Accel-KKR is backing a new software business striving to make hotel direct booking more personalized.
The private equity firm is financing a merger of Pegasus and Travel Tripper, both hospitality-technology providers.
Accel-KKR is betting on creation of a “disruptive new market leader,” David Cusimano, a principal at the firm, said in a news release. The firm has a minority stake in the combined company.
Currently, many hotel brands still use reservation technology developed in the late 1990s or early 2000s. The combined firm will enable hotels to upgrade their online reservation platforms and make booking more personalized by offering tailored extras based on guest data and information on past reservations.
By going to hotels directly, customers would also have access to cheaper rates, making it easier for hotel brands to compete for traffic with wholesalers like Booking.com and Expedia.
Currently, hotels and online travel agencies use rate-parity agreements, requiring distribution platforms to offer the same rates as hotels. At the same time, distribution platforms also have leverage to raise commission fees charged to hotel brands.
The new entity will serve 5,500 hotels and make more than 16 million reservations a year. The company’s annual revenue is estimated at $65 million with growth between 25 and 35 percent annually, a source familiar said.
Pegasus, known for its back-end reservation-process and central-system software that collects data on inventory and rates, will complement Travel Tripper’s front-end booking technology and marketing tools.
Essentially, the merger came together through Travel Tripper’s acquisition of Pegasus, which was previously owned by Austin-based Proveho Capital. Proveho is fully exiting the business, a source familiar with the company said.
Travel Tripper can take advantage of Pegasus’s client base, which includes Lotte Hotels and Resorts, Extended Stay America and Arora Group, among others, the source said.
Travel Tripper’s booking engine also automatically provides more personalized offers during the booking process.
Pegasus was a public company in the 1980s and struggled during the financial crisis. It was taken private in 2009 by Dhisco.
Pegasus was later broken up into several businesses, including Onyx CenterSource, and Pegasus, with a focus on B2B technology software.
Houlihan Lokey’s Vikram Sood served as a financial adviser to Pegasus on its sale to Travel Tripper.
Action Item: To contact Accel-KKR in Menlo Park, California, call +1 650-289-2460.