"While we have long been rooted in the hotel industry, our mission has always been to simplify transactions for travel businesses without limiting ourselves to just hotels."
As a veteran in the travel technology sector, Ted Zhang, co-founder and CEO of DerbySoft, has been leading the company with a low-profile but steady approach for many years. In 2024, DerbySoft announced the acquisition of PKFARE, an air ticket distribution platform. How are the synergies developing between the two entities now? What are DerbySoft's future strategic plans?
Charlie Li, CEO of Travel Daily, talked to Ted to explore these topics.
1. The acquisition of PKFARE is just the beginning
Charlie Li: What drove DerbySoft to acquire PKFARE?
Ted Zhang: We have consistently sought strategic acquisitions to accelerate our growth. Entering new sectors solely relying on our own efforts is extremely challenging. The acquisition of PKFARE is not only an expansion of our business but more importantly, it's about industry synergy. By integrating resources, we aim to bridge four critical gaps in the travel industry: information, technology, operations, and trust.
Charlie Li: DerbySoft has been more focused on providing technology services for hotel distribution, while PKFARE specializes in building a distribution platform for air tickets. After the acquisition, what adjustments have you made in terms of products or business?
Ted Zhang: We have launched two new products, Exchange and Package.
* Exchange: By partnering with global hotel chains, we have built a platform that streamlines connectivity and enhances transaction efficiency. While hotels have the option to bypass us, the challenges of payment and channel management often lead suppliers to rely on our platform.
* Package: This product integrates hotel and flight price data to optimize revenue management. Traditional static package pricing can result in losses, while our real-time data integration helps hotels maximize their revenue, simultaneously meeting the needs of OTAs and TMCs.
Charlie Li: Some people are concerned that your entry into distribution services might affect your neutrality. What is your view on this?
Ted Zhang: We have two clear commitments: we will never enter the consumer-facing market and will never develop a Property Management System (PMS).
We adhere to transparent cooperation, allowing hotels and airlines to choose how they want to work with us autonomously. This model not only protects the interests of our partners but also makes our business more sustainable.
02. Lessons from International Expansion
Charlie Li: DerbySoft’s international business accounts for over 97% of its operations, and the company has been focused on the global market since its inception. With the current surge of Chinese companies expanding overseas, what insights can your internationalization experience offer to other companies venturing abroad?
Ted Zhang: Our employees come from 25 different countries, truly achieving internationalization. Localized management is crucial, and our approach follows three key principles:
* 90% of issues are addressed by our strategic roadmap, which covers processes, revenue targets, customer segments, and more.
* 9% rely on fundamental principles that all employees must adhere to, regardless of their cultural background.
* 1% depends on human touch to build consensus across our global teams.
Charlie Li: In recent years, the U.S. has imposed restrictions on Chinese companies citing national security concerns. How has DerbySoft responded?
Ted Zhang: The impact could be significant, but we are prepared:
* Data Distribution: Six or seven years ago, we distributed our data across the U.S., Japan, Europe, and China, ensuring compliance with GRC (Governance, Risk Management, Compliance) requirements while keeping data localized.
* Localized Teams: We established a 30-person team in Barcelona and plan to also expand our team in the U. S.
* Financial Reserves: We have long-term dollar reserves in banks to handle emergencies.
These measures ensure that we can continue to provide stable services even in extreme situations.
03. Connecting All Travel Companies
Charlie Li: DerbySoft has been around for over 20 years. What are your expectations for its future?
Ted Zhang: I envision DerbySoft having a comprehensive technology platform to support numerous acquired companies. In 10 years, DerbySoft might evolve into a group comprising thirty, forty, or even fifty companies. Within this group, each company will operate independently and maintain its proud brands.
As the backbone, the DerbySoft Group will continuously provide the technology platform to support their development. Ultimately, this will create a virtual B2B marketplace or a large platform where B2B transactions become much easier.
This platform will enable customers to explore offerings seamlessly and choose partners freely. Our goal is to make the travel industry more open and interconnected, achieving true "Travel Without Boundaries."
Currently, payment remains a challenge for us, particularly the exchange rate risk associated with hotel payments. Therefore, we are also keeping an eye on outstanding payment companies globally and are considering further acquisitions to address these issues.
The travel industry encompasses accommodation, transportation, dining, shopping, and entertainment. We are currently focused on hotels and air tickets, but we will expand into more areas in the future. As our core business profitability improves, we will certainly acquire more companies and continue to empower the industry.
