Pure Hospitality Solutions, Inc. (PNOW) Shrewdly Positioning SME-Focused Online Hospitality Booking Platform in Consolidation-Heavy OTA Market

IBISWorld’s recent travel agencies research report puts the U.S. market size at around $34 billion in annual revenues as of 2014, with a steady increase in internet-based technologies fueling a CAGR of around 1.2% over the next five years. At the same time, consolidation pressures among the big three U.S. online travel agencies (“OTAs”), Expedia (NASDAQ:EXPE), Priceline (NASDAQ:PCLN) and Orbitz Worldwide (NYSE:OWW), are heating up the push to dominate online and mobile markets, and capture market share within this key area of the roughly $165 billion (eMarketer) U.S. travel space.

Expedia is by far the biggest player today, with around 40%-plus of the OTA market currently under their thumb and increasing emphasis is now being placed by Expedia on content over commerce in their online and mobile footprint. With more and more attention being paid to all parts of the travel experience, as loyalty programs, personalized messages, and more granular accommodation data are brought to the fore, the OTAs are seeking out the best digital landscaping artists they can find in a bid to grab and hold onto consumers amid a slowly tightening U.S. travel market. Expedia continues to innovate with mobile apps geared towards app retention and user experience cultivation, using marketing efforts like mobile-only offers, as well as new features like their recently released Media Lounge, that actively touts other travel-themed apps.

Priceline’s acquisition of mobile app developer Kayak in late 2013 is another example of the underlying dynamics at play in the market. Kayak’s iPhone, Android, Windows Phone and Kindle Fire apps, in addition to their mobile site, continue to show increasing emphasis on feature-rich design that empowers consumers, with the debut of additional tools like itinerary managers and flight trackers. Kayak also brings in information like baggage fees, weather data, airport terminal interior maps and images of sourced destinations, showing how the trend towards content over transactions in the OTA world has become core to growth strategies.

Online search giant Google (NASDAQ:GOOG) also recently announced in February of 2015 that they have made a big push further into the OTA market with the launch of a new online tool to assist travelers in planning their trips, called Google Flights, which gives users a great deal of power when it comes to examining various destinations, dates, fares, and flights. This move by Google follows up on a series of such moves over the past several years, including licensing the hotel booking software of a start-up backed by Expedia, Room 77, as well as the launch of Hotel Price Ads in 2010, Hotel Finder in 2011, and the ITA Software acquisition during that same year. Add to this the announcement by Expedia, also in February of this year, that they intend to acquire rival Orbitz (currently trading at $11.68/share) for some $1.6 billion in cash ($12.00/share), which comes fast on the heels of the $280 million all-cash Travelocity acquisition earlier in January, and you can start to see the real crunch that is going on in the OTA market.

This set of trends is clearly one of the main drivers behind Pure Hospitality Solutions’ (OTC:PNOW) major refocusing of efforts in recent months on the launch of the update to their extremely successful FROL (Friendly Reservations On-Line) hospitality booking engine technology, Oveedia, slated for Q2 2015. Oveedia is being geared up as the premier online travel system platform for the thriving Central American-Caribbean market. Divesting their hotel assets and moving firmly into becoming the de facto, go-to regional OTA online software for the Central American-Caribbean travel market is a shrewd move by management, who is intent on becoming the top online hospitality booking system for Costa Rica, before expanding further into the Central American-Caribbean.

Pure Hospitality Solutions recently released projections to a series of private investment groups pegging valuations on their Oveedia platform in the range of $40 million or more. Management further explained that their real-estate properties could never return similar shareholder value. Divestment of current real-estate holdings, a halt to any further real-estate acquisitions and a decided refocusing of efforts on the Oveedia rollout is a big move for PNOW, but management is confident that they have correctly read the sector’s weather signs and have placed the company in the pole position to deliver handsome returns to the company’s investors.

Get a closer look at the company by visiting www.purenow.solutions

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