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[00:00:00] Matt Welle: If you're a large hotel, if you're a 100 to 1,000 rooms, suddenly
you're looking at 15 to 30 integrations, and there is a real integration tax. You have to
navigate multiple vendors. You've got multiple contacts that you have to negotiate
their support handoff. So, when something goes wrong somewhere, you have to figure
out which system was wrong, and you have to navigate a 3-way conversation in that
sense.
[00:00:32] Matt Welle: Hi, everyone. Welcome back to another Matt Talks. And this
week in Matt Talks Hospitality, I wanna talk about an open versus a closed ecosystem.
If you've been following the Mews journey for a couple of years, we've been around for
about 13 years.
[00:00:45] Matt Welle: We definitely started as an open ecosystem where we had an
open API, and we invited the entire hospitality world to integrate into the platform. We
were the first platform to publicly put our API on our website and say to the entire
industry, if you wanna, you can. You can build towards it. You can pull data. You can
push data. And that really became one part of why Mews has been such a huge
success.
[00:01:08] Matt Welle: At the same time, you've seen us launching more and more
products as being acquisitive. So, we've bought several product companies that we
thought and we saw from our marketplace that were very exciting, and they were the
winners in that category.
[00:01:19] Matt Welle: And we thought we need to bring them into the fold so that we
can add more value to those products. So, which direction are we going? Are we going
to keep our marketplace open, or are we closing down slowly? And is this an Android
versus an iPhone kind of setup? Because Apple is obviously a very closed ecosystem,
whereas Android is completely open. And I think it's an important debate because
we're seeing a lot of shifts in different industries that are similar to hospitality, and that
will give us some guidance on where Mews is going as well.
[00:01:46] Matt Welle: So, I'm gonna be open. I'll share about what the pros are, the
cons, and hopefully, that gives you some sense of direction. Because sometimes, you
don't know whether you should buy a Mews solution. Like, let's take the Mews RMS or
Atomize solution versus other solutions in the marketplace. And I wanna be able to give
you some guidelines on where we're moving towards, but also what you should do as
your business because, ultimately, you wanna do the thing that's right for you instead
of the thing that's right for me as an entrepreneur. So, I hope you enjoy this Matt Talk.
[00:02:13] Matt Welle: So, let's start with the open or what we call best of breed,
where a platform works with any integrations, but you have the choice of the best of
the breed. So, you really can diversify your technology stack. Before we get into the
details, I wanted to turn to the definition here, and Bain actually has a great definition.
[00:02:32] Matt Welle: So, let's look at what Bain said. “The best of breed is a platform
that creates value by enabling partners, customers, and the platform owner to create
value together.” In practice, best of breed thrives when a market has lots of innovation
at the edges, and I think that's really important. So, if you think about hospitality with all
of its different types of businesses and ways of operating, and you know, think about a
hostel, beds inside a dorm are complex, and you got lots of group travel. But then
you've got a luxury hotel that has maybe a spa and a golf course, and that has to have
very different systems. And then you get a wedding hotel that does complex wedding
venues. And every single hotel has its own niche, and that makes it really hard to build
one single solution that serves all of these different hotels in the different use cases.
[00:03:16] Matt Welle: So, this is really where best of breed comes in because you
build a solid core, and this is where Mews started when we operated 13 years ago. We
said, “Let's build a phenomenal PMS, the best PMS with the best open API.” The API is
the kind of documentation about how you integrate with Mews. And that's what we
did. And we didn't hide the API.
[00:03:36] Matt Welle: And we didn't hide the API. We stuck it on our website, and we
said to the world, “Please go and integrate.” And it allowed us to scale because we
didn't have much money in the early days. So, we've got to focus all of our funding on
building the core PMS and making sure that that was the best in the industry. Whilst at
the same time, every hotel we went into, and if you think about a smaller hotel, 20 to
80 rooms, you're looking at about 7 or 8 integrations. So, every time we would go into
the hotel, they said, like, “Well, we've got this accounting system, anyone. We've got
this channel manager. We've got this kind of event system.” And every time we ran into
new integrations. And we had the choice of either having to build those integrations
ourselves or actually building this open ecosystem where everyone integrated towards
us, and we could reuse those integrations. And that's what we did.
[00:04:19] Matt Welle: So, we opened up the API. We put it on the website. It allowed
us to integrate with over a thousand integrations today, and that allowed us to scale
internationally, but also across different segments in the industry because we could
tick pretty much every box.
