The acquisition of Airbnb which could be the core of its next epidemic playbook

Hotel Tonight CEO Sam Shank

Ben Robertson

In this weekly series, CNBC looks at the companies that made the list of inaugural disruptors 50 years later.

Like many mobile-first, on-demand service-based companies that started in the early 2010’s, HotelTunite matched the two biggest disruptors in that segment.

“The world goes like this: with Uber, you push a button and get a car; with Grubbah, you push a button and you get food,” HotelTunite CEO and co-founder Sam Shank said during a June 2013 appearance on CNBC “Squawk Box. . “

“With us, you press a button, and you’ll find a place to stay,” he said. “We have an app for on-demand shelter.”

Launched in January 2011, HotelTunite wanted to popularize a segment of the travel and leisure sector that its founders felt was overlooked: last minute and same-day bookings.

“From the beginning, the idea was to bring the idea into the mainstream that spontaneous travel is more fun and rewarding,” Jared Simon, former COO and co-founder of HotelTunite, said in a recent interview. “Initially, it wasn’t an idea that was at least mainstream, and we’ve got a lot of pushbacks about the idea.”

But HotelTonight quickly gained traction as it leaned towards its mobile-first experience that resonated well with a younger, more cost-conscious population.

“At the time, the process of booking a trip was like buying a home or applying for a loan,” Simon said. “The amount of information and time you had to give up was to give up any kind of spontaneity on the trip and it felt like a transaction, not an experience.”

Simon said travelers often told them they had been “really mistreated by the current online travel agencies for many years” and tried to “prove that we can build a genuine partnership with them” instead of HotelTunite. This leads you to focus on things like simplifying the information you enter and providing more pictures and well-written descriptions of the rooms, features that Simon said are “now much more pervasive.”

Even the idea of ‚Äč‚Äčlast minute booking was crippled by some candidates. Booking.com launched its own Booking Now app in 2015, which shut down almost two years later, when several other clones popped up around the world with similar business models.

Although Shank said in 2013 that the company would “not want to go into the whole travel market,” HotelTunite has become a more traditional hotel booking platform over time, expanding its booking window, adding a desktop browser version and even for their cost-conscious basis. More luxury hotel deals are being offered.

In 2017 it announced the $ 37 million Series E Round which took it to $ 463 million valuation, bringing its total funding from firms like Accel Partners, Battery Ventures, and First Round Capital to $ 126.9 million, according to Crunchbase. It has even entered into partnership agreements with the Madison Square Garden and the New York Yankees, which offer geo-local offers to fans at sporting events and concerts.

“We were fortunate to be in a place where we were the first mobile-only commerce app,” Simon said. “It gave us some latitude and some space to work because the larger behemoths have not yet figured out how to colonize that space, so we were able to pioneer some marketing ideas and other ways to reach customers that gave us a beach, and then Our MSG partnership has allowed us to take this one step further and in other areas besides the original product we were innovating. “

HotelTunite has reached a point where its platform has more than 25,000 hotels in about 1,700 cities worldwide.

Key CNBC Disruptors: Where Are They Now?

Airbnb finally acquired HotelTonight on its way to an IPO in March 2019 in a deal worth more than 400 million. Simon said the deal was something that was “just understandable,” because the companies were “very appreciative of the 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 mentioned the demand for boutique hotels on Airbnb. Airbnb said at the time of the acquisition that the HotelTonight app and website would work as before, which is still true.

However, less than a year after the Kovid-19 epidemic hit, which presented a new set of challenges for Airbnb to navigate as well as try to build an end-to-end platform, HotelTonight is expected to be a big part of it. Was done.

Jet Kelly, managing director of equity research at Oppenheimer & Co., said HotelTunite was “operating quite quietly within Airbnb.”

“It wasn’t a big focus of the company just judging by the end like four shareholder letters, they don’t talk about it,” Kelly said. “When you see Airbnb ads, it says ‘Host made it possible.’ It doesn’t really shout at the hotel. “

An Airbnb spokesman declined to comment on the issue.

Andrew Boon, managing director of JMP Securities, said Hotel Tonight probably helped Airbnb accelerate its relationship with the hotels, adding that “it’s hard to say whether it succeeded or failed because something happened outside of Airbnb.”

Part of the challenge, Boon says, is to look at how travel trends are moving forward. Airbnb has benefited from the trend of passengers staying longer in alternative accommodation, often outside the main city center, Boone said. HotelTunite, on the other hand, was city-based, often appealing to customers who traveled for last-minute work or were late after a show or sporting event, travel and entertainment sector that did not bounce back.

Simon said he believed there would be a greater desire for “spontaneous travel” after the epidemic, which was HotelTunite’s initial guideline.

“I think it’s one of the changes we’re seeing that people recognize the value of experience and the value of not planning and the value of living 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 it.”

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