HotelTonight CEO Sam Shank
In this weekly series, CNBC will cover the companies that created the first Disruptor 50 list 10 years later.
As many mobile-first on-demand service-based companies launched in the early 2010s, HotelTonight saw similarities with the two biggest confusion factors in its category.
“That’s the movement of the world. With Uber, you can get a car with the push of a button. With GrubHub, you can get food with the push of a button,” said Hotel Tonight, CEO and co-founder. Said Sam Shank. Appearing in June 2013 CNBC’s “Squawk Box.. “
“With us, when you press a button, you get a place to stay,” he said. “We are an app for on-demand shelters.”
Launched in January 2011, Hotel Tonight aimed to popularize last-minute same-day bookings in some of the travel and leisure sectors that the founders felt they had overlooked.
In a recent interview, Hotel Tonight’s former COO and co-founder Jared Simon said, “The idea from the beginning was to try to bring the idea that voluntary travel is more fun and rewarding. “. “Initially, it wasn’t at least the mainstream concept, and we got a lot of backlash about it.”
However, HotelTonight quickly gained momentum as it devoted itself to a mobile-first experience that resonated well with younger, more cost-conscious demographics.
“At that time, the process of booking a trip was like buying a house or applying for a loan,” Simon said. “The amount and time of information you had to give up completely killed all sorts of spontaneity while traveling, making it feel like a deal rather than an experience.”
According to Simon, hotel owners are often said to have been “very poorly treated by existing online travel agencies for years,” and instead Hotel Tonight “can build a true partnership with them.” I tried to prove that. ” Therefore, the focus was on simplifying the information that needs to be entered, providing more images of the room itself and a well-written description. According to Simon, this feature is “much more popular now.”
Even the concept of last-minute bookings has been criticized by some incumbents. Booking.com released its own BookingNow app in 2015 and shut down about two years later, but several other clones have emerged around the world with a similar business model.
Shank said in 2013 that the company did not intend to “follow the entire travel market”, but over time HotelTonight moved to a more traditional hotel booking platform, expanding its booking window and desktop browser. Added version. Due to their cost-conscious foundation, they may even be inclined to trade in more upscale hotels.
According to Crunchbase, it announced a $ 37 million Series E round in 2017 with a valuation of $ 436 million and total funding from companies such as Accel Partners, Battery Ventures and First Round Capital to $ 126.9 million. became. We also have partnership agreements with Madison Square Garden and the New York Yankees to offer our fans geographically located offers at sporting events and concerts.
“We were fortunate to be in a place where we were one of the earliest mobile-only commerce apps,” says Simon. “Because the big giant didn’t yet understand how to colonize that space, it gave us some freedom and space to work, so we gave us a bridgehead consumption We were able to pioneer some marketing concepts and other ways to reach our customers. In addition to our core products, we were able to take a new step in the MSG partnership and other areas of innovation. “
HotelTonight now has more than 25,000 hotels on its platform in approximately 1,700 cities around the world.
Eventually, Airbnb acquired Hotel Tonight on its way to an IPO in March 2019, reportedly worth more than $ 400 million. The deal was “reasonable,” Simon said, as the two companies were “very complementary in terms of products.”
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 quoted demand from boutique hotels and demand for Airbnb. At the time of the acquisition, Airbnb said the Hotel Tonight app and website would behave as before, but that’s still true.
However, less than a year later, a Covid-19 pandemic occurred. Presented a new set of challenges As Airbnb navigated and tried to build an end-to-end platform, Hotel Tonight was expected to be a big part.
Oppenheimer & Co. Hotel Tonight “runs fairly quietly within Airbnb,” said Jed Kelly, managing director of equity research at Airbnb.
“Judging like the last four shareholder letters, it wasn’t a big focus of the company. They don’t talk about it,” Kelly said. “When I look at Airbnb commercials, it says’made possible by the host.’It doesn’t really scream at the hotel.”
An Airbnb spokesperson refused to ask executives for comment.
Andrew Boone, managing director of JMP Securities, a company at Cititzen Financial Group, said Hotel Tonight is likely to have helped accelerate Airbnb’s relationship with hotels, but “an extrinsic event has happened to Airbnb.” Said.
Part of the challenge, according to Boone, is to see how travel trends will evolve in the future. According to Boone, Airbnb tends to allow travelers to stay in different accommodations for longer periods of time, often outside the main city centre. HotelTonight, on the other hand, is more urban and often appeals to customers who travel last minute for work or stay late after shows, sporting events, travel and entertainment departments.
Simon said he believes that getting out of the pandemic has a greater desire for “voluntary travel,” which was the first guideline for Hotel Tonight.
“I think it’s one of the changes we see. People recognize the value of experience, the value of not planning, and the value of life,” he said. .. “The trip is back, and we’ve already seen a lot of evidence of it. The hotel will be at the center of it.”
sign up A weekly original newsletter that goes beyond the annual Disruptor 50 list, we’ll take a closer look at companies like the pre-acquisition Hotel Tonight and founders like Shank and Simon who continue to innovate in all areas of the economy.