CEO Interview, Bill Kerby, Monaker Group
By Daniel Carlson -October 18, 2019
We are pleased to have had the opportunity to interview Bill Kerby, the CEO of Monaker Group. Tailwinds recently initiated coverage on Monaker and our overview is available here.
Tailwinds Research (TW) – As this is our first CEO interview, please take a few minutes and explain to the listeners Monaker Groups’ business and market opportunity.
Bill Kerby (BK) – Monaker is a technology-driven travel company focused on delivering innovation to the marketplace for alternative lodging rentals “ALRs”, also referred to as vacation rentals. We’ve built a proprietary Booking Engine that provides access to more than 2.6 million instantly bookable vacation rental homes, villas, chalets, apartments, condos, resort residences and even castles. The Monaker Booking Engine, or MBE, offers a true B2B travel solution whereby global distributors and online travel agencies can access a customizable platform for alternative lodging where instant booking capabilities allows them to offer their customers a complete package with air, car and all other travel services.
In late 2015 we entered this space, the fastest growing sector of the travel industry, as a first-mover. That is, no one had yet offered a white-label Business-to-Business solution that would allow large travel distributors, like airlines, cruise, hotel, travel agents and tour companies, to participate in the growing ALR and vacation rental market. They could only stand by and watch companies like AirBnB and HomeAway take millions of dollars in business away from them. And this is now a huge market. Today, about 1 in 5 lodging bookings is a vacation rental, representing a total market of more than $170 billion annually. There are some predictions that this could become 1 in 4 lodging bookings in just a few years. Monaker enables these large travel distributors to participate in this booming market.
TW – What makes the Monaker Booking Engine unique and does it create some barrier to entry to other possible white label booking engines?
BK – Beyond the obvious challenges in creating a cloud-based B2B booking platform and integrating this technology with travel distributors’ existing systems, Monaker has amassed more than 2.6 million properties globally. This provides a strong service proposition that distributors need for supporting their customers. It includes all properties being vetted and serviced by property management companies who are responsible for quality, support, maintenance, transparent pricing, and compliance with all regulatory and tax requirements. This system has taken more than three years to build out and perfect. It makes Monaker a first mover in the space in terms of being able to offer very appealing instantly-bookable global inventory to large travel distributors who are eager to enter the vacation rental space with properties that both complement and enhance their current travel offerings.
TW – Talking a moment about the financial model, how does the MBE generate revenue for Monaker? How do you expect revenues to ramp?
BK – Our B2B white-label model has two main revenue streams, one directly from travel agents and another from white-label channels contracted to use Monaker’s booking engine for booking Alternative Lodging Rentals. A single transaction can include an ALR that can be bundled simultaneously with other travel reservations, including air, car, tours, etc. Monaker receives a variable percentage of ALRs and the other reservations booked through its platform. Think of us a toll booth on a bridge connecting property owners and managers on one side and travelers, travel agents and distributors on the other. The cash register rings every time a reservation passes through our system.
Today, more than 250,000 Travel Agents will soon have access to use our MBE and vacation rental inventory for commissionable bookings. We estimate our white-label distribution pipeline represents more than $20 billion in combined lodging reservations annually.
MBE positions Monaker for a rapid scale up via large OTAs partner adoption, airlines, car rental companies and others looking to offer complete travel packages with ALR, and have a commissionable solution for their agents. We believe it is a very scalable tech platform without staffing constraints or requirements at either end. The bookings are handled by our distributor partner and the guest experience is managed by the onsite property manager. Once our relatively minor overhead and pubic company expenses are covered, we see most of the revenue falling to our bottom line.
TW – How many travel agents currently don’t have access to an ALR inventory? When you look out a year, how many travel agents do you hope will have access to the ALR properties on your platform?
BK – Travel agents can go through various third-party systems to book ALRs and vacation rentals, and cobble together a travel package for their customers. But it’s very difficult, especially when they might have to wait hours or even days to hear back from the property owner, and after all that, they’re unlikely to earn a commission on the ALR reservation. Monaker, on the other hand, is either contracted with or current in discussions with several groups that represent in excess of 100,000 North American travel agents and 500,000 global travel agents. Our goal is for all of these agents to have access to our booking system by the end of 2020.
