like Siteminder, D-edge, Sabre etc all offer a huge bundle of services.
Hotels used to love the idea of “One throat to choke” which means one company to support you on an issue, this is because before companies used to blame each other for any issues and nobody took any accountability.
Bundles do have a big flaw in that it’s a hell of a lot of software to build, look after and make great.
Bundle = Mediocre set of software
Now I’m not saying the big companies I mentioned are mediocre but what I mean here is that when they release their new shiny product it is probably great. But because of the many products they have, they work on the next thing that needs attention.
So that nice website builder when it was launched 5 years ago was great, now it seriously needs a rewrite since it hasn't had any big improvements over the years.
Ok I get it, bundle is not cool but best of breed has cost, integration and support issues?
It’s true it does.
The reason why there are big problems with using separate tools is a side effect of that bundle.
Think about it, if a big company offers a big bundle of tools why would they let 3rd parties sell similar tools?
Integration Issues — This is the biggest problem I see, new startups or existing companies can’t connect to anything!
Have a new booking engine startup that is awesome, converts like crazy and looks really great. Good luck getting an agreement to connect it to the big tech systems!
If they do allow it to connect they wont get a full API to access properly, they will pay a bunch of money and sometimes have to pay again per customer using it.
This goes to the next issue.
Price too high — Using best of breed tools to plugin costs a fortune, but this is from integration fees usually. And also competing against the bundled option since it’s cheaper.
Support — You can imagine that you won’t be treated so great when there is some support issue and the booking came from a 3rd party product. They will blame each other and they will tell you that you should have used the bundled option.
Ouch how painful is the above things to deal with as a 3rd party company and as the buyer.
Bundling causes more competitors and more bundles
Think that bundling is good? Did you know it causes more competition and more bundles?
When I started back in 2016 with the Booking Factory the original idea was a Shopify for Hotels. They can build their own websites and shopping cart and it can be extended with a developer community and 3rd party skins etc.
But instantly we had an issue that it was near impossible to connect any systems.
So what do I do? just give up?
No it turned into a PMS so we did not need to rely on anyone and provide a full bundle of products that work together. Then we would try to take customers away from their system to ours.
Amenitiz was a similar platform and started in a similar way with a “Shopify for hotels” idea and now they are a fully fledged bundle with PMS, Channel Manager, Website builder etc etc.
Hostfully started as a guide for hosts to provide their guests in their vacation rental but ended up as a fully fledged PMS… You get the point!
The problem I ran into with our bundle is what I described above, it’s a lot of software to build and you lose focus. The whole developer open api Shopify type idea with 3rd party themes and skins got sidelined because we had to do some invoice system or some other management feature that 1000 other systems had.
So Channex changes this?
Yes Channex will try to change this, it wont be an overnight solution but it’s our goal. Theres too many bundles around to change overnight but it’s coming!
We have unbundled the channel manager first, a “Channel Manager” is just some API to send prices to OTA like Booking or Expedia. It’s a bunch of backend logic to make it work well but the idea is simple.
For hotels and small property owners there will be a free version and for PMS there will be an enterprise edition.
Channex was built as API first so our whole UI uses the public API. So basically it should mean any system can connect and have full access to required functions or data.
Changing from bundle to connected marketplace
There are many examples of this new way, you can see Stripe is a payments provider and they provide an amazing open API for 1000s of developers to make custom apps or integrations to their platform.
Then there is Slack, a chat platform that has built an amazing community of great apps that connect to and from it.
Both make no money or charge fees for integration partners.
The Future
Bundles will remain of course but I see some opening up for integrations, lots of old school PMS are talking “Open API” and even if they don’t understand what that actually means I think it’s some progress in the right direction.
I see a new type of PMS that have an open mindset just killing it and making more PMS follow the same model.
One PMS who I admire is Mews, they have had open API for years and now boast the largest app ecosystem in the industry. I remember they were worried a few years ago that all systems would copy their Open API idea and it would be not special any more. But as of 2020 (Nearly 2021) hardly any PMS has an Open API mindset except Apaleo.
Channex we will be like the Mews of Channel Manager, or maybe Stripe of Channel Manager makes more sense. We will look forward to lot’s of new apps and innovations in the next few years!
If you have an app or want to connect Channex please look at our API here at: docs.channex.io
Or reach out to talk about your idea.
