HotelTonight CEO Sam Shank
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Like many mobile-first, on-demand service-based companies started in the early 2010s, HotelTonight saw similarities with two of the biggest disruptors in that category.
“That’s how the world is moving: with Uber, you push a button and get a car; with GrubHub, you push a button and you get food,” HotelTonight CEO and co-founder Sam Shank said during a June 2013 appearance on CNBC’s “Squawk Box.”
“With us, you push a button, and you get a place to stay,” he said. “We’re the app for on-demand shelter.”
Launched in January 2011, HotelTonight looked to popularize a part of the travel and leisure sector that its founders felt had been overlooked: last-minute and same-day bookings.
“The idea from the start was all about trying to bring the idea to the mainstream that spontaneous travel is just more fun and rewarding,” Jared Simon, the former COO and co-founder of HotelTonight, said in a recent interview. “At the outset, that was not a concept that was mainstream in the least, and we got a lot of pushback about the notion.”
But HotelTonight quickly gained traction as it leaned into its mobile-first experience that resonated well with a younger, more cost-conscious demographic.
“At the time, the process of booking travel was like buying a house or applying for a loan,” Simon said. “The amount of information and time you had to give up sort of killed any sort of spontaneity in traveling at all and just made it feel like a transaction, not an experience.”
Simon said that travelers would often tell them that they “had been treated really poorly by the incumbent online travel agencies for years,” and HotelTonight instead tried to “prove that we could develop a real partnership with them.” That led to a focus on things like simplifying the information you had to enter and providing more images and well-written descriptions of the rooms themselves, features that Simon said have “become much more pervasive now.”
Even the concept of last-minute bookings was cribbed by some of the incumbents. Booking.com launched its own Booking Now app in 2015, which it shut down roughly two years later, while several other clones popped up around the globe with similar business models.
While Shank said in 2013 that the company wouldn’t look to “go after the entire market of travel,” HotelTonight did make a shift over time to become a more traditional hotel booking platform, expanding its booking window, adding a desktop browser version and even leaning into more luxury hotel deal offerings for their cost-conscious base.
In 2017 it announced a $37 million Series E round that took it to a $463 million valuation, bringing its total funding to $126.9 million from firms like Accel Partners, Battery Ventures, and First Round Capital, according to Crunchbase. It even struck partnership deals with Madison Square Garden and the New York Yankees, providing geolocated offers to fans at sporting events and concerts.
“We were fortunate we were in a space where we were one of the earliest mobile-only commerce apps,” Simon said. “That gave us some latitude and some space to work because the larger behemoths hadn’t figured out how to colonize that space yet, so we were able to pioneer some marketing concepts and other ways of reaching consumers that gave us a beachhead, and then allowed us to take another step with the MSG partnership and other areas where we were innovating on in addition to the core product.”
HotelTonight grew to the point that it had more than 25,000 hotels in approximately 1,700 cities worldwide on its platform.
Ultimately Airbnb acquired HotelTonight on its road to an IPO in March 2019 in a deal reported to be worth more than $400 million. Simon said the deal was something that “just made sense,” as the companies “were very complimentary in terms of product.”
At the time, Airbnb CEO and co-founder Brian Chesky said the move was a “big part of building an end-to-end travel platform.” The company also cited the demand from and for boutique hotels to be on Airbnb. Airbnb said at the time of the acquisition that the HotelTonight app and website would operate as it had before, something that is still true.
However, less than a year later the Covid-19 pandemic hit, which presented a new set of challenges for Airbnb to navigate while also trying to build that end-to-end platform HotelTonight was expected to be a big part of.
Jed Kelly, managing director of equity research at Oppenheimer & Co., said HotelTonight has “been operating pretty quietly within Airbnb.”
“It hasn’t been a big focus of the company just judging by the last like four shareholder letters, they don’t talk about it,” Kelly said. “When you see the Airbnb commercials it says ‘Made possible by hosts.’ That doesn’t really scream hotels.”
A spokesperson for Airbnb declined to make an executive available for comment.
Andrew Boone, a managing director at JMP Securities, said while HotelTonight had likely helped Airbnb accelerate its relationship with hotels, he said “it’s hard to say if it’s been either successful or unsuccessful just because of everything that has happened that is exogenous to Airbnb.”
Part of the challenge, Boone said, will be to see how travel trends evolve moving forward. Airbnb has benefitted from the trend of travelers choosing longer stays at alternative accommodations, often outside of major city centers, Boone said. HotelTonight, on the other hand, was more city-located, often appealing to customers who may have traveled for work last minute or stayed late after a show or sporting event, travel and entertainment sectors that haven’t bounced back as well.
Simon said that he believes coming out of the pandemic there will be a larger desire for “spontaneous travel,” which was an initial guiding principle of HotelTonight.
“I think it’s one of those changes we’ll see, that people recognize the value of the experience and the value of not making plans and the value of living life as it comes,” he said. “Travel will be back, and we’re already seeing a lot of evidence of that. Hotels will be at the center of that.”
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