TW – You’ve integrated your booking engine with your largest partner to date. What is the potential you see from this relationship and when do you expect to go live with the partner?
BK – This contract and relationship is with a well-established global lodging support platform that links conventional lodging, like hotels and resorts, to more than 100 large travel websites and hundreds of thousands of travel agents around the world. They are responsible for billions of lodging transactions annually. Naturally, we are very excited about this opportunity, knowing that if Monaker manages to garner just fractions of percentages of their total lodging bookings, it would be hugely meaningful to our revenue stream. They have informed us that they are expecting to go live with our booking engine in the very near-term.
TW – You also have announced upcoming launches with other strategic partners. Can you provide some insight on strategic relationships and how they fit into your business model?
BK – Monaker has concentrated on signing contracts with multiple travel companies in North and South America, Europe and Asia. With such as global customer base, we expect to reduce the effects of seasonality in bookings encountered by other travel companies.
TW – Moving on, you recently closed the acquisition of IDS. Can you discuss what motivated you to make this acquisition and why it is additive to Monaker?
BK – The acquisition was strategic and timely enabling us to expand product and distribution capabilities. For example, Monaker will be rolling out its commercial corporate travel platform, Nexttrip.Biz. We’ve been beta-testing nexttrip.biz throughout 2019. The API’s and technologies acquired from IDS will help us accelerate the platform’s commercial rollout. It will provide small to medium sized businesses access to wholesale travel inventory, including air, lodging, car rental and other travel products. It will also track employees travel and provide them a bonus rewards program. Business travel is a great new opportunity to distribute Vacation Rental Properties that could house employees for conventions, conferences and longer-term business stays. There’s been a surge in travel companies seeking to position in the small-to-medium business service area and we think we’re a first-mover with wholesale pricing combined with alternative lodging inventory. We expect to be marketing nexttrip.biz this fall.
TW – Digging a little deeper on NextTrip.Biz, why is the IDS acquisition important for that product? What’s the status of the site? How do you expect to gain customers?
BK – The acquired IDS technologies and API’s allowed us to accelerate the move from beta-testing to where we are now, which is commercially sound offering ready for marketing. We now control everything in-house. Our target and goal is to service small-to-medium size businesses that don’t have the financial muscle to source wholesale pricing or travel services on their own. Nexttrip.BIZ is designed to provide a unique solution centered around saving money on travel. We will be using our prepaid marketing relationship with Recruiter.com to reach out to over a million businesses globally as well as ongoing discussions with groups, including consultants, conference coordinators, events planners, charities, College and high school Sports teams – all looking for ways to conveniently search, book and more importantly save on travel. We expect to begin marketing the site in the next few weeks. We also believe it’s a unique growth area to offer our vacation rentals in off peak vacation travel times.
TW – Post the acquisition, how many properties are on your platform? How does this compare with other ALR consolidators?
BK – Today, we have about 2.6 million properties available for booking through our system. Looking at peer companies, Airbnb says that have more than 6 million and Expedia, who bought VRBO and HomeAway a few years ago, has about 2 million vacation rental properties. One differentiator is that ALL our properties are instantly-bookable, whereas Airbnb and Expedia still have many in the older “request/accept” format. Our IDS technology and asset acquisition has given us access to more North American properties to strengthen our position and we’re very close to completing the final integration to bring in those units to our system. So, we’re set to see our available inventory climb to over 3 million properties and hope to increase that further in 2020.
TW – You highlight that your ALR inventory is “Instantly-bookable.” Please explain what this means and why it is important. How do instantly-bookable vacation rentals benefit Travel Agents?
