UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 20, 2021
ASTREA ACQUISITION CORP.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-39996 | 85-2609730 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
55 Ocean Lane Drive, Apt. 3021, Key Biscayne, Florida 33149
(Address of Principal Executive Offices) (Zip Code)
(347) 607-8025
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Units, each consisting of one share of common stock and one-half of one redeemable warrant | ASAXU | The Nasdaq Stock Market LLC | ||
| Common stock, par value $0.0001 per share | ASAX | The Nasdaq Stock Market LLC | ||
| Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share | ASAXW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure
As previously disclosed, on August 9, 2021, Astrea Acquisition Corp., a Delaware corporation (“Astrea”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Astrea, Peregrine Merger Sub, LLC, a Florida limited liability company and direct, wholly-owned subsidiary of Astrea (“HotelPlanner.com Merger Sub”), Lexyl Travel Technologies, LLC, a Florida limited liability company (“HotelPlanner.com”), Double Peregrine Merger Sub, LLC, a Florida limited liability company and direct, wholly-owned subsidiary of HotelPlanner.com (“Reservations.com Merger Sub”), and Benjamin & Brothers, LLC, a Florida limited liability company (“Reservations.com”).
On December 20, 2021, Tim Hentschel, Co-Founder and Chief Executive Officer of HotelPlanner.com, and Mohsen Moazami, Chairman of Astrea, participated in an interview with SPAC Alpha. Additionally, on December 21, 2021, Mr. Hentschel participated in an interview by Boardroom Alpha. Transcripts of the interviews are filed as Exhibits 99.1 and 99.2, respectively.
The information set forth in this Item 7.01, including the exhibits attached hereto, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward Looking Statements
Neither Astrea, HotelPlanner.com, Reservations.com nor any of their respective affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this Current Report on Form 8-K. This Current Report on Form 8-K is not intended to be all-inclusive or to contain all the information that a person may desire in considering the Transactions. It is not intended to form the basis of any investment decision or any other decision in respect of the proposed Transactions.
The exhibits furnished herewith includes “forward-looking statements” within the meaning of the federal securities laws with respect to the proposed Transactions between Astrea, HotelPlanner.com, and Reservations.com including statements regarding the benefits of the Transactions, the anticipated timing of the Transactions, the business of HotelPlanner.com and the markets in which it operates. Astrea’s, HotelPlanner.com’s, and Reservations.com’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements generally are identified by the words “aspire,” “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “will be,” “will continue,” “will likely result,” “could,” “should,” “believe(s),” “predicts,” “potential,” “continue,” “future,” “opportunity,” “strategy,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Astrea’s, HotelPlanner.com’s, and Reservations.com’s expectations with respect to future performance and anticipated financial impacts of the proposed Transactions.
These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Many of these factors are outside the control of Astrea, HotelPlanner.com, and Reservations.com and are difficult to predict. Factors that may cause such differences include, but are not limited to: the risk that the benefits of the Transactions may not be realized; the risk that the Transactions may not be completed in a timely manner or at all, which may adversely affect the price of Astrea’s securities; the failure to satisfy the conditions to the consummation of the Transactions, including the failure of Astrea’s stockholders to approve and adopt the Merger Agreement or the failure of Astrea to satisfy the Minimum Cash Condition (as defined in the Merger Agreement) following redemptions by its stockholders; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; the outcome of any legal proceedings that may be initiated following announcement of the Transactions; the combined company’s continued listing on Nasdaq; the risk that the proposed transaction disrupts current plans and operations of HotelPlanner.com and/or Reservations.com as a result of the announcement and consummation of the Transactions; costs related to the Transactions; changes in applicable laws or regulations; the possibility that the combined company may be adversely affected by other economic, business, and/or competitive factors; the impact of COVID-19 or other adverse public health developments; and other risks and uncertainties that will be detailed in the Proxy Statement and as indicated from time to time in Astrea’s filings with the Securities and Exchange Commission (“SEC”). These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements.
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Astrea, HotelPlanner.com, and Reservations.com caution that the foregoing list of factors is not exclusive. Astrea, HotelPlanner.com, and Reservations.com caution readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Neither Astrea, HotelPlanner.com, nor Reservations.com undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
Additional Information and Where to Find It
This document is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the transaction and does not constitute an offer to sell, buy, or exchange or the solicitation of an offer to sell, buy, or exchange any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, purchase, or exchange of securities or solicitation of any vote or approval in any jurisdiction in contravention of applicable law.
In connection with the proposed transaction between Astrea, HotelPlanner.com and Reservations.com, Astrea has filed a preliminary Proxy Statement with the SEC. Astrea plans to mail the definitive Proxy Statement to its stockholders in connection with the Transactions. INVESTORS AND SECURITYHOLDERS OF ASTREA ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT HOTELPLANNER.COM, RESERVATIONS.COM ASTREA, THE TRANSACTIONS AND RELATED MATTERS. Investors and securityholders will be able to obtain free copies of the Proxy Statement (when available) and other documents filed with the SEC by Astrea through the website maintained by the SEC at www.sec.gov. In addition, investors and securityholders will be able to obtain free copies of the documents filed with the SEC on Astrea’s website at https://astreaacquisitioncorp.com
Participants in the Solicitation
Astrea, HotelPlanner.com Reservations.com and certain of their respective directors, executive officers, managers, members, and employees may be considered to be participants in the solicitation of proxies in connection with the Transactions. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of the stockholders of Astrea in connection with the Transactions, including a description of their respective direct and indirect interests, by security holdings or otherwise, will be included in the Proxy Statement described above when it is filed with the SEC. Additional information regarding Astrea’s directors and executive officers can also be found in Astrea’s final prospectus dated February 3, 2021 and filed with the SEC on February 4, 2021. These documents are available free of charge as described above.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit | Description | |
| 99.1 | Interview transcript | |
| 99.2 | Interview transcript | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: December 21, 2021 | ASTREA ACQUISITION CORP. | |
| By: | /s/ Jose Luis Cordova | |
| Jose Luis Cordova | ||
| Chief Financial Officer | ||
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Exhibit 99.1
SPAC Alpha interview transcript with HotelPlanner Co-Founder & CEO Tim Hentschel and Astrea Acquisition Corp. Chairman Mohsen Moazami
Interview date: December 20, 2021
Link: https://www.youtube.com/watch?v=aof84zvriM0
Official Transcript
Dan Dombrowski: Welcome to the SPAC Alpha interview. My name is Dan Dombrowski and today I’m speaking with the Chairman of Astrea Acquisition, Mohsen Moazami and Tim Hentschel, the CEO and Co-Founder of HotelPlanner. We’re going to be discussing the 3-way merger of Astrea, HotelPlanner and Reservations.com. Gentlemen, I really appreciate you taking the time to speak with me today.
Tim Hentschel: Thank you for having us.
Mohsen Moazami: Thank you for having us.
Dan Dombrowski: Tim, can you tell me what the environment looks like when you first started the company?
Tim Hentschel: Early days of the internet back in 2004, online hotel bookings just started to become a big part of the e-commerce online. So we were a small community of engineers and entrepreneurs and it was a very exciting time. Everybody was trying things out and everyone was helping each other. One of the big conferences that we would always go to is called Phocuswright. It’s still around today. That was a small group of hundreds of people. Now it’s thousands of people, the majority of the companies that are publicly traded. But back then, we were all private. Yeah, it was a small community looking to do amazing things.
