Following last week’s big announcement that Pegasus Solutions
has signed of a definitive agreement to acquire the stock of Unirez, Inc., Internet Travel News met up with Dwight Hendrickson, President & CEO of Unirez, John Davis, CEO and Chairman of Pegasus Bob Boles, EVP Marketing & Sales of Pegasus and Cindy Foor, VP Marketing Communications of Pegasus at WTM to discuss the potential and implications of the expected acquisition
The transaction is expected to generate approximately $10 million in future tax deductions that will effectively reduce the purchase price. The acquisition is subject to completion of due diligence and other customary contingencies.
ITN- When are you expecting the acquisition of Unirez to close?
BB - This was announced last Wednesday and we are expecting it to close at the end month
ITN- What are the main objectives of the acquisition?
JD - First and foremost, the deal expands our product line significantly - you look at the independent hotels they fit into three groups - we already have a strong presence with the soft brands, providing reservation services to all of those brands. We also provide services to those independent hotels looking for someone to provide marketing services and technology. The third group is our independent hotels that just need technology, the fastest growing of the three groups. Unirez is the biggest in the world at providing technology services, providing a complex system in a simple manner to be distributed electronically throughout the world. We did not play in that field before but by buying Unirez we are now the largest player in that sector so we have a very large presence in all 3 sectors.
ITN - When did Unirez launch?
DH- Unirez incorporated in the end of1999 and our system went live by July of 2000. We are 3 ? years old years old and have had a very good run We were in right place at the right time with the right technology.
JD- Exactly right
ITN- How will this acquisition better place you in future?
JD- The hotel now has choices - Before, we would go in and sell the hotel services, if the hotel did not want the marketing, just the technology, we didn’t have the systems in place in order to offer that product before, now we do. In addition we picked up well over 3000 customers which doesn’t hurt either.
BB - the Unirez portfolio is strong in the US and Utell portfolio is strong in Europe so it’s a good balance between Europe and the US market
ITN- Why your recent focus on independent and small group hotel market?(to Pegasus)
JD- I think it offers the biggest opportunity for Pegusus. The major chains have always been our base products. We found that as our products became more successful many of the chains begin to take the services in-house and do it themselves -they could afford to do it for the same fees that we would charge if not less. That opportunity does not exist within the independent hotels - they are always going to need a company like Pegusus to provide technology solutions in the markets which they are going to need. So there is less chance of them going somewhere else.
We also believe the independent hotel is a unique product - more hotels are becoming commodity. We could no longer tell you the difference between 3 star hotels and we are in the business. We believe the independent hotels don’t have that problem - you are going to have a unique experience and we believe there are more people that would like to have a unique experience than a commodity.
ITN- Can you comment on your acquisition strategy?
JD- We are looking for companies that will expand our product line, customer base that are profitable and have the unique position in the market.
ITN- Will Unirez retain its own identity in the future, or will it be absorbed into the Pegasus organisation?
JD- For the near term, yes, but one of the most important things is that we want to make sure that we don’t - pardon me - screw up the great thing that Dwight has built over the last 3 years. It’s an incredible achievement, he’s been very successful. The last thing we want to do by acquiring Unirez is mess it up and start losing the customer base - they would not be happy and I would not get to sit here next year talking to them.
DH - But we are on an integrated brand strategy because now you have Pegasus, Utell and now Unirez. We are going through some work to unify so that there is a single brand that they feed into. We want to utilise these brand names.
BB- This acquisition means an evolution where hotels can pick there comfort zone. Pegasus will now be able to provide whichever solution the hotels require. They have the most comprehensive end to end solution. Where else can you go?