Asia’s two leading broadband Internet companies for the hospitality industry have agreed to terms of a merger that is expected to create one dominant industry player, boasting unmatched scale, engineering expertise and pricing power in what has been a fragmented and highly competitive industry.
The pending merger of Hong Kong-based I-Quest Corporation and Singapore-based ViewInternet was facilitated and encouraged by a leading global investment firm, which has signed a conditional but exclusive three-way agreement with I-Quest and ViewInternet. The US-based investment firm would inject US$20 million into the combined entity, allowing co-investors to commit an additional US$10 million.
I-Quest and ViewInternet are the premier providers in Asia of packaged, high-speed Internet solutions for hotel guestrooms, meeting rooms and business centers. Among other agreements, I-Quest has an exclusive contract with Hyatt International, while ViewInternet has an exclusive contract with Shangri-La.
Together they create a company with superior technology, scale, brand recognition, pricing power and financial muscle, which is expected to put additional pressure on smaller, financially challenged rivals, who have struggled to find capital for expansion and to meet basic service obligations. The combined entity will have more than 20,000 hotel rooms installed, and more than 85,000 rooms under contract, mostly in five-star properties in Asia’s international gateway cities.
“Many hotel owners and executives have been waiting for a dominant, well-financed industry player to emerge in Asia,” said Anthony Blass, I-Quest’s Chairman and Chief Executive Officer. “This merger removes that confusion from the market and clearly establishes an industry leader.”
P. Howard Useche, Chief Executive Officer of ViewInternet, said that in addition to its financial strength the combined company offers the most complete and robust product line in the market. “We believe that hotels have a much clearer choice after today,” Mr. Useche said.
Both companies bring complementary strengths to the merger. ViewInternet is the only industry player to develop a dual broadband guestroom solution for laptop computers and televisions, while I-Quest is the only industry player to develop a revenue-generating content and hospitality web-development business to buttress its connectivity revenues.
Management experience also is highly complementary. I-Quest’s management expertise is marketing and service oriented, with a well-established brand and superior customer support networks and training modules for hotels, which maximizes guest usage and enhances hotel satisfaction. ViewInternet management’s core strength is its technical efficiency and ability to leverage technology to achieve scale.
“Our vision has always been to leverage our infrastructure to create multiple revenue streams and a robust and scaleable operations center, which we believe achieves the highest returns for this type of business,” said Mr. Useche. “Our merger with I-Quest adds depth, scope and marketing expertise to reinforce the product offering, which helps distance ourselves even further from potential competitors. I-Quest brings valuable experience to the table, having started operations in 1996 and completed 60 hotel installations with its Worldroom Connect service.”
The merged entity will inherit both ViewInternet’s proprietary network infrastructure and I-Quest’s thriving web development and content business. I-Quest’s award-winning web site, Worldroom.com, is one of the most comprehensive web destinations for international business travelers and generates nearly half of I-Quest’s revenues. The unique network infrastructure developed by ViewInternet, meanwhile, allows it to aggregate bandwidth, monitor usage trends and enhance performance from a central location.
“Developing and sustaining multiple revenue streams and creating efficiencies of scale are the keys to success in our industry, where demand for innovative Internet solutions has never been stronger,” Mr. Blass said. “The combination of ViewInternet and I-Quest brings together a full menu of products and services for hotels and for traveling executives that we believe is unmatched anywhere.”