Dan Dombrowski: Can you walk me through what your product looked like when you first started vs. what the company has evolved into for the offerings today?
Tim Hentschel: When we first started we wanted to solve the tough problems in the industry. Everybody else was doing an individual hotel room booking and they were doing it very well. With a co-founder who is a senior software engineer, came from IBM, top of his class in computer science from Northeastern, extensive entrepreneur and hospitality background myself. We had this synergy of the team that looked at problems to solve from high touch and high automation. Logically, taking on the group booking problem, the problem being that it didn’t’ exist on the internet at the time. Trying to solve that was the first thing that we dove into. So, we wanted to make it so that anybody could go online and plan a group of any size, whether it was for a wedding or family reunion or a complicated, thousands of hotel rooms, with tens of thousands of square feet of meeting space for big conferences or conventions. We wanted to make that so that you could get all of that done within minutes instead of days.
Dan Dombrowski: Coming into the present, what do your products look like now?
Tim Hentschel: The products have grown quite a bit. We’ve had HotelPlanner 1.0, 2.0, 3.0. We’re up to HotelPlanner 5.0 now. We continue to try to solve those problems in the hotel booking market that resolve around high touch and high automation. We’ve taken the product from an eRFP, electronic request for proposal, to an instant group booking system that’s based on Closed User Group rates. Then, we’ve taken that past, multi-room, into discounts for individuals, for any length of stay and deep discounts with personalized service through the first-of-its-kind gig economy travel agent reservation platform. And all of that is backed by AI from start to finish. So with the gig economy travel agent reservation system, we gig localized service and the way that the system comes together is through AI, it will find the customer and what they’re looking to book and what destination and then automatically match them up with a gig economy reservationist that has either intimate knowledge of the city they’re going to, or is based in that city. It’s actually a pivot from our group system, which the original group system that we had was putting a group coordinator in touch with a localized planner that was based in the market that they were going to do their event in. So we just pivoted that to individual and it’s worked fantastically well, especially over Covid. Over Covid, people want to ask more questions of locals. We see a tremendous spike in call volume and with this kind of high touch, the conversion for calls to bookings is at an all-time high.
Dan Dombrowski: I’ve heard you talk about your gig workers. What is a gig worker exactly?
Tim Hentschel: It’s anyone that wants to make a little extra money on the side or as a full time job. It’s basically when you make your own hours. It’s been very popular in the last few years it will have over $5B in revenue through the gig market. Famous gig based economy companies are Uber, AirBnB. You then just basically log into an app or extranet in our case. The minute you log in and put on your headset, our system start transferring you calls. You start answering those calls and talk to people about their trip to your city or a city you know a lot about. Once they make the booking, they get paid for that time.
Dan Dombrowski: Can you give me some context on what the industry looks like? Who are the biggest players in your space and what are they doing?
Tim Hentschel: The biggest players in our space are names you would know like Booking.com, Trip.com, Expedia, Hotels.com and they do individual bookings very well. We complement them because we power them for multiple group bookings, 9+ rooms. Then we also complement beyond that. Over the phone call center experience with the first-of-its-kind gig economy platform. So higher customer service is what we strive for with that. And then of course, delivering great service with a good price with 50,000 direct hotel relationships that we’ve built over the last 17 years on the group booking side.
Dan Dombrowski: Could you walk me through each channel or each segment of your revenue streams?
Tim Hentschel: Each segment of my revenue streams. Start with individual bookings. That would just be somebody that was searching to book a room in a city and they would typically start out on a search engine, find HotelPlanner or Reservations.com, which is the company we’re merging with for this 3-way merger and SPAC deal. Or other companies like Meetings.com. Once they start to search out destination and hotels with rates, they may have some additional questions. We put a 1-800 number for them to call. Once they pick that up, they talk to an agent that’s localized and that agent helps them complete the booking, or they can simply complete the booking online with a credit card. They’ll see a plethora of different options there. We take pride in offering as many different options for each customer because we’re doing so many types of different groups and events and travelers. That we want to have suites with breakfast included, or not included, corner King rooms, adjoining rooms, Club suite rooms. You name it, we want that option there so they’ll be surprised with how many options they have to choose from. Then of course, backed by excellent customer service that comes from having employees all around the world that know our 50,000 hotels on a property level because when we’re doing multiple rooms, we want to make sure that the reservations we’re making that are part of a group, all get blocked all the same floor together with extra services and free room upgrades. That transitions over to the individual side so we’re making sure that every customer gets a little bit of service.
Dan Dombrowski: Can you talk about the OTA segment as well?
Tim Hentschel: The OTA is our B2B side. That’s where we have our white label and customers will find our 9+ room option, drop down option, when they’re searching for a reservation. Or in groups & meetings tab will take them through our system that allows them to search multiple cities at the same time, however many rooms they believe they need and then of course, asking them if they need meeting space or banquet space. Then they’ll have the option to confirm an instant group rate that they can just send out to their members who can confirm each reservation with their credit card. Or, they can take a little bit longer and negotiate online with our 50,000 hotel partners on what kind of specific rate to terms they want for their group booking. And then of course, that takes a little bit longer because you’re negotiating with a person on a property back and forth. Then they can sign a contract online and basically move that to the customized group booking website process that they send out to their members and those members book within their block and it’s completed.
Dan Dombrowski: What has the higher profit margin?
Tim Hentschel: The margins will very on every single reservation. The highest margin would be direct business that comes in and books a pre-paid individual hotel booking.
Dan Dombrowski: Do you have a breakdown or average breakdown by segment?
Tim Hentschel: Our unit economics are some of the best in the industry, so our commission varies 20-25% per booking. Our net contribution margin on each booking is around 33%.
Dan Dombrowski: What do your customer acquisition costs look like?
Tim Hentschel: It’s typically around $2.50 per booking, per PPC, Price Per Click advertising.
Dan Dombrowski: Do you have a term of value for each customer?
Tim Hentschel: That’s a little more difficult for us because our revenue streams are so diversified. But on average, an individual customer will be around $40 or $50 for us. A group would be around $400 to $500.
Dan Dombrowski: Where do you think that you stand in the industry with your competitors?
Tim Hentschel: In group hotel bookings, we’re #1. We do 5,000 groups per day. In terms of individual bookings, we’re #4. There’s three companies that do more hotel bookings than we do.
Dan Dombrowski: You’ve grown out of organic growth in an industry that has seen a number of participants come and go. What do you attribute to your longevity and persistence within this space?
Tim Hentschel: I think it’s due to our attention to that high-touch and high automation. A lot of big and small companies that have tried to tackle the online hotel booking space have either gone for too much automation or too high touch and they either get killed by labor costs when they go for too high touch, or they get killed by lack of customer service so they can’t get conversion when they go for too high automation. So it’s hitting that sweet spot which has taken us 5 iterations of our technology over 17 years. It’s not an easy thing to do. We really had to stick with it and ask a lot of questions and make a lot of mistakes and pivot quite a few times and perfect it again and again and again. But luckily, because our co-founder is a brilliant engineer and he hand picks all of our engineers on his team, we have the mindset that we can AB test to look at each iteration of the technology and test again and again and again until we get it right. So that’s I guess one of our competitive advantages to that. That’s not to say that the big guys don’t do that exact same thing. They do. It’s just that in the niches we go after, we dominate, it’s hard for them to put that kind of attention that we will put into those kind of details because for them it’s a niche. For us, it’s our main market segment.
