Oracle's Nor1 Acquisition: One Year Later
It’s been almost a year since Oracle announced that it was acquiring Nor1, a 15-year-old startup that had been integrated with Oracle’s OPERA Suite of solutions for almost a decade. For those unfamiliar with it, Nor1 is a merchandising platform that enables hotels to provide personalized upsell offers throughout the guest journey using applied AI, including machine learning. This results in improved guest engagement, revenue and loyalty for hotels. To learn how the acquisition is progressing and the effect it’s had on Nor1 and its clients, HT sat down with Nor1 Founder and Vice President, Oracle Hospitality’s Nor1 Jason Bryant.
What are your thoughts on the Nor1/Oracle merger and acquisition?
As a startup, Nor1’s board of directors and investors always knew that at some point the company would be acquired. Oracle was always at the top of the list for obvious reasons including the fact that we have been integrated with their PMS software for about a decade and they have a giant base of properties with brands that fall right within our customer sweet spot. Plus, there is a great meshing of our company cultures. We’re both customer-centric and both our companies make decisions in a similar way because our objectives are very similar. That’s continued to pay off as the integration has continued to mature. As an entrepreneur, I’ve seen many deals that look good on paper but then fall apart in execution. That hasn’t happened here. So far, the execution has been even better than I ever expected.
How has the integration changed the way Nor1 operates?
During all integrations, every facet of the business is bound to be touched. From the way we contract to the way we market to the way we operate our business, all of that will continue to mature. My team is very conscious that Oracle is a $40 billion company. If they’ve done one thing in technology it has proved how to scale on a massive basis. So, we’re all working to pursue that level of maturity.
How will the integration improve Nor1’s products?
Two words: reducing friction. One friction point has always been integration costs. That’s been completely eliminated. So for our hotel clients who are also Oracle Hospitality PMS clients, there are no integration costs. Plus, the integration is helping us streamline our product and improve it for both the guests and hoteliers. Ultimately, we want to make their lives better. With this integration, we’re able to fortify and scale our product to work even better while being less expensive.
Why did Oracle want to purchase Nor1?
Probably one of the most significant assets that Oracle was interested from Nor1 is called PRIME, our applied AI platform. We use a variety of data science approaches to create our offers to guests, all of which happen in real time. That’s the key component – that it is happening in real time. Additionally, we assess multiple data sources at any given moment in order to calculate what is the best offer for this particular guest at this particular time, which makes our offers highly personalized. This makes us different from a revenue management platform which typically provides rates using supply/demand forecasting algorithms.
Another big benefit to our platform is our ability to engage with guests from booking through check-in. Many hoteliers have upsell programs but only engage with perhaps 20 percent of guests, including even the big brands. Our goal is to engage with 100 percent of guests. Not only does that ensure a higher return on investment but it also provides a consistency in service and delivery of hotel knowledge. Since we integrate with the PMS, we can help hoteliers know their guest in a way that OTAs just can’t.
Will this integration with Oracle affect your business model?
Nor1’s revenue model has always been 100 percent success based, and it isn’t going to change now. We only generate revenue if our clients generate revenue. If our clients have no demand, they pay us nothing. When demand increases, we have a percentage of share in the success. This works for us and for our clients for a specific reason: You don't have to motivate Nor1 to continue to enhance the technology. You don't have to motivate us to make sure that we are attending to the optimization of every single property. Why? If we don't, we don't get paid. So, we're naturally aligned with the objectives of our clients and they know we don't have to be pushed to continue to evolve our data science or our guest engagement or the presentation layer. That's all built in based on the revenue model. Then on top of that model, this integration has virtually reduced our common clients’ financial risk to zero because now the integration, maintenance and license fees are all free.