A Niche Opportunity for Real Estate Investors
Transforming Travel, One Guestroom at a Time
REI INK had the pleasure of meeting and talking with Kevin Bidner, President & CEO of the Hotel Communication Network at the National Private Lenders Association Conference in Austin, TX. Below is an excerpt from the company’s Executive Summary which outlines the concept, strategy, and business plan of the company. It was only natural to include this in our January 2025 “Niche Markets” issue as it represents a unique investment opportunity that real estate investors may be interested in exploring.
Travel is one of the world’s largest industries, comprising 10% of the global GDP. The Hotel Communication Network’s (HCN) founders identified the travel industry as an opportunity for a digital platform that had not yet been established and set about applying their considerable experience in this sector to the evolution of a strategy to establish a digital platform by penetrating the heart of everyone’s travel experience, the guestroom.
This launch strategy is the installation of tablet computers into guestrooms creating a billboard with ‘push’ messaging, as well as a fully interactive portal, aggregating hotel, city, and meeting/convention content as well as transactional opportunities. The tablet also enables communication through the guest’s own mobile device, based on a system of scannable QR codes delivered to the screen.
There is an obvious industry-wide ‘technology vacuum’ in today’s guestroom. With 85 million millennials now outspending all other demographics in the travel industry, Hoteliers, traditionally late adopters of technology, are overdue for a communication upgrade. It is quite clear: having a book and a land-line phone in the guestroom simply won’t do for the millennial generation. The upgrade of communication technology has been tried on the television (failed), and on guest’s own devices with mobile apps, also with similarly disappointing adoption results (JD Power reported under 10% adoption in 2019).
In contrast, a guestroom tablet reaches every guest on property with proactive in-room ‘Billboard’ type communication, which is un-missable. Even more convincing, 85%+ of guests pick up the tablets on every day of their stay, entirely solving the hotel’s communication problems, updating the communication technology in the guestroom to conform with the demands of today’s generation of travelers, and making the guestroom tablet the natural next major rollout in the hotel industry.
A guestroom tablet replaces all the old ‘junk’ littering up the guest experience, replacing the paper hotel directory and city magazines, the land-line phone, clock radio, TV remote and even the thermostat, with a single device that becomes the room controller, while at the same time creating a cutting-edge communication and transactional capability in the guestroom.
The winner of the guestroom technology platform becomes far more than just the ‘guestroom tech company.’ As the installation grows to critical mass in the industry, this guest-facing, connected network becomes a ‘digital marketplace’ and eventually a travel industry marketplace.
To that end, HCN’s founders, with two globally successful digital platform plays in their resume, created a strategy to win the industry from the top down by investing their time and technology to become the company that would one day win the multi-million room major accounts, starting with Hilton, then Marriott and IHG (Holiday Inn, etc.) With that leadership, the rest of the industry will follow, triggering a multi-million room rollout to the 3, 4 and 5-star category hotel tiers worldwide.
“Win the Guestroom, Win the Guest”
There are over 17 million guestrooms in 187,000 hotels worldwide. Of those, 16.9 million of them are devoid of smart room technology and HCN has created a smart room platform that can be deployed on a global scale. It is cloud based, multi-lingual and built on the latest technology stack that can adapt to any hospitality segment in the marketplace. Global hotel revenue hit $198.6 billion in 2020.
In addition, the hotel room is the nexus of the tourism industry, the convention industry, and the hotel related food service industry in every downtown core. Placing a proactively broadcasting tablet right at the point of purchase (75% of all travel spending decisions are made in the guestroom), gives these stakeholders direct access to this incredibly valuable customer set.
HCN’s mission is the establishment of a critical mass of tablets in every major city, creating a global ‘digital marketplace’ in the travel sector. Important to note, the tablets are only the starting point, by getting millions of guests per day using the marketplace, this launches the “HCN Passport” mobile platform, that the guest can take with them all through their stay, with an AI concierge to accompany them and assist them with their every need.
The Global Launch Begins Now
HCN is well on the way to launching its global rollout along two strategic pathways to achieve rapid expansion and reach throughout the hospitality industry.
Plan A targets the installation of 100,000 tablets in Hilton Hotels worldwide within the next 12 months. With a global Master Service Agreement secured with Hilton, this planned rollout is more than achievable. The zero-cost installation model for hotels, paired with a revenue-sharing arrangement, offers strong incentives for adoption and accelerates scalability.
The second pathway focuses on high-density installations in major metropolitan areas to further accelerate market penetration. This approach includes collaboration with city visitor bureaus to place HCN tablets in guest rooms as dedicated “Visitor Guides.” Starting with 30,000 units in Chicago, this model will expand rapidly in cities like New York City, Las Vegas, and Orlando, where installations could reach 100,000 units per city. Globally, this model has the potential to reach millions of rooms, tapping into the 17 million rooms worldwide within the hospitality industry.
Either of these — Hilton’s adoption, or penetration into city markets, paves a clear path for HCN to enter IPO territory. With no competitors able to match their pace, they have a solid path to success ahead.
In the chart below is a breakdown of their projections, per revenue unit, per room, per month in the various revenue categories. Note the tablet cost is $145 each.
Synergistic rollout to the 4+ and 5-star properties
The world is filled with 4 and 5-star resorts with the discretionary ‘guest amenity’ budget to easily afford to invest in tablets for the guestrooms. HCN’s leadership in their “mass rollout” will blaze a trail and create demand in the industry, starting with the major brands like Hilton, Marriott, IHG (InterContinental) Accor (Fairmont), and many others.
HCN has won a “Master Service Agreement” with Hilton Worldwide and all sub-brands and is now rolling into this million-room global hotel enterprise. Specific focus on sales to the 4 and 5-star properties in this major brand is now underway with Conrad Waldorf properties now installed, and many more on the prospect list.
Valuation
The pre-money valuation for the current B Round is $60M. There are several strong analyst reports that hold this valuation as reasonable to low, given their current progress towards such a large upside.
Based on similarly staged companies and proposed valuations for Hardware/SaaS deals recently cited by Blossom Street Ventures, the average company at HCN’s revenue and deployment stage has been valued at the $80 million pre-money mark, which dovetails with their assessment.
Late Breaking News
In late-breaking news, HCN is in the final stages of acquiring the best of their competitors, Crave Interactive, out of the UK. Crave specializes in the 5-star hotels and resorts, and has a great suite of technology for this end of the market which combines perfectly with and complements HCN’s best-in-class communication and advertising platforms.
With HCN’s grip on the 4-star hotel sector, they have become the unrivalled global leader in this vital, emerging technology category of the travel industry.
The industry has one strong player in all categories to rely on for the upgrade to its guestroom technology and communication. This is a major step forward for HCN in solidifying their platform as the global ‘guest network’ for the travel and tourism industry.
Exit
To that end, once HCN has a critical mass of rooms and recurring revenue, it will become an attractive acquisition target in the next three to five years by companies such as TripAdvisor, Kayak, Google, etc. It is a natural fit for these and other firms directly or tangentially in the space.
This is a giant industry. With 18 million hotel rooms, even a small fraction will lead to a giant exit for HCN and fabulous multiples on your investment.
The math is simple: ‘Platforms’ like HCN regularly exit at 10x revenue. HCN is in ‘Unicorn’ territory, a dream come true for those who invest at the early pre-IPO stage.
For additional information, please visit the Hotel Communication Network at www.hcn-inc.com or email Kevin Bidner at kbidner@hcn-inc.com.