Mohsen Moazami: Once we entered exclusivity with HotelPlanner, we at Astrea really conducted very comprehensive technology review of the HotelPlanner platform as well as obviously Reservations.com. And it took a lot of work, a lot of labor, but it really came out as the major strength and core competency of the company. Again, I have spent 35+ years in the technology business and that’s the industry I’m from. So I care quite a bit about many issues ranging from cyber security exposure, the modern vs. old architectures, and so on. They really got a phenomenal score on all those fronts.
Dan Dombrowski: To that end, what changes were made from the 4th iteration to the 5th?
Tim Hentschel: The 4th iteration was instant group rates, which was taking it away from an eRFP system to allowing HotelPlanner to be the Merchant of Record so that we could instantly confirm the booking with the property system through a virtual card and send that confirmation back to the customer. Basically means that you can complete an entire group booking in the same session, from the time you search to getting a confirmation number for each individual room within your group block to your email or over text within the same session. So that was the 4th iteration. That was the instant group bookings. The 5th iteration is the gig economy travel agent platform. First of its kind, again, automation and high touch that was transferring what we knew that customers wanted on the group side with a localized planner and transferring that to the individual service side.
Dan Dombrowski: How much of that do you attribute to a reclassification of a gig worker in the U.S., a 1099?
Tim Hentschel: Excellent question. We’re so lucky that we’re in such an interesting space of hotel reservations with gig because we don’t necessarily need somebody based right in that city because we’re not an Uber or Lyft that needs somebody to pick them up. We just need somebody to answer a call and answer questions about that city. For instance, if California reclassifies its gig economy workers, it will put restrictions on us hiring gig workers in California, but that’s not to say we couldn’t hire workers in New Mexico or Arizona. They used to be California residents who still have a very good working knowledge of Las Angeles, San Diego and San Francisco, and so on. I think as regulation pushes gig economy workers out of certain state or even out of certain countries, we have a lot of flexibility to hire within neighboring countries and neighboring states. So yes, we’re very fortunate that way.
Dan Dombrowski: How does your exposure break down by continent for the gig workers?
Tim Hentschel: North America has 90% of our gig workers right now because that’s where 85% of our business is. The other 10% is mainly Europe and Asia. They only get paid as bookings are made so as revenue is generated. But they are getting paid very well. Top 50% of our gig economy agents are making $20 - $30/hour. They’re not a direct expense to us because they’re on a revenue share model. As we add more capacity that just means we can take more calls. So right now, our company is only answering 40% of our call volume with our 3,000 agents. So in order to get to 100%, we estimate we’ll need at least 5,000 agents. When we get to 10,000 agents, that’ll give us the opportunity to start powering other online travel agencies for their call centers. That’s where we see great opportunity because we know the gig economy platform converts better.
Dan Dombrowski: Why does a customer call you as opposed to Booking.com?
Tim Hentschel: Because with 50,000 direct hotel relationships, we have unique deals that you can’t get anywhere else. Interesting fact about our 50,000 hotel partners is that the majority of them are owner operators. A lot of people see a flag like a Marriot, a Hilton, a Hyatt and they assume that that property is owned by that brand. The truth is, especially for the 1 star, 2 star, and 3 star properties in North America, those are typically franchisees and they are licensing that brand for what they call the flag that they put outside their hotel. The person that owns the hotel is usually an owner operator and they’ll live directly on the property. Those are the people we are communicating with on a daily basis.
Dan Dombrowski: What does your process look like when an issue inevitably comes up? How do you handle complaints?
Tim Hentschel: We have a customer service team. It has a software program that helps them keep track of everything, escalate them, until they reach a successful conclusion. And of course, they pull in all the parties that we can get involved until the problem is solved. Not only the people on the property but it may also be a localized management company for that property or it could mean a chain, hotel chain contact as well. As well as upper management at our company too. We’ll work and work and work until the problem is solved and the person is happy.
Dan Dombrowski: What do you see for potential products going forward?
Tim Hentschel: We see us continuing on the path that we set forth 17 years ago which was to solve the tough problems in hotel and travel e-commerce. And groups and meetings. And that’s why, looking at things that need high touch and high automation so that we can build the tools that people can use intuitively and put the right customer service touch on that when you need it and want it, but not when you don’t. That’s rather complicated but I think we get a little bit better every day by giving people that option whenever they have a question or there’s information that’s not readily available. We record all calls that come in and then we have a team that actually monitors those calls, reviews those calls, and sees what the most frequently asked questions are, and then we try to improve the site and the information that’s on it based on that, every single day. I think we can do that a little bit better than most because we do encourage, with the gig economy travel agents, we do encourage more calls. So we get to hear from our customers every single second and every single minute of the day.
Dan Dombrowski: What market offers the greatest opportunity for you?
Tim Hentschel: We were born in North America, I believe North America will continue to be our strongest market. It has so much opportunity, especially with events and meetings and leisure group market. So if you think about it, especially take sports for instance. I’ve lived in Europe for 8 years and now lived out in Asia and Singapore for the last two years. When I look at how strong our youth sports are in North America, it’s amazing market. And they go on to NCAA college sports and continue to travel and play for sports. Some will go to the minor leagues and club teams and maybe onto the pros. Our athletes start at a young age and play competitively for decades and travel is a massive part of that in North America. And then of course, we love to get together in North America too. Family reunions, because families are large and can get spread out pretty quickly. Bringing people together for family reunions. Corporations are national and global, so they’re always needing to get together. So it’s really hard for other areas of the world to compete in the groups and meetings space with North America because it just has all this demand for getting together in groups.
Dan Dombrowski: What challenges do new participants face when entering into the OTA space?
Tim Hentschel: Now technology has advanced so much further. The ability to get direct hotel contracts and relationships is a lot harder now. The ability to build a good SEM Search Engine Marketing strategy is harder, it’s also a lot more expensive. The barriers of entry are exponentially hard than what they were a decade and a half ago when we got started.
Dan Dombrowski: Could you drop personas of travelers through the height of travel restrictions?
Tim Hentschel: So it’s an interesting question. When Covid first hit, we know hotels were still open and there were travelers in them. We had to figure out who that traveler was. A large percentage of travelers was in relation to a work crew. Either having to travel to pre-established operation that was being affected by Covid. Health workers were big traveling group of that segment and then also just people who were relocating, say they were on assignment and now they had to get back home and there was multiple steps to that. There was a huge amount of demand for extended stay properties. We started to target properties that we knew were good for extended stay. We just did a deal with Extended Stay America. Your properties, your Hilton Garden Inns, and suites, properties with kitchenettes in them became very popular. The average stay right now is around three to four nights. Back at the height of Covid, it would be two to three weeks. So a lot has changed since then, but that’s how it started out. We don’t have as many extended stay requests as we did back in 2020. But we have grown that market considerably because of the targeting we did at that time. So we have kept some of that market share.
