The immediacy of mobile technology has created an entirely new market of last minute and same-day service companies. HotelTonight arose at the perfect time, almost too early, to get ahead in a budding industry.
Much like Class Pass’s fitness class filling model, hotels also have a universal need to make money; when they have an empty room, it’s not generating any revenue for them.
@ HotelTonight is a part of the travel industry, aiming to fill up last minute, unbooked hotel rooms at a discounted price. Founder Sam Shank found himself with several years of experience from various travel companies when he could no longer ignore his entrepreneurial spirit. His first business was a hotel review site, TravelPost, that was sold to SideStep which sold it to Kayak.
Starting another business and going back to square one was a humbling experience for Shank. He had his online hotel booking idea and brought on Chris Bailey, who built the app, and Jared Simon, also experienced in the travel industry, to help execute his vision. After the app was built and launched, it was chaos for the founders, in the most wonderfully creative way possible.
The company felt a hard realization many other entrepreneurs have had: they had a great product and nobody cared. HotelTonight had built relationships with iconic boutique hotels to offer amazing discounts on luxury rooms. But nobody was booking besides the founders’ themselves and their kind family and friends.
Then when people did start booking, the growing pains were widely felt. Shank answered all of the customer service calls, even when his phone rang at 3am.
HotelTonight has come a long way since its upstart in 2010 and launch in 2011. Born in the mobile-first era, this San Francisco based company is able to stay ahead of major names like Expedia and Booking.com by being a leader in mobile bookings. About 20% of all online travel bookings now occur on mobile devices. Mobile bookings are projected to reach $36 billion this year, triple the $12 billion spent in 2013.
Despite industry growth, HotelTonight struggled to reach profitability. After raising $115 million in venture capital, the company went from burning through $2 million to $3 million each month to earning a profit. HotelTonight planned for an IPO, but still struggled with the pressure to grow.
To deal with this pressure, the business model has expanded. Initially Airbnb and HotelTonight were different markets, but in 2014 HotelTonight began expanding from same-day bookings to 7 days in advance to 100 days in advance, continuing to make great travel experiences more accessible. More than 25,000 hotels in about 1,700 cities globally are currently listed on Hotel Tonight. By comparison, Priceline’s Booking.com has 1.2 million hotels.
Now, HotelTonight still has the fastest booking in the world at ten seconds.