Meetings technology giants StarCite Inc. and OnVantage Inc. on Aug. 9 announced a complete merger, astonishing the industry and creating a new company that uses OnVantage's technology platform and StarCite's brand. The merger was initiated by the two companies' investor groups, which are co-owners of the new StarCite. The transaction unites two fiercely competitive industry heavyweights of similar size and offerings, said Michael Boult, who continues as president and CEO of the Philadelphia-based company. The merger also raised some concerns about market dominance.
Existing customers of the merged companies can use their current products until they feel comfortable transitioning to the OnVantage platform, said John Chang, former CEO of Santa Clara, Calif.-based OnVantage, who now serves as chairman of StarCite. However, Boult said all future technology development will be based on the OnVantage platform.
"This is the meetings-industry equivalent of Microsoft and Apple announcing that they're merging," said Corbin Ball, president of Bellingham, Wash.-based consulting firm Corbin Ball Associates.
The StarCite brand now fully dominates the meetings technology industry, Ball said, and none of the smaller meeting technology providers reasonably could be seen as competitors. Still, Boult said, there is plenty of room for growth and competition.
"It's pretty early days in the industry," he said. "Despite the size of the business we have, we're sort of 3 percent down and 97 percent to go. We think there's an awful long way to develop this new company."
Even though the StarCite brand will continue, the market should look at the move as a merger of equals, Boult said.
"The new name of the company going forward is StarCite. In a sense, people will look at that and perhaps think that this was an acquisition because of that. But that's not the case. The StarCite brand was selected because it has continuity and more equity than OnVantage in terms of eight years versus two years. We think it's the right brand for the combined company going forward, but that has nothing to do with the actual value of the component pieces coming together," he said.
OnVantage recently released its EasyBook product for small meetings
(Meetings Today, July 17), which will be managed in a dedicated StarCite division. EasyBook has service needs and offerings that extend far beyond the technology product, he said.
The move away from StarCite's Global Meeting Solutions platform is astonishing considering the amount of investment the company has made in upgrading it, Ball said. The company only last year integrated its products onto one platform
(Meetings Today, Aug. 15, 2005).Consultant Ball said he had expected further consolidation in the meetings technology market, but the merger was still surprising because of the sheer size of the two companies.
"I always thought it would be something like Travelocity or Expedia or one of the 800-lb. gorillas that would come along and scoop one of them up. They are clearly the top two players in the industry. To hear of a merger is astonishing. I never would have expected that," he said.
The merger cannot be taken lightly in terms of how it will change the competitive landscape. "In a way, it's good to see two strong competitors keeping each other in balance," Ball said. "I wouldn't go so far to say it's going to hurt the industry, but I think that competition is always a good thing and I hope that other forces will move in to try to balance that out—because that would be a little scary, actually."
Boult said competition is a strong trait of both companies. "We've been fierce competitors, and that's helped us both be better at what we do. We need to make sure going forward that we continue to be fierce competitors with whoever else emerges," Boult said. "We're not foolish or silly enough to believe that we're going to be the only people in the market offering this solution, but we think that we have a tremendous lead."
Customers can expect a hybrid of the two companies' pricing models in the future, Boult said, but charges will continue to be customized.
"We know what works, we know what price points are acceptable in the marketplace so we have good experience there. We'll be flexible and creative as we always are, but for a pricing perspective I would say the return on investment will remain absolutely the best buy in travel with this new company," Boult said.
The merger opens the opportunity for greater benchmarking among the combined customer base of approximately 120 corporations, said Michele Snock, StarCite customer and manager of global meeting services for San Jose, Calif.-based Cisco Systems' Americas operations.
"The more people that jump on this bandwagon, the more we can all progress together," Snock said. "It's great if we can take the tool out of it and get those 120 companies together to talk about how they're going to use the tool and use the best practices behind it. The tool is an enabler, but you still need all the processes and guidelines behind it."
The combined revenues of the two companies likely would lead to more product development, she said. "This is a great win for both companies because they can put together their combined pool of technology and make this even better than it was for both of them. That helps the consumer," Snock said.
The services the company can offer in helping customers with adoption and change management make StarCite more than a technology company, Boult said, but "we're also not the traditional full-service entity. We don't claim to be nor do we want to be. We're a new type of company."
