SiteMinder’s Deeper Connectivity For Growth

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This story features SITEMINDER LIMITED, and other companies.
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The trillion dollar global accommodation market is ripe for disruption with improved revenue generation as SiteMinder aims to grow its share.

-Channel Manager to Smart Platform: Becoming the central nervous system for hotels
-Unlocking a trillion-dollar opportunity through deeper connectivity
-Growth Drivers from Channels Plus, Dynamic Revenue Plus, and the Push Into Real-Time Pricing
-Analysts' Perspectives highlight monetisation potential and long-term upside

By Danielle Ecuyer

Positioning itself for growth amidst an enormous market opportunity

Listing on the Australian stock exchange in 2021, SiteMinder ((SDR)) has evolved into a smart cloud-based platform for the global hotel/accommodation sector that could be described as the central nervous system for a very disaggregated industry ripe for disruption in terms of booking solutions and revenue maximisation.

Analysts envisage the potential for SiteMinder to build on its existing successes from start-up to a technology solutions company with over a $2bn market capitalisation, most importantly turning cashflow positive at the latest August FY25 results.

Investors are always looking for the next TechnologyOne ((TNE)) or WiseTech Global ((WTC)) at earlier stages of corporate development to catch the next ten-bagger.

Whilst brokers are not promising the success can definitively be replicated, SiteMinder has been putting in place the infrastructure and platform blocks to build on its achievements and accelerate the monetisation of its platform.

Building the positive case for product add-ons

Prior to its recent Investor Day in late September, the company delivered its latest research on the global hotel industry which outlined future potential revenue via “deepened system connectivity”.

Some 65% of hoteliers believe faster fully integrated systems could generate a minimum of 6% additional annual revenue, which equates to billions in extra revenue for the global accommodation sector with an estimated value of US$1.2trn.

The survey also revealed 92% of hoteliers say speed has emerged as highly significant, with 58% believing it is “business critical”. While manual data inputs for the industry remain commonplace, some 36% of hoteliers reported updating pricing monthly or less, and 70% spend over eleven hours a week on tasks that could be automated.

AI solutions also have a place, with 43% open to exploring AI-driven solutions.

As often stated by technology investor Cathie Wood of ARK Invest, technological shifts are happening “faster, cheaper, better” — but are they in the case of SiteMinder?

Investor Day left some unanswered questions 

The Investor Day update illustrated SiteMinder IQ of $85bn-plus in gross booking value; 2.4m rooms; 130m-plus reservations; and 250m-plus room nights across the platform of revenue management, guest acquisition, and guest experience.

For context, there are two major aspects to the company: one is the evolution of the Smart Platform, which is the engine room for customers, and the second is connectivity for customers to other distribution channels.

Management has cleverly framed the customer experience through what it refers to as the “Revenue Flight Deck” — a dashboard of services to enhance the user experience.

Morgan Stanley liked the analogy to a flight deck, which integrates the dashboard and toolkit hotel revenue managers depend on, while countenancing the destination to realising monetisation was a little less certain.

Acknowledging management’s message to investors the global hotel sector is under-resourced and “tooled,” which lays bare an opportunity cost for revenue generation due to an absence of systems heightened by obstacles and inertia; the broker accepts the opportunity to tap into a $1.2trn total addressable market is there.

Citi was quick to point out the first Investor Day in 2023 outlined the new products, Direct Revenue Plus (DR+) and Channels Plus (C+), and the September presentation focused on execution and scaling to expand SiteMinder’s development to a revenue platform as well as a software-as-a-service business.

Channels Plus unwrapped

Taking a step back, Channels Plus is a cloud-based channel management solution aimed to help hotels and accommodation providers integrate their property management systems (PMS — the core back-office system hotels use to manage operations like reservations, check-in/check-out, housekeeping, billing, and guest profiles) with online travel agencies (OTAs), global distribution systems (GDS), and other booking platforms.

Citi sees Channels Plus as allowing hotels to bring on board new OTA channels without having to sign agreements with each of them. Equally, OTAs can offer special campaigns or discounted commissions to hotels.

Channels Plus is signing up new customers at the fastest rate of any prior product introduction. Management’s case study showed C-Plus able to generate 3% of a property’s bookings, which Moelis estimates can produce an additional 9bps of the property’s booking value for the platform.

