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Travel Startup Founder Series: CEO David Millili Pegasus Solutions

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Interview with David Millili CEO Pegasus Solutions

In this interview you’ll learn;

  • How David Millili went from being a hotel General Manager to launching a startup with VC Capital, to launching a second startup Open Hospitality that get’s bought by Pegasus Solutions to becoming the CEO.
  • How David and his partner built one of the first hotel booking engines.

Below is the edited transcription from the video interview I did with David Millili the CEO of Pegasus Solutions at the Eye For Travel conference in September. It was a great interview and David is an amazing entrepreneur. Unfortunately I had major audio issues half way through the interview.  With all the noise and racket of the conference it was very difficult to hear the last half of the interview, thus I decided to show the interview in a transcribed format.

MATT ZITO
Matt Zito here with the Travel Startup Video Founder series with David Millili, the CEO of Pegasus Solutions we are the Eye for Travel Distribution Conference. Welcome to the Travel Startup Founder Series David.

DAVID MILLILI
Thank you.

MATT ZITO
So can you talk a little bit about Pegasus Solutions? Specifically, I get a lot of travel startups and entrepreneurs that want to learn how to get access to inventory for hotels and automated connections and I know that’s a big part of your business.

DAVID MILLILI
Yeah, sure. I mean, from Pegasus, really, that side of the business, which is our distribution business, we have a product called the Switch, in which everybody’s familiar with and that actually connects out to almost a hundred thousand hotels, over a thousand websites, all the major OTAs. And today, we’re doing about eight billion transactions. That’s marketing talk, but that means looks and books combined is about eight billion types of queries on that database computer system.

MATT ZITO
Okay, yeah. So I was looking online that you are doing the largest number of hotel transactions. Is that in the world or…?

DAVID MILLILI
We do the largest number of property transactions through the switch. So basically, there are some that have more hotels on the systems, but for us, I think, as far as pure volume, not revenue, but as far as pure volume, I think we’re the largest processor in the world.

MATT ZITO
Can you talk a little bit about like the Switch? Can you explain what that is?

DAVID MILLILI
Yeah, so if you want to take it in its simplest form. When the airlines systems came out – with the green screens that travel agents would enter and take your booking – what happened was hotels wanted to be on those systems. At the time, it wasn’t easy for hotel chains or one off hotels to actually connect out to those four systems, so the Switch was formed. So basically, the technology, which resides in our data center in Scottsdale, enables hotel brands, OTAs or representation companies, like a Travel Click or a Sabre, to connect into the Switch and then get access to where the GDS is and all of the OTAs that are connected to it. So it made it just much more easier for some of the brands and some of the hotel groups that work with us to connect out rather than writing and maintaining code for four different systems.

MATT ZITO
Yeah, sure, so I know there’s been a lot of advancement in technology, there’s really a lot in the last five years. There’s a great ability for hotels to get distribution.

I know you’re the CEO of a major travel company but sort of talk a little bit about how you got start with your entrepreneurial ventures what was your path to how you got to where you are today?

DAVID MILLILI
Yeah, it’s interesting for me because this is a unique situation where I get to actually be an entrepreneur, or a start up guy in a big company that everybody knows about, so Pegasus acquired my company Open Hospitality in October 2011.

The idea there was really to take the interactive, the website, the sexy stuff that hoteliers really want to get involved with, integrate that in with Pegasus, which was more of a legacy, kind of the big switch and a big CRS type of player in the marketplace. What happened was, and after being there for a while, the board decided to make some changes, I was made CEO in June of 2012.

I brought in Chris Swishers, who was running sales for Open Hospitality who was the chief sales officer. We’ve kind of shuffled deck a couple of times, really went into the business looking to right size it and looking to actually move it ahead rather than just kind of status quo. The company as a whole had kind of fallen victim to what some traditional big companies do when you grow and you get bigger and you get bigger and you get bigger and there’s more and more layers that are interjected into the company.

