Hotel Tonight, a hospitality tech startup known for helping travelers score bookings the same day they are needed, is abandoning its one-night focus to compete with larger online travel agencies.
Beginning early October, Hotel Tonight will allow users to book hotel nights up to 100 days in advance, similar to OTAs such as Expedia and Booking.com. Hotel Tonight made a name for itself by helping travelers find discounts on same-day reservations, and several years ago the company expanded to a seven-day booking window to allow for more guest control over the booking process. This new 100-day strategy, however, is a major departure from the company's original intent, though Hotel Tonight CEO and co-founder Sam Shank said this decision was made in the name of competition.
“This marks the start of how we are going to compete in the market from now on," Shank said in a statement.
If it’s a competition Shank wants, he’s about to get one. Expedia and Priceline Group currently account for roughly half of all hotel bookings made on mobile devices, while hotels bring in about 16 percent. Hotel Tonight, which is based in San Francisco, so far raised $115 million in venture capital but spent a great deal of last year laying off staff and discarding expensive promotions on the service. During this period, Shank said Hotel Tonight went from spending $2 million to $3 million each month to earning a profit, but now the company is feeling pressure to seek growth.
While Hotel Tonight’s aspirations are admirable, it is currently doubtful if the company will be able to offer rates comparable to those found on Expedia or the heavily discounted options available to guests who book direct at brand.com. Simply crunching the numbers does Hotel Tonight no favors, either. The company has more than 25,000 hotels across 1,700 cities globally in its database, but compared to Booking.com’s 1.2 million hotels it’s a drop in the ocean.
Shank, however, says the key is in seizing the mobile market. Mobile bookings brought in $12 billion in 2013, but next year they are projected to reach $36 billion, and Shank said that Hotel Tonight’s goal is to win over customers from other services by providing a quality mobile experience. More specifically, Hotel Tonight allows users to book a room in 10 seconds, and searches are highly specific, delivering only up to 15 options for travelers looking for a room. Shank likens Hotel Tonight to the Lyft or Uber of the hospitality world, touting mobile first and not looking back.
There is more appeal here than at first blush. Today’s mobile users value speed and accuracy over everything else, and providing a long list of options confuses and obstructs their decision making more than it empowers them. However, if Shank thinks Expedia is about to let another company come in and pull the mobile booking rug out from beneath them he is dead wrong. Before he took over as CEO of Uber, former Expedia boss Dara Khosrowshahi said in April that more than one-third of all Expedia bookings take place over mobile devices, and more than half of the company’s traffic comes from mobile.
It’s a risky move for Hotel Tonight, but in the online bookings tug-of-war risky moves are often the only moves available.