[00:04:32] Matt Welle: So, you get the flexibility. You suddenly get a tech stack where
every integration partner you probably currently work with, we have an integration
with. So, the flexibility is really key. However, there's a downside to this best of breed,
which is the integration tax. So, suddenly, when you're a small hotel, you're looking at 7
to 8 integrations. But if you're a large hotel, if you're a 100 to 1000 rooms, suddenly
you're looking at 15 to 30 integrations. And there's a real integration tax. You have to
navigate multiple vendors. You've got multiple contracts that you have to negotiate
their support handoff. So, when something goes wrong somewhere, you have to figure
out which system was wrong, and you have to navigate a 3-way conversation in that
sense. There are security challenges that you have because data is flowing across
these different systems, and you have to make sure that you're protected.
[00:05:18] Matt Welle: There's conflicting data, and there's more brittle workflows
because something may break down if an API changes. So, you have a high
dependency on team members that you have to hire. So, you have to have a team that
sits on your side to navigate all of these different integrations. So, for a large hotel or a
long hotel group, I can imagine that you invest in that. But if you're, you know, a 20 to
80 room hotel, you're probably not gonna have a large IT team that's going to navigate
those conversations. Another thing to keep in mind with best of breed is that future
extensions of integrations are complex.
[00:05:46] Matt Welle: Another thing to keep in mind with best of breed is that future
extensions of integrations are complex. So, whilst when you buy it, you may like what
the integration does, but once you start using it, you realize that actually your use case
is not yet built or is getting built, and it's on a roadmap. However, you're working with
two companies. So, maybe the one company has it on the roadmap. But on the other
side, you have to have the other company build the API integration. So, they have to
upgrade the API, or they have to extend the API.
[00:06:16] Matt Welle: So now, you're navigating two roadmaps, and that is always
slower than one single company that's delivering a product where they just have to
work on their own products. And that's really, really important. The companies that I
would suggest you look at when you're looking at our best of breed marketplace are
really companies that are constantly evolving the integration to Mews. The companies
that have the deepest integration to our APIs so that they've really taken all the use
cases.
[00:06:41] Matt Welle: Something that we saw a couple of years ago when we
developed, for example, we called it project Spacetime, where we diversified time and
space. So, you're no longer selling just hotel bedrooms overnight. We were selling
coworking spaces, and bicycle rentals, and tents, and dorms, etc. So, we had flexible
space, but we also said, instead of just per night, a desk needs to be rented by the
hour. Maybe, a dorm is by night, but actually an apartment is per month. So, we made
both our spaces and our time flexible. We updated our API, and then we didn't find
anyone who was integrating into it because the marketplace solutions just hadn't even
thought about the flexibility that Mews was building into their API.
[00:07:26] Matt Welle: So, we have to really focus on those partners that are leaning
into that. So, two really great examples that have recently upgraded their integration
with Mews are, on the one side, Mara, which is the guest intelligence and review
platform. So, they're, on the one side, trying to drive more reviews, but they also have
the intelligence to tell us what's happening in the hotel, so whether Mr Jones in Room
101 complained about his air conditioning, they update the guest profile and the PMS,
but at the same time, they go into Flexkeeping, our housekeeping solution, to say
“Room 101, we need to go get maintenance on that to check the air conditioning in that
particular room.” So, they've really stretched across our ecosystem and our APIs to
make sure that their solution is very deeply embedded into Mews.
[00:08:08] Matt Welle: Another great example is Namaste. Namaste is a booking
engine. So, Mews offers a booking engine. However, Namaste has more flexibility
because it's their core solution. It offers a lot more flexibility to kind of make it look and
feel like your hotel website. And they've embedded our payment solution inside the
booking engine. So, we take payments for them. So, the moment you get to the last
page of their booking engine flow, we have Mews payments there so that we can
capture 3D secure tokens, so that we can make sure that future payments in the hotel
are automated through Mews Payments and really look for those partners in our
marketplace that are stretching the limits of what our API can do. And then it's an
important question to ask in the process when you speak to those types of partners.
[00:08:50] Matt Welle: So, we talked about the open ecosystem. Let's have a look at
the other side of the spectrum, which is the closed ecosystem, and what are the pros
and cons of that kind of solution. Here I turn to BCG, who talked about this, and they
said, “It's a more tightly controlled product family where multiple modules come from
one vendor.” Often with one data model, one user experience philosophy, one
commercial relationship, and one roadmap. So, the major advantages are here. There's
less complexity. You've got tighter security, and integrated tools, and harmonized UI
providing a much easier and better experience for the user. So, there's real upsets here.
You know, a user logs in and can navigate between the different platforms. Automation
works across the spectrum.