Dan Dombrowski: How have your customer behavior changed from 2019 to what their behavior is now?
Tim Hentschel: We actually have found that customers are much less rate sensitive than they were in 2019. 2019 was a time of all-time highs for the industry. Occupancy levels were actually higher than in 2021, but the rates that we’re seeing customers pay this year, even with lower occupancy, because of pent up demand, and a desire to take that trip no matter what the cost is. We’re seeing rates that are going to the $500 and $600 and up per night, just for a standard room at a lot of destinations. People are buying it very quickly without even asking or looking at it. So we see rate sensitivity diminish over this time.
Mohsen Moazami: I am on the last business trip of 2021 in London. I traveled from San Francisco to here this week. It’s amazing to see my hotel which is a nice 5 star hotel, 100% fully booked. Trying to get car service from Heathrow into the city upon my arrival was impossible. Every car service was overbooked. Restaurants, try to find a restaurant reservation in London right now where all this news on Omicron is floating around...interesting observation.
Dan Dombrowski: Can you walk me through your international expansion road map looks like?
Tim Hentschel: Over the last 10 years, we’ve put offices in very strategic cities: London, Amsterdam. We had an office in Hong Kong and now we have an office in Singapore. The office in Hong Kong is being transferred to Singapore because we feel that it’s perfect location to handle the expansion of our business in Australia and New Zealand. At the same time, being close to northern Asia for the business we do in China, Japan, and Korea. And of course, Southeast Asia market is a huge tourism destination. So you have Indonesia here, you have Malaysia, Philippines, and Thailand being the biggest destination worldwide for travelers. So we’re very happy, I’ve been based here for the past couple of years, we’re very happy about the growth of the Asia market and our European offices are overseen by Bas Lemmens who is one of the co-founders of Booking.com who is based out of Amsterdam. Europe growth has gotten stronger and stronger as time goes on. One of the things that I’ve noticed is a ex-pat moving around the world to help our international expansion, finding localized talent goes a long way. My main objective is not to try to do too much myself, but to find the right talent that has the right connections to get deals done within their market. And of course, that goes to our sense of localized service is always better. That’s what we’ve done with very talented managing directors like right here in Singapore, we have Chris Lee, an entrepreneur who started VenueExplorer, which is a company that we bought right before Covid. And then of course, Bas Lemmens as I mentioned and then in the UK we have Tim Gunstone who started EyeForTravel and is now our MD for the UK. Great talent that helps grow those markets locally.
Dan Dombrowski: How do I figure out the right valuation for our company?
Tim Hentschel: The stock price, I do not feel reflects the true value of companies right now. A lot of people think the market is inflated and that may be true on the top end for the really big names, right? Because everybody has gravitated into the FAANG stocks over Covid and the pandemic pivot stocks. But, with the SPAC market boom right now, I think a lot of investors have overlooked a lot of good up and coming talent. And so, I would say you can look to our investor deck, and we have a slide based on comps. Right now, we’re very undervalued and I can say that very confidently because when were going through the SPAC process, we turned down offers that were much higher valuation for our company. We wanted to pick a SPAC partner who had done a successful SPAC and DeSPACing before and saw the stock price go up and up and up as Mohsen mentioned before. Taking a company public and then having the stock climb was what our intention was. We’ve priced the valuation of the company where it’s far under our competitive set and the slides in our investor deck show that. And that’s done with intention of making sure our stock climbs over the next couple of years.
Dan Dombrowski: What do your competitors look like for your valuation multiples?
Tim Hentschel: Competitors are ranking between 5x of revenues to 10x or 11x or revenues. We’re at 4x of 2021 revenues and only 3.3x of our 2022 estimated revenues for our valuation.
Dan Dombrowski: You were talking about international expansion. How much capital do you need to fund your growth?
Tim Hentschel: We’ve been bootstrapped entrepreneurs for a decade and a half. So the capital that we currently have through our cash flows is enough to hit our forecasted growth which is significant. It’s over 30% year over year. We did not forecast growth from the use of proceeds by intention because as you know with a SPAC, you don’t know what redemptions are going to be. So we wanted to be able to go public without depending on extra cash from the use of proceeds. So that we didn’t restrict ourselves based on redemptions. Pretty much to answer your question, the forecast that we have out there is based on our current growth trajectory and cash flows and the momentum that’s currently built into the company and the synergies from the 3-way merger?
Dan Dombrowski: And how are you going to be using your proceeds?
Tim Hentschel: Proceeds will be mainly to increase search engine marketing spend, to hire some more engineers and hire more sales staff and then of course, what’s left over after that we’ll use for mergers & acquisitions?
Dan Dombrowski: Can you give me a breakdown of what that looks like?
Tim Hentschel: Sure. About 30% for SEM and then 20% for additional engineers and 20% for sales staff and then of course 30% will be used for M&A.
Dan Dombrowski: How are you positioned for tail events now that you’ve navigated Covid?
Tim Hentschel: We’re positioned in a really good place. Over 2020 as Mohsen described, our revenues were only down 23% [as a combined company with Reservations.com] where our competitive set was down over 50%. A big part of that was because of our gig economy travel agent reservation platform. Travelers during times of uncertainty want to pick up the phone and talk to a local expert. And we know this is true because we outperformed our forecast for Q3 of this year, and you can see that on our proxy online right now. And that was over the Delta variant and we could do that because the gig economy travel reservation platform performed very well. So the stronger that gets, the more that variants actually help us, they don’t hurt us. Any kind of uncertainty means that people will want to pick up the phone and talk to a local expert and that’s what we have that no other competitor has. If you’ve been through a Black Swan event, you’re always going to be prepared for the next Black Swan event. Yes, we feel much more comfortable going into something like that. We already know the calls we have to make, the adjustments to our expenses that we quickly have to make, the calls we have to make to our supply partners, the calls to our banking partners. All of that has already been documented and we can just follow that playbook. But, luckily with the gig economy travel agent reservation platform, we’re that much more prepared for that. Think about it. There’s nothing more flexible than that. Most people will be able to work from home whenever a Black Swan event that happens. That’s perfect for our gig economy travel agent reservation platform. Most people who have to travel during that time will want to talk to a local expert and that’s where our gig economy travel agent platform comes into play again. So any travel company out there, we’re the most prepared right now based on those factors.
Mohsen Moazami: You talk about resilience and being prepared for Black Swan events. HotelPlanner motto is ‘high touch and high automation’ and by definition, high automation reflects the management’s conviction on bringing innovation to the industry. One innovation that HotelPlanner has uniquely brought this year that doesn’t get enough credit for, is the gig economy workers who are agents scattered all over the world helping us plan our travel accordingly with their help. As we invest more and more in automation and technology and artificial intelligence with gig economy-based workers who are the bulk of our employee base, we can expand rapidly or we can shrink rapidly. And therefore, we are very prepared for Black Swan events which we hope never happens but they will happen.
Dan Dombrowski: Can you walk me through how you structured the transaction?
Tim Hentschel: The shareholders have warrants and as the stock price increases, they redeem their warrants. The executives have an earnout structure that’s in line with the warrants, so we can receive additional shares in the company as the stock price increases as well. We’re very much incentivized to grow revenues and EBITDA in a way that the public markets will appreciate the value and growth of the company so the stock price increases.
