Simon Lester is Chairman & CEO of Lester Hotels, which provides hotel and hospitality management services. He has been involved with the Academy for almost twenty years, first as a member and for the past 10 years as Chairman of Academy Group 7.
A serial entrepreneur who has built businesses in the travel, property and hospitality sectors, he talks to us about having the courage of your convictions and not accepting the first offer that comes along when selling a business.
“A few years ago I sold a travel company to a larger competitor. In addition to the sale price for the business, we offered to sell them a robust online booking system that we had developed over a period of ten years called ‘Gratis’ – Global Reservation And Travel Information System. But they only offered us a paltry amount for it – around £10,000 – so we declined the offer.
Simon Lester
Academy Chairman – Group 7
We knew that the software had a value of its own and so a year prior to the sale of the company, we had spun the software off into a separate company. As we had made a pretty hefty investment in its development – about £250,000 all in all – it was important that we got a reasonable return for this.
A colleague and friend from my network, Richard, is the founding Director of an on-line venue directory. It made a lot of sense for us to partner. His challenge at the time was to demonstrate to hotels that his system would generate business for them, and that it was worth their while taking out a subscription. He had the data, but we had a front-end booking system.
Together we could create a new offering that the market was crying out for at the time. There was nothing even resembling it off-the-shelf that was half as good as what we had – otherwise we would have bought it.
Richard and I were a natural partnership. We both started our businesses at similar times and there was a good cultural fit. In addition, we brought in Michael as the new MD – originally he was the senior director of the travel company. All the senior directors got along well with each other and we took a small dilution to bring another director on board from the travel company at a later date.
As a result, we were able to form a new alliance combining the venue directory with Gratis by developing an interface between the two. Every time a reservation was made through Gratis the user could access the quality data.
Once the interface was complete, we went to the agency market and started licensing agents to use our software on a licence fee model.
Commercially, there were two key advantages to this approach. Firstly, it generated a re-occurring revenue stream and secondly, the venues could see the added value and level of enquiries from their subscription.
Over the past three years we have licenced more than 250 agents to use Gratis for event bookings and last year we reached the magical figure £1 billion conference enquiries through the system making venuedirectory.com the market leader in the UK by a considerable margin.
The company now employs 40 people in our HQ in Bournemouth including a dedicated team of programmers who continue developing the systems. But we no longer need a sales team because hotels now contact us directly to get onto the system. Instead we have a membership renewals team and we have one of the highest client retention rates of any market sector.
Learning take-away
- Recognise the value of what you have.
The key learning is to have the courage not to take the first offer that comes along – instinct and bloody mindedness served us well. When we were first offered £10,000 for the software, we had valued it at £250k, although we would have accepted £50k at the time. Now it’s worth well in excess of £1m on its own as it is capable of generating reoccurring income.
What would I have done differently? Not very much, although we should probably have developed the software in-house rather than outsourcing it, as we did initially.
- Alliances and partnerships – network with like-minded CEOs
When I look at the deals I have done, they have all been through my own network and we place a big emphasis on networking with like-minded CEOS. This is one of the reasons I got such value from the time I was an Academy member (nine years).
What’s next?
Our next step is to develop small meetings live booking service later in 2015. Initial feedback from the industry indicates a strong level of interest in such a service.“