Chang said the merger is similar to when PayPal merged with X.com six years ago to form the dominant vendor in online payment systems. "Whenever you have two companies that are clearly the dominant players in an emerging industry, when those two players come together all sorts of great things happen from the companies' and the investors' perspective. Even for the customers, there can be a lot of great benefits, because they get clarity of choice. The two companies are better able to reinvest in providing products and services," he said.
The merger was initiated on April 15, with an exploratory call and preliminary sharing of company information, Boult said. Since then, there have been "some tough nights and long days" working out the details, but the benefits are clear.
Each side is funded by the limited liability corporations that act as StarCite's co-owners. "It was an investor-to-investor conversation, which happened before by the way, but this time it seemed to have a new level of momentum," Boult said. "From the very beginning, it seemed like these companies are really very close in terms of size, in terms of vision and in terms of plans."
During the past year, StarCite and OnVantage have had slightly different approaches to the meetings industry, despite their similar client and supplier partners. OnVantage has targeted corporate customer growth and StarCite has aggressively pursued distribution partners—especially such mega travel management companies as American Express and BCD Meetings & Incentives. Despite the merger, StarCite plans to continue its pursuit of partnerships rather than direct competition with agencies, Boult said.
"We've had this bifurcated model and we'll continue to do that. We think it makes sense. We have terrific relationships with many, if not the majority, of the largest distribution partners. For the most part ,they've all decided that building their own technology is not a path they want to pursue. They'd rather work with a company like ours," he said.
The new StarCite management team integrates leaders of both companies, Boult said. In addition to Chang, former OnVantage executives Stanley Chin—who is senior vice president and general manager of EasyBook and has responsibilities for all product management—and supplier-side executive Ed Tromczynski have joined the new firm. John Pino, founder of StarCite, is president of the emerging StarCite International, continuing his role as head of overseas development.
The merger ties together most of the disparate meetings technology initiatives of the late 1990s and early 2000s, when several suppliers, all offering slightly different approaches, vied for corporate customers.
StarCite was formed in 1999 as a spin-off of meetings consolidation firm McGettigan Partners
(Meetings Today, Jan. 25, 1999), which would be acquired by Maritz in 2001. StarCite, initially led by former McGettigan CEO Pino, was well-funded from the outset and offered a version of McGettigan's desktop consolidation software. The firm eventually transferred its McGettigan functionality to the Internet and added several competitors' products by acquisition, particularly attendee-registration tools. StarCite purchased Cardinal Communications' popular RegWeb attendee application in 2002
(Meetings Today, July 15, 2002) and added former competitor B-there's attendee and consolidation products one year later
(Meetings Today, Aug. 11, 2003).Meanwhile, the firm targeted corporate meetings departments as its primary audience and began to successfully sell tools to several large companies.
OnVantage was created in 2004 through the merger of meetings technology rivals SeeUthere Technologies and PlanSoft, merging PlanSoft's deep database of listed suppliers—particularly hotels—with SeeUthere's strength in corporate meetings consolidation and attendee management
(Meetings Today, Sept. 20, 2004). The firm since has courted corporations, while publicly pondering new pricing models and booking methods.
SeeUthere Technologies debuted in 1998 as an online event promotion firm and gradually transitioned to a major player in online corporate meeting registration, allying with transient self-booking tools from TRX, Travelport and, eventually, GetThere.
PlanSoft gained prominence in 1997 when it launched a virtual site-inspection tool, well-funded by several hotel chains and industry associations.
After an aborted 1998 attempt to market desktop software that meeting planning and electronic request for proposal tools, PlanSoft shifted its tools to the Internet, creating a vast, searchable database of hotels and other suppliers it eventually would call Mpoint. The firm was hampered by the slow development of an in-house online registration capability, which had proven to be the most popular meetings technology.
"If you think about it, this isn't just OnVantage and StarCite coming together," StarCite CEO Boult said. "This is PlanSoft and SeeUthere, and B-there and StarCite and Cardinal. This is five companies that are coming together in a sense. The heritage is pretty rich, and who's to say this is the end of the road?"
Managing editor Chris Davis contributed to this story.