A new way of thinking about business put #7 Guest-Tekâ’s Internet access software for hotels on top
After struggling through the early years alongside many of its high-tech competitors, Guest-Tek CEO Paul Sullivan says his company’s turning point came when it stopped using a business model common in the sector.
“We weren’t alone in the dot-com era – a lot of people were measuring success by market share,” Sullivan says. “So there were a lot of well-funded organizations out there that simply bought business.”
But eventually, Sullivan says, the privately held firm stopped spending the bulk of its investment dollars on acquiring market share and began to simply sell its technology and services and allow Guest-Tek’s customers to position its products as they saw fit.
“Our fortunes, then, weren’t hinged on the ability to sell or promote the service because we got paid upfront,” Sullivan adds.
As a result, Guest-Tek’s revenues have soared, the company has recently become profitable and its high-speed Internet access software is found in thousands of hotel rooms across the world. It has also landed Guest-Tek in the #7 spot on the list of Alberta’s Fastest Growing Companies.
Meeting and guest rooms in Hyatt, Westin, Sheraton, Four Seasons and Radisson hotels often have Guest-Tek’s software, GlobalSuite 3, available to ensure business travellers have high-speed Internet access.
If a new installation requires hardwiring, Guest-Tek will contract a cable company and project-manage the work, then install the server, train hotel staff and offer customer support through its call centre.
Once guests connect their laptops to the company’s proprietary software, Guest-Tek claims to have a 95% success rate connecting them with high-speed DSL Internet access. And if problems should arise that can’t be answered at the hotel, the firm operates a 24-hour, Calgary-based call centre with a staff of 18.
With the call centre’s efforts included, Sullivan says the success rate is closer to 99.5%.
The CEO says roughly one in every 200 users is not able to access the Internet with Guest-Tek’s technology – often because their company has given them a laptop without a network card, a machine that doesn’t allow third party software or one that has a firewall program with which Guest-Tek isn’t familiar.
“IT departments install technology to try to protect the user and it’s that actual technology that we have to overcome to allow them to get onto our network,” he says. “Really, in essence what our technology does is overcome all the settings on your laptop that make it difficult for you to get onto a network.”
Founded in 1996 by entrepreneur Arnon Levy, who is now an executive vice-president, Guest-Tek’s original aim was to supply hotel rooms with personal computers. Levy realized, though, that PCs are high-maintenance equipment, and it is often difficult to ensure they are equipped with the myriad forms of software business travellers require.
“The next best thing to giving them the PC was giving them access to their own network by wiring the hotel and providing high-speed Internet access,” Sullivan says.
Levy – who is lionized in much of Guest-Tek’s corporate material – then recruited a technical team that created the “spoofing” technology designed to overcome all the limitations a typical business traveller faces because of his or her laptop’s unique settings.
Sullivan credits the company founder for having the initial insight, but also for sticking to it through the lean years when financing was scarce, and pushing the idea on major U.S. hotel corporations that were hesitant to do large scale business with a Canadian startup.
“It was not necessarily the ideal for a zillion-dollar corporation with the quality of the Hyatt,” Sullivan says.
Last year, Hyatt Hotels Corporation became one of Guest-Tek’s most notable customers, and calls the company its “preferred provider of high-speed Internet” for its 122 hotels in the U.S., Canada and the Caribbean. And last month, Guest-Tek announced that it had installed its so-called “plug and play solution” in the 2,019-room Hyatt Regency Chicago – connecting all the rooms, according to a company news release, within 14 days.
Such projects have helped the company to achieve rapid growth figures during the past three years. While Guest-Tek declined to have its sales and earnings figures published, Sullivan does expect gross sales to reach $7.5 million during the 2003 fiscal year, which ends March 31 – a total that would more than double 2002 sales.
But the CEO does not feel sales figures are high enough yet to warrant an initial public offering, though he says there has been talk among Guest-Tek’s owners in support of some kind of equity offering, and there has been “significant interest” expressed by its shareholders. Of the 44 investors that comprise the company’s ownership group, 41 are Canadian, and the majority of them are based in Calgary.
Sullivan is also wary of a residual resentment against high-tech companies, which famously crashed after the so-called dot-com bubble burst, sending tech stocks steeply downward. “I don’t think they’re being valued at what they could be,” he says.
While a move toward public equity offerings lies on the horizon, near-term growth plans are centred on finding new markets that could adopt a visitor-based high-speed Internet network.
Candidates include university campus housing, which are often also short-term residences, and hospital rooms. The latter, Sullivan says, would more likely take place in the U.S., where the health care system is privatized to a much larger degree. A patient, he envisions, could get some work done on a laptop while in rehabilitation.
“Why not have you able to access your laptop while you’re in that body cast?” he asks.
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