[00:09:34] Matt Welle: But also, if you think about the example I gave earlier, where
we extended our API, but other industry vendors were not able to keep up to date, that
becomes a real pain. One such example was around revenue management. A couple of
years ago, we had Project Spacetime run. So, suddenly, we were able to sell multiple
types of spaces, apartments, bicycle rentals, co-working spaces, etc, and multiple time
units, but revenue management in the marketplace were like, yeah, but that's not
interesting because 90% of the market are hotels that sell rooms per night. So, we
opened up our API, and none of the revenue management systems was building
towards that use case because they said it's only for one vendor. We have to do this,
whereas we just have to integrate to every PMS.
[00:10:14] Matt Welle: So, for years, we tried to have that conversation, but none of
them really started building towards it. So, we decided to bring Atomize, one of the
leading revenue management systems, into the fold. We acquired them so that we can
control the roadmap. So, we can really build towards the use cases that we believe are
the future of hospitality. And we can only drive that kind of innovation if we own the
roadmap.
[00:10:37] Matt Welle: The biggest risk of this model, however, is vendor lock-in. If you
pick badly, you're stuck. You're stuck with a vendor that you may be disappointed by,
but it's too hard to get out of. And one of the things that I find is that a lot of hotels
don't do proper due diligence. So, they don't ask all of the questions. They don't work
with the entire team. So, sometimes the accounting team is not invited into the RFP
process. So, once they've deployed it, they're realizing all these gaps in the products
afterwards.
[00:11:04] Matt Welle: And then there's no way out because they've now committed
all of their eggs in one basket, one single vendor, that is the risk, because once you've
moved to that platform, it's really expensive to move to another platform. So, if you are
going down this route, you wanna make sure that you do your due diligence in the
correct way. One of the benefits, again, of that one vendor is you've got a single throat
to choke. So, if you're unhappy, you can have one person that you turn to. If there is a
bug that happens in the system, you don't have to navigate multiple vendors. You don't
have to hire an entire team on-site because, actually, the one vendor does all of the
coordinating between all of the different apps, so you don't have to have this massive
IT team on-site.
[00:11:45] Matt Welle: Another benefit is volume discounting. If you buy multiple
products from one vendor, you have more revenue for that particular vendor, and you
can negotiate a volume discount, which is important. There are risks, of course. So, if
you work with a vendor that doesn't deliver world-class technology, you may be stuck
with that entire ecosystem of applications for quite a while. And that puts you as a
business at risk, and specifically focuses on the security of data flows. You know, when
you have one single ecosystem, it is very easy to manage your security. But if you have
multiple apps with data flowing up and down, that puts your business at risk.
[00:12:22] Matt Welle: And, unfortunately, hospitality is experiencing high interest
from hackers and criminals who wanna get access to this very valuable guest data so
that they can contact these guests for their credit card credentials. And this is what
we've been seeing for the last couple of years. So, going with, like, a one-solution-for-
all makes the life of you as a security kind of agent significantly better to make sure
that the data is protected well.
[00:12:45] Matt Welle: So, stepping away from that picture, what are other industry
players doing? And when I talk about industry players, I'm not talking about hospitality
companies. We always look at other industries because we're trying to lead the
innovation. So, we're not gonna learn much from what the legacy vendors have done in
the past. We're actually gonna learn from other industries where there might be
industry-leading players.
[00:13:06] Matt Welle: One such player was Shopify. Shopify is the ecommerce
platform. So, if you run an ecommerce business, you wanna have a website with an
inventory solution where you take payments. And Shopify is the biggest in that
particular category, and they've really leaned into starting as open because they're
horizontal. So, again, they might not have use cases for everything. So, they said, “Let's
just build a really solid core and then let the ecosystem handle everything around it.”
So, they've got a fantastic, fantastic marketplace, but that's needed because they were
horizontal. They wanted to very quickly expand and cover a wide spectrum of types of
businesses.
[00:13:41] Matt Welle: Another great example is Toast. Toast is the point of sale
company who navigate the same thing, but they are more verticalized. So, they are
sitting in the restaurant space. If you compare a restaurant to a hotel, a restaurant is an
easier business to manage because, really, it's just restaurants. So, they don't have to
deal with guests’ CRM data, central reservation system integrations, like the spectrum
hotels that we have to deal with. Toast sits in the vertical of, kind of, restaurants, so
they get to actually build a lot of the solutions themselves, but they do have an open
marketplace. But they are definitely leaning more towards the kind of closed model
with some areas that they don't cover, and that's where they have their marketplace.
[00:14:22] Matt Welle: Another great example that we look at often is ServiceTitan.