Dan Dombrowski: Can you tell me what your team learned from the last transaction?
Mohsen Moazami: The last transaction turned out to be very very successful in the final analysis. But going through the process, the team made all the mistakes in the book. If I tell you that the execution was perfect, I’m misrepresenting the facts. A lot of mistakes were made, but most importantly, a lot of lessons were learned from those mistakes. As such, with this Act 2 with HotelPlanner and the merger with Reservations.com, we have done our best not to repeat those same mistakes and overall, minimize our mistakes and so on. That has made initial IPO very favorable and relatively easy and we announced our target HotelPlanner in the span of about 6 months when we have two years to find our target and do the deal. Similarly, we have full conviction that the final chapter of this deSPACing process will be completed in a short order very successfully as well.
Dan Dombrowski: What were you looking for on this transaction?
Mohsen Moazami: Management that is committed to the long term growth of profit, EBITDA and revenue, and their interest structure that is aligned with that. As Tim my colleague highlighted, a lot of money for them is tied to their future performance. Not everything is going to be handed over on day one post this IPO. These people have the intention and the incentives to perform over the long-term period.
Dan Dombrowski: Outside of a cash infusion, what does your team bring to the table for HotelPlanner?
Mohsen Moazami: I would be joining the Board of Directors of HotelPlanner. I am not a hotel industry expert. I am a technology industry veteran. I have been an entrepreneur, CEO, Founder, sold my company, executive at Cisco and venture capitalist in the last eight, nine years. So I’ve been in every silo of technology value chain if you may. At the end of the day, there is no industry or no segment of the economy today, from taxis to banking, that is not technology. Every company is a tech company and obviously my SPAC colleagues have a lot financial and finance background and discipline that are extremely well versed in the discipline. I can add some value on the technology segment and therefore it’s a strong combination to add the domain expertise and the experience of the team at HotelPlanner and Reservations.com
Tim Hentschel: When we were first building HotelPlanner, a decade and a half ago, our commitment was primarily to building the best product so that customers would seek us out and we could grow revenue to become profitable. Then as the company grew over time, our commitment became bigger than that, it became to our employees as well as our customers and of course, the community at large. As we grown and grown and grown, both nationally and internationally, the opportunity to go public, future proof HotelPlanner for the next generation and the generation after that becomes part of that greater vision of building a company that can be long-term sustainable and continue to give back. When we found a SPAC like Astrea led by a technology industry leader like Mohsen who shares all those same values, we knew that we were partnering up with the right team. And then of course, with 3-way merger with a company like Reservations.com where their two co-founders Yatin Patel and Mahesh Chaddah have very similar background as I do and John Prince does, both bootstrapped entrepreneurs, no debt as I’ve said before, and a heavy emphasis on giving back. Makes us unique because when we do get public, 70% of the company will be owned by the four founders. With the Astrea SPAC having such an emphasis on community and with the four founders having a long history of that too, we’re building a great company that will have the values that will give back to not just shareholders but to customers, employees and community. ESG that everybody is looking for these days is embedded in HotelPlanner and you can see it right in the diversity of our Board [nominees]. The different Board members that we pulled together. Kate Walsh is the Dean of the Cornell Hotel School. Dylan Ratigan who had his own show on MSNBC. Mohsen Moazami who was an executive with Cisco Systems. Jim Wilkinson who was the Secretary of the Treasury [Chief of Staff]. Dieter Huckestein who was a CEO of Hilton. The diversity around their experience. Gianno Caldwell who is one of our youngest members, a political analyst, African-American from the south side of Chicago and is now on our [pending] Board. All of those people from diverse backgrounds who want to help with this project to take it to the next level and to make us one of the most successful travel tech companies on the NASDAQ is pretty amazing and we’re very excited about it.
Mohsen Moazami: I would like to add that HotelPlanner has been a sustainable company and a profitable company for the past 17 years on a bootstrapped self-funded fashion and we have every confidence that with high automation combined with high touch, innovative technology-enabled company, they will thrive for the next 30+ years in the public market. So pay attention to HotelPlanner.
Dan Dombrowski: I really appreciate the time you both took today to speak with me.
Tim Hentschel: Thanks Dan.
Mohsen Moazami: Thanks. I enjoyed it a lot.
Exhibit 99.2
2021-12-20-HotelPlanner - 12:21:21, 6.47 AM
Tue, 12/21 6:53AM • 32:53
SUMMARY KEYWORDS
spac, travel, hotel, gig economy, people, booking, redemptions, revenues, business, group, site, platform, deal, merger, grow, ai, gig, industry, biggest, miami
SPEAKERS
Tim Hentschel (CEO, HotelPlanner), David Drapkin (Boardroom Alpha)
David Drapkin (Boardroom Alpha) 00:00
Hey everyone, thanks for listening to Know Who Drives Return. To listen to all of our podcasts, be sure to visit podcast.boardromalpha.com. And make sure to subscribe so you don't miss any for ongoing daily analysis, check out our channel at the thestreet.com/boardroomalpha. And don't forget to sign up for our newsletter. And now back to the episode Alright, Hey everyone, welcome back to Know Who Drives Return. I'm David Drapkin. Today we're getting back into talking travel hotels and booking with Tim Henschel who's the CEO and Co-founder of HotelPlanner. HotelPlanner and Reservations.com are going public in a SPAC transaction via Astrea. Acquisition Corp. in a deal that was announced this past August. We're going to talk to Tim about HotelPlanner. Why you should pay attention, COVID, travel and more, you know, the future of convening large groups of people. So Tim, you know, really appreciate you taking the time to talk to us this morning.
Tim Hentschel (CEO, HotelPlanner) 01:06
Yeah, thanks, David, for having me.
David Drapkin (Boardroom Alpha) 01:08
Awesome. So how about just to get started to kick us off a little bit of intro to Tim. Maybe your background and what led you to, to the, to the booking space?
Tim Hentschel (CEO, HotelPlanner) 01:19
Sure. Third generation hotelier. Me and my family went to the Cornell Hotel School, worked in hospitality industry, since I was about 12 years old, took an interest in the early days of the internet, because I graduated from Cornell in 2001, when the internet was really just poppin' in its infancy. And I took some classes in the engineering school there and computer science. I always knew that, online tech was something that inspired me and I was just fascinated all the things that it could do for the hospitality industry. So I teamed up pretty much right out of school with a business partner, John Prince, who's our CIO. And he graduated top of his class from Northeastern, and computer science. He was a senior software engineer for IBM, he saw the vision of being able to solve some of the more complex problems of travel tech online. And the first problem we set out to solve was booking large groups of rooms. So there was a lot of proficiency in those early days to book just one room at a time. But we wanted to solve the multiple room conundrum. And I believe we did a very good job at it, because we dominate that space now of nine plus hotel rooms, through hotelplanner.com our site, which stands for meeting planner, event planner, wedding planner, but at hotels, so hotel planner, and then our sister site Meetings.com. And then we also power, all of the major online travel agencies for nine plus hotel rooms, groups and meetings.
