Have you all ever heard of HotelTonight? Two years ago I helped 12 athletes invest and get marketing deals with them. They all used the service and loved it, but didn’t have access to invest. Two weeks ago that company was acquired by Airbnb! Why would Airbnb acquire HotelTonight? Here is what “Curbed” had to say: “Airbnb buys HotelTonight to build ‘end-to-end travel platform’
The purchase illuminates how Airbnb, which is planning a public IPO, may be looking to boost growth potential and diversify, as a means of attracting investors. Purchasing a hotel booking site, or even buying hotels, analysts suggest, is an important step before going public, now likely to happen in 2020.
HotelTonight was previously valued at $463m in 2017, after a $131m funding round, and is thought to be worth much more now. Airbnb, which was valued at $31bn after its last funding round in March 2017, needs to broaden its offerings.
Many of the lodging company’s recent moves, including Airbnb Plus, a luxury offering, an initiative to reach business travelers, and its Experiences program (which hasn’t lived up to expectations), have been efforts to mimic the services and standardization of traditional hotel chains.
The company already lists hotels—The Wall Street Journal also added that Airbnb announced that it expanded its listing of boutique hotels by 152 percent—and buildings customized for home-sharing sites (via initiatives like Niido), advising developers who are adding inventory to home sharing sites.
Jan Freitag, senior VP for lodging insights at STR, told Curbed last year that he believed the site was becoming more like an online travel agency (OTAs) or platforms, such as Expedia or Priceline, and might be able to undercut these types of lodging sites. Since Airbnb charges just 3 percent commission to host, compared to the 9 to 10 percent charged by other OTAs, it’s an attractive proposition. ‘If I’m Airbnb and looking at going public, knowing I’ll be under more scrutiny, and looking for more growth to satisfy Wall Street, I’ll do the math and say, how do I add the growth to make investors happy?’ Freitag said. ‘Hotels. It’ll start with a few rooms.'”