Meet the Man Making Your Hotel Smarter

In 2004, after taking GuestTek public, Arnon Levy was forced out of the IP-tech company he created in 1997. With the company in decline, he orchestrated a hostile takeover and fought his way back to the top. Now he’s taken the company global and has poised it for sustained success.

You travel the world as CEO of GuestTek, but how did you get started as an entrepreneur?
I’ve always had a project going. I started with a lawn-care and gardening business in high school because there were few other jobs around. I ran it through university, along with a T-shirt company, and those endeavours paid for my education. I’ve always believed that opportunity is out there just waiting to be taken.

Tell me about the origins of GuestTek. What was life like for a tech company in 1997?
I had worked with almost 100 small- and medium-size businesses with Western Arctic Development Services and Western Economic Diversification after completing a bachelor of commerce degree at the University of Calgary. When I moved back to Calgary in 1996, a family friend approached me about starting an Internet café chain, which were popping up all over the place at the time.

Right. There were a lot of them back then. Did that deter you?
Well, I wrote the business plan for him but quickly realized it wasn’t a good way to go because Internet cafés were capital intensive. It’s hard to make money when you invest so much at the front and then keep reinvesting.

So how did your plans change?
I had specialized in the hospitality industry at university. We had built these Internet-style kiosks that we were going to use for the café model. We were thinking of putting them in bars and realized they would be better placed in hotels. In 1997, we put the kiosks into a hotel lobby and in about 20 rooms. That was really the birth of our company. But something unexpected started to happen: people were unplugging our system to use their own laptop.

Did that mean your company was obsolete?
No, it was the birth of high-speed Internet in the hotel room. We just had to evolve. We built networks to provide it. We were the first company in North America to put high-speed [Internet] into a hotel room, and we became the first to do digital video-on-demand in the early 2000s. Two years later, we did IPTV in hotel rooms and IP telephony. We’re working towards uniting all technology in a hotel room and running it through the network to make these rooms smart so guests can control absolutely everything on their own.

“By constantly investing in new technologies and new ideas, we are the ones that are disruptive in our industry. We never stop developing or looking at better ways to provide our products and services. We are constantly ahead of our competitors. If you stop, you fall behind.”

You grew quickly. How did you take the company from nothing to public between 1997 and 2003?
We got friends and family involved to raise money, and then we worked with a venture capitalist. There were some conflicts, but we kept moving forward and had 300 percent growth year after year.

Then you hit some turmoil. What happened?
The bankers and venture capital guys decided someone older had to be in charge. I had started the company at age 26 and was just a year or two over 30. I volunteered to step down because I saw there was no other way. They got a very high valuation, and I sold some shares and walked away. In less than a year, we went from 13 percent EBITDA [earnings before interest, taxes, depreciation, and amortization] to 18 percent EBITDA loss, and the shareholders approached me to do a hostile takeover.

Couldn’t you have just walked away and started your next business?
Sure. I believe in that model of building something, making it great, selling it, and moving on to the next brilliant idea—but I knew that we had something here that wasn’t even close to reaching its potential. I wanted to take it there the right way.

How?
We got into a big fight.

Obviously you emerged on top.
I found a Japanese company that believed in my vision and wanted to invest, and they helped me to gain control of the company and work towards my vision of converged networks and a global reach. We took back control in November of 2004.

What shape was GuestTek in then?
Not great, honestly. The share price had fallen from $11 to $2. But in six months, we got it back to around $8. The Japanese company gave us two years to hit performance goals with the option to be bought out at a higher valuation, and we hit our goals in 18 months. We were celebrating and popping champagne corks, but there were major issues in Japan that stopped the deal, and our shares fell all the way to $1. We got orphaned by all our big investors. I went through a nasty divorce, and the price fell even more.

Again, you could have walked away, and nobody would have blamed you for doing so.
I knew it would take time, perseverance, and money, but I knew this company had it to succeed. I could have walked away, but I was still holding 10 percent of the company, and I believed there was still a chance to do things right. We had to fix some relationships we had destroyed. It took us a year to recover. The Japanese didn’t recover, and I had the chance to personally buy them out. I did that, and in the end of 2009, I bought out the rest of the shareholders and took the company private.

Why take that much risk?
I knew what the company was capable of, and I knew what the future could hold.

What did you learn from all the difficulty?
Perseverance and decisiveness are so important. You need to make big decisions, and even if you make the wrong choice, you have to persevere. I’ve hardly ever seen a business plan that winds up matching what really happens. As long as you’re moving forward and not standing still, keep moving.

After 2009, was there a key moment that proved you were on the right track?
We kept concentrating on quality of product and quality of service, and that set us apart from our competitors. The biggest thing we did was in relationship building. We became the first company in the industry to expand into Latin America, and we became by far the biggest in the Americas and the Caribbean.

Your next big move was to acquire iBAHN in 2014. Why was that deal so important to you?
They were huge in Europe, Asia, and the Middle East, so this deal allows us to go to our customers and provide the same Internet, video-on-demand, and other technologies in every property worldwide. For a major hotel, it’s all about consistency. This is like having the same room pillow and blanket in every brand’s hotel in every city. It elevated us into a whole new level. If you go to McDonald’s, you know you’re going to get the same hamburger regardless of location. We’re doing that for hotel technology solutions.

What technology are you most excited about now?
We can allow hotel guests to control whole rooms through their own personal device: lighting, heating, blinds, security, TV—everything. Say you’re watching a hockey game in your room and you want to go to the pool; you simply broadcast it to your personal device and go watch it by the pool. We can also let users beam content from their smartphone or other device to the hotel TV. And all of this can go through the hotel’s own app or the GuestTek app, so users can have the same experience worldwide.

What’s next?
Global growth is the main thing for us. We’re active in 81 countries, with offices in 28 and more than 800 employees. We haven’t seen this kind of growth since the beginning.

How does the 2015 GuestTek match your original vision?
I found our original business plan a few weeks ago—the one I wrote in 1996. The numbers on it were surprisingly close to where we are today, but it took us longer than I thought. I had predicted seven years; it took us 18. But it’s validating. It proves that despite the challenges and obstacles along the way, the vision was there the whole time.