David Drapkin (Boardroom Alpha) 03:01
Got it. And so you did mention a little bit there about how your focus is on these larger group bookings. And so just for clarification, there's a lot of blood in names a lot of competition you hear out there, even in the traditional online OTAs. What differentiates your business from some of the maybe more familiar brand names, that consumers might hear about, your Expedia or Trivagos of the world.
Tim Hentschel (CEO, HotelPlanner) 03:27
Yes, so since we come at the industry from a different angle, like I said, solving complex problems, it also requires not just high automation, but also high touch. You know, as we've gotten more into the individual hotel booking aspect, we've taken a lot of what we've learned from booking group, and transfer that into individuals. So when you go and do a search for just your individual hotel booking through HotelPlanner, you notice that we have more variety of results of different room types and suites and, and different types of deals at each hotel than any other site. And that comes from just wanting to obviously give that superior level of service, as well as a great price and you know, rapid response, you know that so we like to think, say that we like to solve problems with high touch and high automation. And so we recently did that, in the first of its kind gig economy travel agent reservation platform that we developed a couple of years ago. Now that's up to 3,000 Gig agents and the gig agents are anybody that has a love of travel and they can work from their living room and just need a headset. It's a completely done VoIP Voice over IP. And that gives a localized service the first of its kind, so if you were to pick up the phone before on any of the other travel companies, you would get a call center assistant that's typically overseas, and we are looking to make that customer service and that reservation. reservationist, local expert. And that's what we can do with a gig economy platform.
David Drapkin (Boardroom Alpha) 05:17
Got it. And so these gig economy agents, they're humans who are in the local market that the customer is aiming to book and do they have relationships with, you know, the hotels and locations in those areas.
Tim Hentschel (CEO, HotelPlanner) 05:35
No, this is something that anybody can do if they have some extra time, like I said, love of their city, love a few cities that they know very well. And just love to talk about travel and hotels. For the direct hotel relationships, that comes from our product managers and our executives. And that comes from our 17-year history of working with hotels individually to help them book group rooms, and then book closed user group individual rates, and that was our pivot from traditional group into individuals that are traveling more disjointedly as a group, and then also just any individual traveling for any kind of event, what we can get them is a close user group rate, which is a special non-published rate. So those special discounts come from our 17 years of direct hotel relationships, which we have 50,000 hotels that are member to our platform, and we speak with, you know, on property people daily. But the gig economy reservationist, they're backed by that, you know, expertise that we have, and those long standing relationships. But really, all they have to do is just know their city and like to talk to people about what they think is a great thing to do in their city or what which hotel they think is the best hotel to stay in and just help with any questions that people might have
2
David Drapkin (Boardroom Alpha) 07:06
Got it. Got it. And their, as you mentioned, gig workers, so they're only compensated for, you know, any transaction that they helped to facilitate or?
Tim Hentschel (CEO, HotelPlanner) 07:16
Correct. But when we transfer them calls, we're transferring them calls that we know are coming through our reservations line. So it's, it's somebody who's motivated to book on average, our gig economy, travel agents, who will be making between $20 to $30 an hour. So you know, they're, they're doing very well. And they, you know, have a relatively easy job. I mean, they are, like I said, can do it from your living room, you just have to put on a headset, and then the call gets transferred to you. And you're basically going to see on your laptop or desktop, what city results that customer is searching out. So you instantly have something to talk about. Yeah, and if yeah, if you love traveling, love hotels, you love your city, it does seem like a, you know, pretty easy gig for those individuals. Well, it's if you think about it, what a better job if, you know, you will probably college student like I was, and, you know, college jobs are hard to come by, because there's so much labor, and there's just not that much opportunity. So they charge they can get away with paying you $7 An hour $8 An hour. And then you also have to have a non flexible schedule. So this is a much better opportunity where you can work between classes and work between, you know, jobs, your assignments, I should say and homework that you're doing. And basically just log in when you have a few extra hours and may make good money or, you know, have retired, you know, agent or retired at something that was to do or even a part time gig while you pursue something else, maybe something in the arts, even semi-pro athletes, if you think about it, there's just so many options there for people to take advantage of this opportunity to make some extra money while actually just helping people because you're really just promoting, you know, your city plus, you know, cities that you've traveled to.
David Drapkin (Boardroom Alpha) 09:23
And if you could go back a little bit to the closed user group discount rates that you mentioned, is that really the biggest driver of profitability for HotelPlanner.
Tim Hentschel (CEO, HotelPlanner) 09:36
I wouldn't say it's our biggest driver of profitability, but it's one of the things that sets us out from the rest. You know, having 50,000 direct hotel relationships, having relationships with all the major OTAs and sharing inventory so that we can always guarantee the best rate, you know, and being able to offer deals over the phone that you can't get online, you know, helps again make our gig economy travel agent reservationist more competitive. You know, not only do they get to talk about their city, but they get to offer people a special discount. So that makes them lovable. I mean, if I told you, "Hey, you come into my city, I've got a great deal at this hotel" and you look around and you're like, "Wow, that is a great deal", all of a sudden, we're best friends, you know.
3
David Drapkin (Boardroom Alpha) 10:28
And now a word from our sponsor Boardroom Alpha. Boardroom Alpha's SPAC Intelligence platform tracks every SPAC vehicle from pre-IPO all the way through to their deSPAC merger. It is a one stop shop data platform, tracking each constituent across the entire SPAC lifecycle. Know the team and the sponsor behind each back with full SPAC history, person and sponsor historical performance as well as deal info. Track the market, we deliver daily aggregate discount premiums of SPAC total issuance trends and returns biggest daily movers and upcoming SPAC calendar, get immediate and real time access to investor materials, institutional holders, structures, redemptions, filings and more. To learn more, or register for a free trial, please visit www.boardroomalpha.com/spac. So obviously, you know, the last couple years with travel and the pandemic. You know, everything's kind of been hit pretty hard, you know, in reading your investing materials and listen to some of the things you guys been saying. It seems your business didn't drop as much as some of the others in the space. You know, during that time, to what do you attribute that resiliency during what was undeniably a very difficult time for anyone in the travel or hospitality space?
Tim Hentschel (CEO, HotelPlanner) 11:46
Especially if you were in group. I mean, group got decimated, group is still down. But we always put a lot of emphasis on AI like I say, co-founded by top of his class computer science engineer, and the engineering department is handpicked by him. So we put a lot of emphasis on AI. And then we basically put the AI to work. You know, hotels are still open, people are going to book, what are they booking? How are they booking? Let's find what they're searching out and and target those people. Had we had a gig economy travel agent platform pre-COVID, we would have probably not even been down by 23%. We [as a combined company with Reservations.com] were only down by 23% of revenues, you know, our competitive set was down by over 50%. But if you look at our Q3 numbers, we actually beat forecasts, and we're hitting record highs we're gonna do you know, over 100, our forecasts 128 and a half net revenue 128 and a half million net revenues forecasted for 2021. We're doing very well on that. And in Q3, we outperformed that forecast, because our gig economy travel platform was so robust by that time. So what you find is that in times of uncertainty, people want to pick up the phone and have a conversation, you obviously would write if you knew that you could pick up the phone, and you were going to boss him right before you wanted to put in that credit card. You might go, I'm going to pick up this phone just as what's the mask, you know, rules? What is their vaccine passports? Is this hotel really offering breakfast? What kind of breakfast? You know, are they and how do I get it? And so they're picking up that phone and talking to our people? Had we had that pre-COVID I don't believe we would have been down by 23% I believe we would have been flat if not up over 2020. But I'm not unhappy with where we were, you know, our 2019 was all time high revenues for the industry. And we did 97 million net revenues in 2019. We're gonna do over 128 and a half a million net revenues this year. So we're in good shape.