ServiceTitan is in a very different space than hospitality, but they're kind of doing
plumbing, electrical, and roofing, so they're dealing with smaller SMB kind of
companies. And because of that, they have a more tightly controlled ecosystem. So,
they really started from a closed ecosystem and are slowly opening up. But this is how
we think about Mews. We really look at what industry-leading solutions are doing, and
then we take the best parts of that, and that's what we poured over into Mews when
we built our strategy.
[00:14:52] Matt Welle: So, now we've looked at the open, the closed ecosystem, and
what our other industry vendors are doing. And then, really, what's more interesting to
me, at least, is what is Mews doing, because we've definitely shifted our strategy over
the years. We started as an open platform. We came in, and we built the core, a really
solid core with high complexity, but we have this great open API, and we built this
marketplace.
[00:15:15] Matt Welle: Before I explain where Mews is turning towards in the future, I
think it's important to use, for example, the iPhone explanation. So, iPhone and Apple
do the basics really, really well. And then for special use cases, you go to the App Store,
but if I turn to my iPhone, even though in our company, we use Outlook, on my iPhone,
I use the Mail app because I find it easier. I use the Apple Calendar, and I use Apple
Messaging, so it does a few core components extremely well that cover the majority of
customers. And then all of those use cases, edge cases, turn to the kind of App Store 4.
[00:15:49] Matt Welle: So, when Mews started, we really found an industry that was
struggling to innovate. And I remember the early years when we had the conversation
with our developers, when I said, “We've written this API documentation that allows
developers to integrate. Do you mind if I stick it on the website?” And initially, the
response from our developer was like, “Please don't do that because this API is
constantly changing.” But I said, “But we have this big challenge because everyone's
asking us to build integrations, and it's just, we don't have demand power for it. So, this
is the only way for us to scale.” So, we were the first to put it on our website and ask
the industry to update. And we very quickly found a very exciting space of other
startups that had been struggling to get access to the PMS data for years, that were
locked out from all of the big legacy vendors. And suddenly, there was a PMS that said,
“Yeah, yeah, you're welcome to.” Like, we actually want you to integrate with us
because you're solving a problem for us, and we're solving a problem for you. Today,
we have 1,200 integrations in that marketplace, and that really has helped us with our
scalability across the world. However, as we continued building out that API, the
application protocol interface, all the integrators that built the integrations, that they
could, you know, then copy-paste to other vendors. So, they first started with Mews
and said, “Okay, we're gonna do an upselling integration to Mews, and then we will
copy-paste that exact integration to the other APIs. Even though they might not be as
advanced, we'll dumb it down.” And it really became a one-size-fits-all for every
category.
[00:17:13] Matt Welle: So, a housekeeping app had one type of integration, a revenue
management system had one integration; however, like I said earlier, with Spacetime,
we had very unique use cases. So, for example, we have dynamic pricing for any type
of product. If you think about breakfast, we could dynamically price breakfast every
single day. However, no one builds towards that use case. We embedded payments
across the workflow, and no one builds towards our payments SDK at the time. So,
whilst we kept extending our APIs, we found that the limited use cases of our
marketplace really helped Mews back because we were like, yeah, but you can do all
these incredible things to drive more revenue for the hotel, to upsell these products,
you know, if you think about a parking lot at a hotel, why is pricing on a Tuesday in a
parking lot the same as on a Saturday even though Saturday is seeing a 100%
occupancy of the rooms and a Tuesday is 20% occupancy.
[00:18:05] Matt Welle: So, your price should go up on a Saturday because you know
that these guests are gonna come for the rooms. We should be yielding the parking
rates as well. And no one was able to get there. But what we're now seeing across our
ecosystem is that because we know these things, we can have hotels load all of their
inventory and dynamically price when occupancy increases, not just RevPAR increases,
but it's actually the TrevPAR, the total revenue per available room or the total revenue
per available square meter that is actually driving an increase. And that's a really
important thing to keep in mind.
[00:18:39] Matt Welle: Another thing I wanna talk about is data. So, in the time of AI
and where AI is changing everything, you wanna have a castle with a moat around. So,
you wanna protect yourself. And the way to protect yourself from the disruption of AI
is actually leaning into AI. And what it wants is proprietary data, data that is unique to
you as your business, as your hotel business. And this is really where Mews comes in.
