Airbnb to acquire online travel agency HotelTonight

Airbnb is ramping up its strategy around hotel accommodations
by striking an agreement to acquire HotelTonight.

Terms of the deal have not been disclosed. HotelTonight had
raised nearly $130 million in investment funding since its creation in late 2010.

The purchase, according to Airbnb, gives it the chance to “accelerate
our work to build an end-to-end travel platform that serves everyone.”

It is unclear what Airbnb will do with its latest
acquisition in the mid- to long-term — only stating what looks to be a return
to the last-minute focus that HotelTonight launched at the turn of the decade.

Most of the rhetoric in the announcement concerns
HotelTonight’s prowess with its relationship with boutique hotels and how the
deal will make it easier for people who use Airbnb to find accommodations on short
notice.

Airbnb says: “The availability of boutique hotels — in
addition to private rooms and entire homes that are instantly bookable — helps
ensure authentic, high-quality stays are available on demand, especially at the
last minute.”

HotelTonight also works with many chain hotels in its
network of cities around the world. It has a 100-day booking window.

Airbnb says the HotelTonight app and website will continue
to operate, with CEO and co-founder Sam Shank reporting to Airbnb president of
homes Greg Greeley.

All employees will be joining Airbnb, the company says,
except for three unnamed executives from HotelTonight whose roles are not
continuing after the deal closes.

Shank says: “We started HotelTonight because we knew
people wanted a better way to book an amazing hotel room on demand, and we are
excited to join forces with Airbnb to bring this service to guests around the
world.

“Together, HotelTonight and Airbnb can give guests more
choices and the world’s best boutique and independent hotels a genuine partner
to connect them with those guests.”

The acquisition follows a deliberate shift in emphasis by
Airbnb over the course of the last 12 months to expand beyond private
accommodations to include hotels — a distribution strategy through third-party
channel managers that will continue.

It announced a program to allow hotels to officially be
included on the core service in February 2018 and saw CEO Brian Chesky state that
the company was “100% battling online travel agencies,” such as
Expedia and Booking.com.

Speaking to the acquisition, Airbnb advisor Chip Conley
says: “Boutique hoteliers and Airbnb home hosts both offer incredible,
local hospitality precisely because they live in and are connected to the
communities where they welcome guests.

“Airbnb and HotelTonight joining forces will make it
easier for guests to find these kinds of unique, amazing places to stay and is
a natural next step that will benefit everyone in the Airbnb community.”

An ever-evolving model

HotelTonight’s biggest round came in a $45 million chunk
from the Coateau Management hedge fund in 2013.

At the time, none of its rivals, such as Spain’s Blink
Booking, Hong Kong’s HotelQuickly, Germany’s JustBook, the UK’s Hot Hotels or U.S.-based
Priceline’s Tonight-Only Deals app had claimed investment levels approaching
that.

The company was formed in San Francisco, initially as a
same-day booking service where users could get heavily discounted rates on
hotels in select cities, using so-called distressed inventory.

It expanded quickly around North America and into Europe,
putting sales teams on the ground to work with hotels in a particular
destination or region.

The mobile-only service, which later shifted also to
desktop, spawned a string of copycat brands, including a dedicated app from the
aforementioned Priceline.com.

Booking.com and Orbitz (before Expedia bought it) also
followed suit and switched on last-minute capability.

But the limitations on the same-day model soon became
apparent in terms of addressable market size, leading to an extension of the
booking window to seven days in 2014 and then to 100 days in 2017.

A string of layoffs came in 2015 (about 20% of the
workforce).

A turnaround program appeared to have paid off in 2017 when
it raised $37 million from Accel Partners, with talk turning to plans for an
initial public offering at some point in the future.
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Source: PhocusWire

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