BK – The #1 complaint in the industry is the time it takes for a vacation rental property owner to come back to the renter to confirm availability and booking. This virtually stops all other travel bookings like airline tickets, car rentals and tour programs as travelers typically wait until they know they have the property before booking their other travel plans. Our entire vacation rental inventory is sourced and designed for instant confirmations and make the vacation planning process much more streamlined. Simply search, click and book.
Travel Agents benefit from instantly bookable vacation properties because it streamlines the booking process. With the friction eliminated, Travel Agents can book more vacation rental packages and receive a commission on booking vacation rentals, which could include the Alternative Lodging Rental packaged with air, car and all other travel services.
Another common complaint in the industry that the price seldom ends up as originally quoted due to additional fees and charges, like housekeeping, towel services, and key fees added at time of checkout by most other vacation rental suppliers and platforms. This is eliminated with our full transparency, all-inclusive pricing. The price is the price!
TW – Most if not all of your ALR inventory are managed by professional property managers. How does this differ from the other existing ALR platforms? Why is this important?
BK – All of our vacation rental inventory is sourced from professional property managers. The majority of other booking platforms allow homeowners to post their properties. While we believe most homeowners are responsible, there remain numerous concerns including homeowners having properties in other geographic areas from where they live, making them unavailable to meet customers, provide timely responses, or provide maintenance and repairs.
This can sometimes go from bad to worse, as we have all heard the stories about properties being misrepresented, illegal to rent or even nonexistent. We believe many of the concerns surrounding the vacation rental industry are mitigated when using property management companies because most are licensed and bonded. Also, taxes are paid, properties are well kept by property management staff, and they are available to respond quickly to issues.
TW – You recently announced a new CIO with an impressive background. What does his hire mean for Monaker?
BK – Yes, we recently appointed Tim Sikora to the new position of CIO. Tim has over 22 years of IT, sales and operational experience in the travel industry. He previously served as director of North America Sales at Boeing. Prior to Boeing, he managed and led the expansion of two IT services companies: Peak 10, a leading data center and cloud Services Company, and Ciber, a global information technology infrastructure services provider. He was also the director of Information Technology End User Services at US Airways and led the airline’s integration of IT end-user platforms following the merger with America West. He has also held senior technology management positions at Caribbean Sun Airlines, DHL Worldwide Express and Midwest Express Airlines.
Tim will manage our technical teams to drive platform development, innovation, design at scale and speed of delivery. The appointment of a travel IT professional with this extraordinary level of experience and accomplishments reflects how we have reached a pivotal stage in our growth and market expansion. Under Tim’s new leadership, we expect to see a further acceleration of our growth and technological innovation, and accomplish this while ensuring we continue to deliver an exceptional customer experience.
TW – How much money has been invested into the Company to date?
BK – To date, and focused on our travel technologies, we have raised approximately $20 million. We’ve completed a couple of offerings with ROTH Capital Partners, with involvement of Aegis and Northland. The majority of the funds raised and invested in the company have come from our board and key insiders. I’m very proud of our board and thankful for their financial support through the design and buildout phase. I believe they share with me the same enthusiasm for this space and our opportunity. The board, management and key insiders have nearly 50 percent ownership. Along with the other factors I mentioned earlier, this level of investment also represents a significant competitive barrier to entry.
TW – It certainly sounds like the next 6 to 12 months will be an exciting time for Monaker and we thank you for taking the time to speak with us. Before we go, any final thoughts?
BK – Well, I have to say that it’s certainly taken us longer to get where we are today than we had initially hoped, but we are excited about what we have accomplished, our positioning in the market, and the global distributor relationships we have developed and are ready for roll out.
The Alternative Lodging and Vacation Rental industry is growing rapidly, and we believe we’re well-positioned to participate. We’re seeing increasing interest from large travel companies for our white-label B2B inventory and solution, and we’re optimistic our new nexttrip.biz offering for businesses can be a solid growth engine as well. I want to thank our board members and stakeholders for their support and contributions, and all of our shareholders for their patience and support over the last few years. We’ve finally made it through the concept, design and buildout phase, and believe we have laid a solid foundation that should allow for strong growth and profitability.
