Unbundling of Siteminder — The big startup opportunity
Siteminder is in trouble, at war maybe. They are getting attacked on all sides by startups from all over the world. They might not even know it!
This is not an attack on Siteminder, but being the biggest SaaS supplier to hotels it’s a good click bait title. There are many other big companies who also bundle like Cloudbeds, Travelclick, Sabre etc.
In the last 10 years we have gone through a massive trend in hotel technology, something called “bundling”.
This is where you offer more products to your customers (hotels) in addition to your core product.
Siteminder Core Product: Channel Manager
Other Offerings: PMS, Booking Engine, Rate Shopper, Website Builder and Siteminder Exchange
By offering more products, you can sell more to your existing customers and increase revenues per customer.
End of the bundle?
It is hard to say that 2020 is the start of the trend to unbundle, hotel technology is still very disconnected and often the only choices available is from the same supplier.
Connectivity is getting better though!
Startups like Impala, Hapi and us (Channex) are working hard to connect things together to provide easy access for new entrants to sell and connect to the hotels existing technology.
Just like the unbundling of Craigslist that gave us companies like Airbnb, Stubhub and Etsy and then later the unbundling of Google Gsuite which is giving birth to Zoom and Superhuman (Email client) we will also see the trend continue on all verticals.
Startups can capitalise on lack of focus
Most companies who bundle generally make everything mediocre or “good enough” if you are lucky their core product is good but the other offerings are just ok.
This provides startups a great opportunity to focus and specialise.
Have you seen the “free” booking engine option that a PMS would provide the hotel? it’s S@*T!
Some people do a better job than others, Mews booking engine looks pretty good especially as a free option with the PMS.
Apaleo is a PMS which is quite new and they don’t provide any booking engine or side offerings, instead they say there is a bunch of connected apps the hotel should look to pair with it and then focus to provide the best PMS they can.
Pricing is key
Bundling currently has a major advantage which is price, when you have a channel manager like Siteminder connected to your PMS already then to choose their booking engine for an extra $50 is an easy and convenient choice especially considering the hotel might have paid 100s or 1000s of dollars to connect the both together.
If the hotel wanted to use a different booking engine it might cost a small fortune to connect that to their PMS also.
Did you know that hotel app companies have to pay up to $10,000 just to get an API agreement with each big PMS and Channel Manager and also a monthly fee for “maintenance”?
So in times like this you can see why 3rd party product costs a fortune and hotels choose bundling as a way to get the tools they need at an affordable price.
Lowering costs of connectivity
For unbundling to actually succeed we need to smash down the walls to connect all things together, to bring connectivity costs down to something that is negligible in terms of cost to value.
The cost to connect things should be like the cost to use a toll bridge, it’s there to help you instead of you having to build your own bridge or drive the long way around.
Once we achieve this the unbundling economy will boom and big companies that are looking after 5+ products will face extreme pressures to compete on all fronts.
Conclusion
The big bundled product suite companies have grown fast over the last decade, but we should see the rise of specialised point solutions at comparable pricing options.
To achieve this new unbundled economy we might need a new specification of how hotel apps talk to each other, a neutral modern specification that is supported by many for the benefit of the whole industry.
Let me know your thoughts on this trend in some comments, especially if you don’t agree!