We were doing some things that we really shouldn’t be doing as far as some businesses. We were in a commission processing business, which we sold in April of this year. So, I really come in looking, and say ‘Okay, what are we doing? Why are we doing it? How do we make it better?’ Everything’s revenue based and everything’s really built around listening to our clients and listening to our employees. Our tag line now is “we are the hotel people.” In my opinion, I think many in the industry there were many ones that thought the company focused purely on technology and forgot who the end user was, who the customer was, and that’s really, whether it be a one off hotel or a rep company or a major brand, so that’s really been our focus for the past fifteen months.

MATT ZITO
And you said earlier you got your entrepreneurial start as a general manager of a hotel and you started a company to automate things for the travel industry can you talk about that.

DAVID MILLILI
Yes, absolutely. I managed hotels in New York City, lived on a property. I really wanted to start a management company. In the late nineties, it was much easier to get money from work Internet initiatives than it was to start a management company or to buy real estate, so myself and my business partner, we started a company that was a little more like a city search. It was more like Times Square, South Beach areas where you would have a certain type of appeal, but through that, we really realized that nobody was providing hotels with a booking engine that made sense for their property, and I think our hotel roots just kind of made us gravitate toward that, so we saw there was a problem and we came up with a solution.

We started sketches of the first system on paper. In 1999, we actually had printouts that we did in PowerPoint and went into hotels and said, this is how the booking engine looks, Yeah, on paper. Our first booking system was built on a Microsoft Access database and we would actually log into Access, pull the data, copy and paste it into a Word document, align it, print and then fax it to hotels, so – you’re talking about innovation. That was probably the most innovative process or creative process we came up with.

MATT ZITO
So you actually built one of the first booking engines for hotel chains.

DAVID MILLILI
Yeah, it was private label. I mean, we basically, being a former GM, we understood the ownership operations, so most of the ownership, they don’t want to spend any out of pocket costs, so we went in and we said, ‘Look, allocate an amount of rooms to your property, we’ll charge you ten percent commission like a travel agent, and you’ll be able to take bookings and do your requests. And the New York marketplace really ended up at one point back in 2001, powering over fifty independent hotels in New York, which was a pretty large market share, and we just evolved the system from there.

MATT ZITO
So when you got your start, were you working as a general manager at the same time? Were you doing your presentations?

DAVID MILLILI
No. What happened was it was a lot of after-hours conversations about what we wanted to do. We were trying to raise a little bit of money. We leveraged that money to start the business. We basically then went out and raised a million dollars venture capital in 2001. Our first tranche of funding hit the Friday before 9/11. We thought we weren’t going to get the second round. We did. We started to expand, we started to move and sign hotels in Florida, California. Unfortunately, the venture capital firm placed a CEO in the company and at the time, we were a couple of young guys we were bringing a million dollars in and unfortunately, it just didn’t work out and we left that company, took a year off, that former company was sold to TravelClick in 2004. We then launched, Open Hospitality, which was the first of its kind, it was the first all-inclusive one stop shop.  We gave hotels new web development, we hosted their email, private label booking engine, search engine optimization, e-marketing, and actually account management.

MATT ZITO
So you packaged everything in the marketing, development and management.

DAVID MILLILI
We did it for a management fee. We did it for potential bookings, so we partnered with the hotels where at a time if you run a small independent hotel, there’s no way you’re going to go to ownership and spend $50,000 on a website so we came in, said, ‘look, we’ll give you a website for free. We just want a piece of the booking for helping you achieve the booking through the website. And it worked out really well. It was a win-win for both parties.

MATT ZITO
I really appreciate you sharing your story. It shows your an entrepreneur who has worked his way up, built two companies and now is the CEO of one of the largest travel companies in the world. Today we’re with David Millili the CEO of Pegasus Solutions. Thank you so much.

DAVID MILLILI
Thank you.

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