Last-minute hotel booking app HotelTonight is expanding in Europe to include Spain and Italy as peers and rivals spring up in other markets around the world.
HotelTonight’s mobile app lets customers browse and make same-day hotel bookings at discounted rates; for hotels, it helps fill beds and bring in new first-time customers. Since starting up in December 2010, the US-based company has expanded to 12 countries around the world including Germany, France and the UK. Most recently, it added new cities in Spain and Italy – Milan, Rome, Florence, Barcelona, Madrid and Malaga.
Overall, HotelTonight is sitting at five million downloads worldwide, up from about four million in late January, with 1.5 million of those outside the US. Shank isn’t willing to break that down by country or how many bookings are made each month but does say that the company now has 2,500 hotel partners globally with 500 of those outside the US. The business model is to take a cut from partner hotels – it varies but the average is in the mid-to-high teens – for each booking completed through the app.
Like Airbnb, HotelTonight is helping lead the growth of a new market for accommodation service – in this case, last-minute hotel booking rather than peer-to-peer short-term rentals. According to CEO Sam Shank, about half of HotelTonight’s users wouldn’t otherwise have booked a hotel that night if not for the app.
Plenty of similar services have sprung up since 2010. Priceline started its own last-minute booking mobile app in 2011; Expedia introduced a last-minute deals service in January 2012. Other competitors based in Europe include JustBook (Germany) and Blink Booking (Spain), Meanwhile, a couple of Rocket Internet grads have made an entry to the market in Asia with copycat HotelQuickly.
Again, like Airbnb and its rivals, the market will take time to grow to a saturated point and then shake-down into a group of sustainable companies. “Building an app is fairly straight-forward, especially if you have somebody to look at to be influenced by,” Shank points out. “But growing and scaling a business like ours, dealing with the support issues, dealing with inventory, having great hotels, keeping those hotels happy every day – that takes a lot behind the scenes to make it work.”
HotelTonight most recently raised a $23m round led by US Venture Partners in June 2012, bringing total capital raised to about $35m. The company’s future plans include further expansion in Europe.
Image credits: via HotelTonight
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