On March 7th 2019, Airbnb announced to have reached an agreement to acquire the last minute hotels booking app HotelTonight. Although the financial terms of the transaction were not disclosed, this deal could represent the largest acquisition completed by the San Francisco-based company. Indeed, the online app was valued at $463 million in occasion of its last fundraising, two years ago, and, up to now, the largest acquisition achieved by Airbnb was the one announced in February 2017, when, according to Bloomberg, it paid around $300 million for Luxury Retreats, a Canadian full-service villa rental company.
HotelTonight is a booking hotel mobile application focused on last minute offers. Actually, after starting with a booking window of only 7 days, today people can book their accommodation up to 100 days in advance, a strategic move that makes the company a real competitor for the established online travel agencies, such as Expedia and Booking.
Airbnb, which is one of the largest accommodation platforms, has recently claimed in a press release to have more than six million listings around the world, underlining that this number is greater than the number of rooms offered by the six largest hotel groups combined.
Digital platform company Airbnb became a new competitive force in the hospitality industry, causing traditional lodging companies to re-examine their business models and physical footprints. Going forward, the value of hospitality companies increasingly resides in digital innovation.
HotelTonight is a booking hotel mobile application focused on last minute offers. Actually, after starting with a booking window of only 7 days, today people can book their accommodation up to 100 days in advance, a strategic move that makes the company a real competitor for the established online travel agencies, such as Expedia and Booking.
Airbnb, which is one of the largest accommodation platforms, has recently claimed in a press release to have more than six million listings around the world, underlining that this number is greater than the number of rooms offered by the six largest hotel groups combined.
Digital platform company Airbnb became a new competitive force in the hospitality industry, causing traditional lodging companies to re-examine their business models and physical footprints. Going forward, the value of hospitality companies increasingly resides in digital innovation.
Source: https://www.slideshare.net/dwang1109/5-things-hotels-must-do-to-provide-the-best-guest-experience-77769734
A key rationale of this deal for Airbnb is the spontaneous trend that has been affecting the travel and hospitality industry. Indeed, HotelTonight’s business is based upon the fact that people are becoming more spontaneous and they prefer to have as less planning as possible, increasingly looking for on demand solutions either for business or leisure purposes.
A primary goal for Airbnb is building an end-to-end travel platform, which can serve every customer need, such as planning a trip a year or a day in advance, according to Brian Chesky, Airbnb Co-Founder and CEO, who added: “Working with the incredible team at HotelTonight, we will offer guests an unparalleled last-minute travel experience that provides unique, memorable hospitality on every trip, on any schedule, at any time”. According to the company’s press release, the decision to offer on its website boutique hotels proved successful for the home business, considering that almost 90% of customers who first used Airbnb to book a hotel room and, subsequently, reused a second time the platform, then booked a home.
Furthermore, Airbnb wants to provide the best solutions for anyone who is looking not only to find an accommodation, but also to identify the most efficient transportation as well as to engage in a variety of activities. Indeed, on the Airbnb platform, besides booking homes and boutique hotels, it is also possible to arrange the so called “experiences”, which include activities such as hiking in Cuba or wine tasting in Paris. Moreover, the company has recently hired Fred Reid, former CEO of Virgin America, who is responsible for building partnerships and services that can improve the transportation experience for Airbnb’s customers. The deal represents an important step in terms of business diversification in view of the IPO, which will probably occur in 2019 or in 2020.
Under the terms of the agreement, HotelTonight will continue to operate as an independent business, although Airbnb in the future will probably add on its platform some HotelTonight’s listings, as well as direct link to HotelTonight website, in case a customer finds no accommodations available.
Upon completion of the deal, Hotel Tonight CEO, Sam Shank, will be responsible for Airbnb’s boutique hotel category, reporting directly to Greg Greely, who was appointed in March 2018 Airbnb’s President of homes.
Luca Ranzani