David Drapkin (Boardroom Alpha) 13:11
You're already tracking higher from your from your pre-COVID levels.
Tim Hentschel (CEO, HotelPlanner) 14:04
Correct. Yeah, that's what I was trying to get at. But you did it much, you've got to the point much faster than I did.
David Drapkin (Boardroom Alpha) 14:11
Why do you think others you know, it sounds like this gig economy strategy is working well. Why do you think others aren't embracing that at all?
Tim Hentschel (CEO, HotelPlanner) 14:22
We're just, that's what we do. We do exciting things. That's why we dominate the nine plus for the entire industry. Nobody wanted to crack that nut because it was a hard nut to crack and it wasn't as interesting I think as automating individual, which is very high volume and high margin with low labor. We have to take these which is high labor, and make them high margin by making high automation. So it's a bit tougher, so people don't like to go into that but like I said, we like to think of ourselves as cracking, solving problems that require high touch and high automation. And that's what separates us out. And this, this call center, you know, I don't know, revolution or whatever you want to call them, but disruption that we're trying to do right now is one of those, like what we did with the group industry a decade ago.
4
David Drapkin (Boardroom Alpha) 15:22
Yeah, it's always interesting, you know, marrying your AI and, and your technology versus just the simple ease and convenience of talking to a knowledgeable person.
Tim Hentschel (CEO, HotelPlanner) 15:33
Well, it's important to remember that AI is what's backing it from start to finish. So AI goes in finds the long tail search customer. The AI backs our platform to feed up the right kind of hotel results. Remember, I was talking about how we have so many more results and other sites when you do a search. Then AI is what connects the right customer to the right agents so they have something in common. So that it's all tied together if when it works perfectly. It's seamless, you know, the AI is working heavy behind the scenes to make it look easy.
David Drapkin (Boardroom Alpha) 16:09
How much of your business is split between, you know, leisure groups, so you know, weddings, parties, you know, events versus professional so the conferences are off sites or things like that.
Tim Hentschel (CEO, HotelPlanner) 16:23
Right. So pre-COVID, we're about 26% a business and 74% leisure, and now we're at around 94% leisure only 5% business. So business group, bookings is the last travel of traveling industries to come back, part of the travel industry to come back. It's the hardest to recover right now. We're doing well in weddings and sports teams. That market has been very resilient over COVID
David Drapkin (Boardroom Alpha) 16:59
Yeah, I mean, at least anecdotally, it seems that, you know, business travel still has a long way to recover. But some of those, some of the other things you mentioned, like weddings and sporting events, and, and parties seem to be, you know, rip roaring back with people having pent up demand after sitting home for so long.
Tim Hentschel (CEO, HotelPlanner) 17:19
Yeah, I think when it comes to an investment in us, it's cool that that while it's actually you kind of getting four things at the same time. You're getting a three way merger SPAC, which is exciting, right? That you don't see those every day. You're getting to invest in the gig economy industry, which is growing rapidly, you're getting to invest in travel with travel as great tailwinds right now, and then you're also getting to touch and invest in group bookings to which is a very good niche that will start rip roaring back, just slightly behind the huge growth that we've had recently, and travel. So those are four things you're getting to take advantage of with investment in us. So it's, uh, it's exciting, you know. I, I'm excited about it. I'm happy, you know, every day that we've been had this opportunity, because to put all of that together in such a short amount of time, is pretty amazing.
5
David Drapkin (Boardroom Alpha) 18:19
And so just talk about your channels a little bit. So you have direct, and you mentioned, your relationship, the OTAs. Also is reading a bit about your affiliate partner relationships. So you are white labeling your technology versus, sorry, with some of those affiliate partners, and how does that work? What do those partnerships look like?
Tim Hentschel (CEO, HotelPlanner) 18:39
Right, so co-brand or white label for groups, meetings, links off one site, or nine plus, when it comes to the hotel room booking options for a number of rooms, that will go through our proprietary technology, our customer service, you know, the rates that we're procuring for group and everything. So it's just a choice that the distribution channel has, you know, they white label it when the site likes to keep the look and feel, and they have a very strong brand, seamlessly, but if you're if it's a site that that typically links off to other sites, you know, helps you do a search and then you know, pushes you off to another site, let's say like a meta, then they are typically more about the co-branded option.
David Drapkin (Boardroom Alpha) 19:30
And then where do you see the as the biggest area for growth? So you're projecting, $170 million revenue next year, and I think that ramps to what something like over $250 over $270 and three or four years, where do you see the bright opportunity in achieving and hitting those numbers the next few years?
Tim Hentschel (CEO, HotelPlanner) 19:54
Well, I'm very confident and you know, everything that we put out there mainly because there's so much synergies just from the three way merger.
David Drapkin (Boardroom Alpha) 20:10
Was Reservations.com a separate entity?
Tim Hentschel (CEO, HotelPlanner) 20:14
Yeah. Yes. So they're it's Astrea, us, and Reservations.com. And Reservations.com does 3.6 million unique visitors a month. They do about 6,000 individual bookings a day, but they don't have any direct hotel relationships. So a lot of the synergies is the minute we plug in with them and give them access to direct hotel relationships that we know will be very powerful for them. They also are using traditional call centers. So we'll be able to also grow revenues by migrating their call volume over to our gig economy platform, which has better conversion, and all of the different aspects of it that I spoke about before. And so that's on the agenda for Q1, Q2 of 2022, the migration of the call center.
David Drapkin (Boardroom Alpha) 21:09
Yeah, it's I guess, well, let's talk about the deal a little bit. Astrea three way merger with Reservations.com. I guess the obvious question is, you know, why now? What do you think being a public company will bring to you guys and help you grow?
Tim Hentschel (CEO, HotelPlanner) 21:32
Well, already, just the movement towards being public has helped us in in quite a number of ways, it really helps you focus down to what you know, is your core, most biggest growth and highest profitability of revenues. From my time having been an entrepreneur, bootstrapped entrepreneur of private company, you know, you love to get into projects, and you're not as always as focused on top line bottom line, as much. Now with this, it's, it's much more focused towards that so that we could, you know, kind of sharpen the sword, as you say, to what is really the core product of HotelPlanner and what we need to drive and push stronger, more aggressively. And that's going to give us that really fast growth, which we've already begun to see. And you saw on the deck, look at the way that we pull away from our comp set, and our actualized numbers, and then you know, that one side, and it shows, you know, to the left of the dotted line, we've pulled away from our comp set and revenue growth for our actualized numbers over the last 18 months. And then it shows what our forecasts are in compared to our comp set and how it continues to grow past. So, you know, we're doing it basically, we're living that right now.
6
David Drapkin (Boardroom Alpha) 23:02
Does that make you an acquisition target in the future?