[00:19:06] Matt Welle: So, with Mews, we've now built Mews BI, where you can store
and house all of your data into a data lake that sits at the heart of the system that can
communicate across all of the applications in that ecosystem. And that really becomes
a treasure trove for the future of your hotel because, suddenly, we know things from
your guest profile that we can then leverage, for example, across the housekeeping
app, or our revenue management system can pick up things that we know in the data
points that we have. If I go to the restaurants and I pay with Apple Pay, if I tap my
phone to the restaurant point of sale, we know that that payment token was used on
the profile, and I can merge the guest data. So, you're building in one ecosystem a
much richer moat around your castle, protecting yourself against disruption because
now all of your data is housed. We use AI to kind of build these fantastic use cases for
your business, and that's how you defend yourself against other kinds of businesses
that are also doing the same thing. We are an industry of corner cases. And because we
are the most human industry, that's okay, right? We wanna make sure that we
automate as much as possible, but then we deploy the humans who now have a lower
admin workload to spark the innovation. We really wanna deploy humans to do the fun
parts, to do the unexpected, to drive these experiences, but we can only do that once
we started closing in on more of the corner cases.
[00:20:33] Matt Welle: Most hotels where I go today, I ask them whether I can see
their checklist. And usually, there's still a long checklist. So, we've automated, you
know, a large portion of their work, but there are still checklists that are saying, check
VIP for arrival, and whether housekeeping has set up the crib in that particular room.
Those corner cases, one by one, were ticking off now through our ecosystem, through
the AI, the semantic layer that we're building into it, that is going to make the life of
hoteliers significantly easier. But we still need humans because people travel to have
human interactions, but we deploy the humans in a much more interesting way
because no human ever went to a hotel school to say, “I would like to stand behind a
reception desk and enter data into a system.” We want that new generation of hoteliers
to really come in and leverage the power of Mews to drive much better experiences.
So, more and more, Mews is leaning into this one ecosystem built and supported by
Mews, and it has real reasons.
[00:21:32] Matt Welle: And I wanna give you a couple of examples, just to show you
why we're doing this. When you combine the point of sale for the restaurant with the
PMS, with the payments, three different products, and you combine them into an
ecosystem, we can now track all of the spend that happens in the restaurant to a single
guest lifetime value. So, on the guest profile, we added a tab recently that it's a lifetime
value. And it's not just what they paid on room, it's all of the spend that they have
across the hotel that we can suddenly collect. But you can only do that when you have
those three pieces connected.
[00:22:02] Matt Welle: Another example is when you have your event solution, your
PMS, and payments integrated, we can take payments for events automatically. And
that's a really critical component because these are high-ticket items, and you wanna
collect that cash as fast as possible.
[00:22:15] Matt Welle: Another great example is revenue per square meter. We know
how large a hotel is. We know how much revenue there is, and we know all of the
pieces that could drive more revenue from our ecosystem. So, we can give real
recommendations to the hotel about how they drive more revenue per square meter
through some of the stuff that we've done, for example, through Spacetime, through
the parking lot extensions, etc.
[00:22:38] Matt Welle: Another great example is a guest who arrives early. The kiosk
will consistently upsell breakfast. It will upsell the early arrival fee because we know
which rooms are clean, because the housekeeping app has already informed us on the
PMS side, so that we can actually sell that room at an additional fee, making you more
revenue.
[00:22:56] Matt Welle: Another great example is the RMS, right, going beyond
bedrooms. Like, how do we sell anything with a dynamic price so that it's flexible and to
help drive more revenue? These are just some of the examples that I have, but the use
cases will continue to build. And this is really why I think Mews is doing a really great
job at not just buying solutions and then leaving them on the outside. We're deeply
embedding them into the ecosystem because we think bringing them closer together
will bring more use cases to diversify Mews tech stack beyond what any other solution
in hospitality can do today.
[00:23:33] Matt Welle: So, are we becoming open, or are we becoming closed? The
answer is both. We'll always remain open because I think large hotel groups will want a
full buffet of integrations they can choose from, and they want that flexibility. And we'll
lean into making sure that the best-of-breed integrations are always integrated deeply
with Mews and that we keep those APIs up to date. For smaller vendors, we will have a
more closed ecosystem because they want that single throat to choke, they want
simple user workflows, they want security handled for them, and that's really what
Mews will cover for the lower end of the market, smaller independent hotels. So,
sometimes a large hotel group might actually buy pieces of the ecosystem, but for
some other pieces, they decide to buy in the marketplace, and we're okay with that.
[00:24:21] Matt Welle: The thing is, we wanna solve the innovation gap that we feel in
hospitality, and we have to navigate both sides of the spectrum. And we're going to be
doing that for many years to come to really transform an industry that has been lagging
for the last couple of years, and I'm excited to now be at the forefront of the
innovation. So, this is really my answer that I give, but I got a lot more time in my
podcast to talk about the details than I do on a stage where I'm given, like, one minute.
So, I'm hoping you're enjoying the depth that I've given the answer in. It's also a bit of a
nothing answer because I'm saying we're gonna do both sides, but there are real
arguments why we have to navigate both sides