As at June, Jarden noted C-Plus had expanded to 5,000-plus properties and 240k-plus rooms from 4,000-plus properties and 220k-plus rooms and is adding 500-plus properties a month. The product offers an opt-out setting, presenting lower barriers to entry on adoption.

Both Citi and Moelis concur C-Plus has the potential to be a “material revenue” contributor in FY27, as cited by management, particularly with the two-sided marketplace.

Channel checks by Ord Minnett suggest C-Plus has the capacity to significantly disrupt the hotel distribution chain over the medium term.

Dynamic Revenue unwrapped

Dynamic Revenue Plus, which launched in A&NZ in September 2024 and expanded to other countries in March this year, has partnered with IDeaS to combine live market data, demand signals, and the ability for hotels to act swiftly on pricing, length of stay, and inventory as well as competitor performance. The rollout should be finished in FY26.

SiteMinder noted the upselling of existing customers to DR-Plus was going well, albeit at a “measured pace”, Moelis adds. The product has the potential to snag 0.9% of Gross Booking Value (GBV) but remains at an early development stage.

Jarden pointed to the release of UltraSync integrated with DR-Plus, which permits rate plans to be automatically updated in the property management system from the revenue manager. This allows for better real-time price management.

Management is hiring sales staff with hotel industry experience as the go-to-market strategy for DR-Plus, as the product is considered more of a consultative, solution sale.

While Ord Minnett’s assessment is that DR-Plus could be a “transformational product”, the major resistance or criticism is whether the product can be rolled out on a cost-effective basis, along with other products at scale. This analyst believes some of what was outlined at the strategy day went some way to addressing concerns.

Monetisation may take time.

Citi notes IDeaS’ pricing engine is optimised within seven days and UltraSync has dealt with the data gap. This has resulted in the analyst lifting DR-Plus revenue forecasts, which are anticipated to grow to around $33m by FY28. Smart Platform revenue forecasts are upgraded by 5% for FY27 and 8% for FY28.

The scope for growth in revenue management systems is considerable, as noted by Citi, with industry share only at 20% and traditional revenue management systems focused on price prediction and not execution. This results in manual price adjustments in the channel and is susceptible to error.

Morgan Stanley was disappointed by the absence of detail on the relative contributions of existing subscription revenues (SaaS) and the transactional product growth versus Smart Distribution versus Channels Plus versus Dynamic Revenue Plus, to achieving incremental annual recurring revenue of around $75m, which aligns with management’s FY26 outlook.

Currently, subscription revenue is the mainstay for SiteMinder’s platform, and new products are adding transaction-based revenue to the mix, linked to booking activity.

Management explained significant value can be unlocked from its existing customer base by upselling and increasing take-up and usage of new products.

If all SiteMinder’s customers took up all its products, Jarden estimates it would result in a five times lift in gross booking value, which equates to ARR/GBV of 1.5% from 0.3%.

Such a scenario is not considered likely but exemplifies that only a moderate take-up rate would support ARR to $1bn.

Morgan Stanley highlighted management confirmed Smart Distribution (SiteMinder’s evolution of the original Channel Manager) will generate FY26 revenue, followed by Channel Plus and Direct Revenue Plus.

On agentic AI, the company is seeking to apply it across reporting/insights as well as applications to update rate plans and inventory.

For Citi, more details on the use of AI and possible product improvements would have been welcome.

Analysts views and outlook

On balance, Citi believes SiteMinder’s data and insights capabilities are not yet fully appreciated. While there are risks attached to the scaling of Channel Plus revenue, the broker reiterates a Buy rating with a higher target price by 5% to $8.40.

Ord Minnett retained its $7.97 target price and Buy rating, noting on the application of an Enterprise Value/Revenue methodology the share price could appreciate to circa $9 to $10 over the next one to two years.

The other daily monitored broker which updated post Investor Day, Morgan Stanley retains an Overweight rating and $7.70 target.

While positive on the company’s proven track record of ARR growth and customers as well as incumbent market position, this analyst remains cautious on the lack of details around scaling the new products to achieve FY26 targets — even more so after the prior Investor Day when the products were announced but management’s guidance implies they don’t contribute to ARR for nearly two years.

Moelis is Buy rated with an $8.51 target and Jarden is also Buy rated with a $7.65 target.

FNArena’s consensus target is $8.097 with six Buy-equivalent ratings including from Citi and Morgan Stanley.

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