Tim Hentschel (CEO, HotelPlanner) 23:06
Oh, who knows? I'll be looking to acquire a few companies myself. So, you know, I like to just think about what I can, you know, control. And I don't know what anybody thinks of me, they probably hate me or, or dislike me, so they don't want to acquire.
David Drapkin (Boardroom Alpha) 23:26
And so I guess two other things on the deal. So what was the plan for the cash? And then, you know, noticing there's no PIPE in this one, just given the dynamics of, you know, where the SPAC market has been shaken out, you know, we are seeing redemptions, you know, ticked up again here in recent months. So I'm thinking (a) use of proceeds for the cash raise and (b) any capital structure financing alternatives, in the sense that in the event that there happens to potentially be higher power redemptions once you close?
Tim Hentschel (CEO, HotelPlanner) 24:01
So the question is about redemptions? Right?
David Drapkin (Boardroom Alpha) 24:04
Well, two, so (a) redemptions and (b) just regular plan, use the proceeds for any cash raised in the transaction.
Tim Hentschel (CEO, HotelPlanner) 24:11
Okay, yeah. So the majority of the use of proceeds is going to be used towards search engine marketing spend and then of course, growing out our engineering department and then some additional sales people as well. As for the redemptions, you know, we were waiting to see that number like everybody else is. We're hoping that the number is going to be low. We have a lot of things in our favor. Our multiple for evaluation is very low. We didn't take our highest SPAC valuation, we had offers that were $200, $300 million more than the valuation we took. We took Astrea's because they have a long history of doing SPACs and making them profitable and positive stock growth. So if you look at the BurgerFi deal that the Astrea team did back in 2020, they went from $10 to $15, over $20 a share. And when we were evaluating SPACs, you know, we basically said, let's go with these guys that have a history of taking companies public through us back and have a history of growing the stock price. So we purposely, you know, went with their lower valuation, which put us to, you know, the lowest multiple of revenues in our comp set, with the intention to grow, grow, grow that stock price from, you know, very low base level. So what I'm getting at is, you know, hopefully the investment community sees that and sees the opportunity and, you know, you know, redemption stay low for us.
David Drapkin (Boardroom Alpha) 25:55
And there's earnouts built in, you know, for both the sponsor promote, as well as, as you guys as well, right?
Tim Hentschel (CEO, HotelPlanner) 26:05
The sponsor promote, yes, is there. Astrea has it. Yeah, we were set up just like any other SPAC, except for, like I said, three way merger. And with us, you know, the company, we're merging with Reservations.com has a very similar founder profile as myself and John Prince. So when we go public, let me founder profile. I mean, we're both bootstrapped entrepreneurs, when we go public, the four founders will own 70% of the company. So that's pretty amazing. And I like to think that it not only is unique, it makes us unique in the fact that that we can execute our vision more as executives that also have a big share in the company as well.
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David Drapkin (Boardroom Alpha) 26:52
No, I mean, that makes a lot of sense there, I guess, I guess. And so, you know, the future of travel, you know, everyone every day is reading something about COVID, a variant lockdowns this and that. What's your view, just generally just curious on, you know, how people are going to begin to react maybe more quickly or more drastically when, when whenever the next new thing comes up? And you know, and how do you think that's gonna affect, you know, travel in the long term?
Tim Hentschel (CEO, HotelPlanner) 27:23
Well, you know, we haven't seen a drop, like I said. We believe there is great pent up demand. We also can see that people want to get back out there. I mean, they've been, you know, pushing back plans for quite a while, and they need their life to return to a sense of normality. I can speak for myself and my own family on that side as well. And so, you know, I just took a trip from Singapore, all the way to Miami. We had our annual conference there in Miami, we had our holiday, Christmas party there and headquarters, we raised money for St. Jude's, we had meetings with all their top strategic suppliers and partners. And that really, you know, made me feel like we're getting back closer to normal for a number of different reasons. (A), I connected through Heathrow, all my flights were full, Singapore, to Heathrow, Heathrow to Miami. All four legs were full, Miami, MIA, Miami, airport packed, security line was going zigzag and then way out, you know how it gets like that ever? That was the case back in 2019. So we definitely get into that kind of demand. same was true for Heathrow. So you know, I think we're very close to getting back to the way things were. I mean, being out here in Singapore, the East is the slowest to move back to that kind of time. And I know that, you know, there's variants coming out. And there's third booster fourth booster, but Pfizer just, you know, announced that they have a pill for fight COVID I'm sure you saw that on the headlines. And it says it's 90% effective. So you know, we're hearing good news every day that COVID is, is getting closer and closer to being completely behind us. But nobody wants it more than then we do because I don't know if you have young kids like I do. But you know, they've been going to school now for two years with masks on I have a four year old nine year old and 11 year old. And I want them to have a childhood like I had there hasn't been sleepovers and basketball games and it's been two years and their whole lives have been upside down and put on hold. And that's the cost that's even greater in my opinion, some of these, there's business losses that we've had. At least with the business is, like, in the case of us, it's led to innovation and pivots, and we innovate. There hasn't been a lot done, on education or, on the kids side that I can see, it's been a very successful pivot that's been positive for that.
David Drapkin (Boardroom Alpha) 30:23
No, I agree. No, no kids for me yet. But you know, definitely acts like the rest of the world to get behind us. Love to travel. I was in Miami a week ago, and I can attest to this. The crowded aspect of that Emperor specifically. No, that's all very, it's all very great. And so in terms of the deal, any sense on timing when you think when you think it might close?
Tim Hentschel (CEO, HotelPlanner) 30:51
Oh I could really guess and I wouldn't want to guess especially considering SEC lawyers.
David Drapkin (Boardroom Alpha) 30:58
Yeah, I know. I had to ask. Yeah, some some time. 2022. Right?
Tim Hentschel (CEO, HotelPlanner) 31:06
You knew you knew eventually, I was gonna pull the SEC lawyer card out. Hey, like, Here you go.
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David Drapkin (Boardroom Alpha) 31:12
Yeah, I know, it's impossible to either guess or speculate on any of the SEC processes. But, you know, people are always interested on timing, especially, especially given some of the technical aspects of the stock market these days.
Tim Hentschel (CEO, HotelPlanner) 31:30
Yeah, I think I could say this, I think we've been working diligently and we have a great team. Latham Watkins is our lawyers. KPMG is our consultants and accountants. So with top tier A team that we have, I think, investors can just basically look at our timetable and extrapolate that will be in line with everybody else. That's a good answer actually.
David Drapkin (Boardroom Alpha) 32:03
Hey. Sounds like you, guys.
Tim Hentschel (CEO, HotelPlanner) 32:08
Yeah, I did. I don't think I can get it better. All right.
David Drapkin (Boardroom Alpha) 32:13
That's a great answer. Hey, Tim. I really, really appreciate it. Fun fun talking to you. Any, any final words of wisdom?
Tim Hentschel (CEO, HotelPlanner) 32:22
Ooh, just gonna say happy holidays and just enjoy, you know, life and family right now. Because that's pretty much what's the most important don't you think?
David Drapkin (Boardroom Alpha) 32:31
That's a great it's a great message. I agree.
Tim Hentschel (CEO, HotelPlanner) 32:34
All right. Well, thank you. Happy holidays you as well.
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