Interview: TRX's Shane Hammond On The Sale Of ResX

TRX sold its ResX self-booking tool to nuTravel Technology Solutions for $3.5 million, the companies announced this week. NuTravel president and CEO Carmine Carpanzano claimed the buy "propels nuTravel into the top tier of online booking solution providers." He told The Beat that the company is seeking to bulk up market share in the booking space, but continue to differentiate itself from the likes of Cliqbook, GetThere and Rearden by maintaining its focus as a pure-play booking provider that sells through travel management companies rather than directly to corporations. TRX, however, no longer views such providers as competitors but as potential clients. TRX received $2.6 million upon closing and will gain an additional $0.9 million "subject to the conversion of certain nonassignable contracts to nuTravel." TRX could net even more from the deal as it provides "certain transition and technical services at an annualized rate of $1.8 million." As part of the deal, nuTravel acquired "software, websites, certain customer agreements and intellectual property," according to a TRX Securities and Exchange Commission filing. TRX expects to complete that transition by Dec. 31, 2012. President and CEO Shane Hammond discussed the deal in an interview with BTN's Jay Boehmer.

Tell me about the decision to sell ResX.

For us, it's a whole new dawn. It gives us opportunity to sell our solutions into what was previously kind of a hostile audience and, now that we're agnostic in the booking space, a pretty friendly audience. We think we can grow faster in higher-margin, more material revenue sectors than ever before.

Who is in that hostile audience?

"Hostile" is a strong word. I use that word just for color. We'd like to sell solutions into Concur and any of the people in this space. KDS. We've got some relationships going with Sabre. Even the OTAs, like Travelocity and Orbitz. Now that we're not, quote, in the booking business, those doors open up, I believe. Number two, we set some objectives for 2011 to grow every product line, and we have, with the exception of booking. It's just been a little stagnant. We just haven't experienced the growth and upside that we were looking for. We're just not focused on that business, and nuTravel is. They're highly focused on it. They're really good at it, and they probably have a little more upside. In the meantime, we'll take some cash and reinvest in other parts of our business.

This is a strategic decision. You're not just divesting to grab some cash.

You got it. We didn't need cash. Our debt is extremely low, and arguably we won't find ways to invest all of this cash at once anyway. But strategically, it does open up doors and gives us a little more market focus.

How long were you exploring this?

One of the things about being publicly traded is that I have a board of directors. Anytime anybody approaches us with anything about buying an asset, we have to run its course because we're looking out for the shareholders' best interest. Over the years, I think we've had this dance probably four times from various players that I can't name for nondisclosure-agreement purposes. In this particular case, this is the second go-round with nuTravel. Carmine was just very convincing and put a deal together that was great. Also, we've got lots of plans to work together on related solutions. He needs some profiling solutions that we retained, and he needs some web services help that we'll deliver for him. So, we'll have a new client as well as a partner.

What will the transition period look like, particularly for ResX customers?

Having been a buyer, as Carmine is in this case, you need a period of time to vet all the relationships and technology to see what you've got. To run that yourself would be very disruptive to the acquirer. In essence, Carmine has hired TRX to run the platform for a period of time so they can do their diligence on the technology and the customers and decide what direction and changes they want to make over time. For our customers, that just means it's going to be a very seamless transition and nothing is going to happen overnight. They'll all have a voice, the same way they had a voice with us in our product development cycles.

Can you say what percentage of TRX's overall business the ResX platform comprised?

It's a good question. We haven't reported it. It's one of those things where the business gets so inter-tangled and mixed up. For example, we sell bundled deals, and how you allocate Y to booking and X to transaction processing and Z to data is totally up to the account. It gets difficult, but I can tell you, it's a lot less than 10 percent of our business.

Are there any immediate changes at TRX? Does this impact headcount or structure of the company?

No real structural changes. A couple of headcount is impacted because they just became redundant, but for the most part the overwhelming majority of the staff will stay in place during the integration period. It's minimally disruptive, but as I say that, I realize that to the two or three who were disrupted, they don't think it's minimal.