Same-day hotel booking app HotelTonight is announcing its first international expansion today, adding Canadian cities Toronto and Vancouver to its list of 30 featured locations. The free app allows guests to book same-day hotels at a deep discount – hotel deals are listed at noon for that evening, and guests can book either one night or multiple nights based on availability. The company has raised over $12 million in funding, and recently crossed over two million downloads of its apps since launching in 2010, though it’s not disclosing how many hotel rooms have been booked during that time.
Hotels offer their unsold rooms day-of on HotelTonight for discounts of up to 70 percent, with the average being around 30 to 35 percent off regular price. Users select their city, or the city they’re looking to book in, and can view photos (often taken by one of the company’s in-house photographers) and property details. The hotels are classified as either hip, luxe or basic, and travellers can see the name, location and details for each hotel, unlike services like Hotwire and Guestmob that hide the name until the booking is complete. Travellers can book a hotel until 2 a.m. that evening, and can book anywhere from one to five nights, based on the hotel’s availability.
HotelTonight is CEO Sam Shank’s third travel startup – he previously started hotel review site TravelPost and travel deal search engine DealBase, and ultimately decided to look at doing a mobile-only hotel deals app which he spun out as a separate company. “I saw an opportunity to create a new brand around this need of ‘I need a hotel right now,’ because none of the big brands stood for that,” Shank said in an interview. “They stood for booking a room for a vacation, maybe for right now, maybe for next week, but no one stood for this immediacy and mobile exclusivity that we had.”
Up until today’s expansion, the app was available exclusively in U.S. cities. Today’s international launch includes deals on Toronto hotels like the Thompson Toronto and the Windsor Arms. Shank said they decided to launch in Canada first because of the “tremendous demand,” both from potential users and hotels. Though Shank wouldn’t specify any further plans for international expansion, the app supports euros and the British pound, so Europe is likely their next target market. “If we’ve been successful in the U.S., which is the hardest market in the world for us to be successful in, we’re going to be extremely successful elsewhere,” Shank said.
The company’s sales team works directly with hotels to list their same-day inventory, and takes around a 20 percent commission on each booking (the specific commission is negotiated with each individual hotel). Shank said selling hotels on working with them was hard since they were often bombarded with requests from daily deal sites, but ultimately the value proposition of selling same-day inventory was appealing. “We come in and we say ‘yeah we want a deal too, but our value proposition is very different. We want a deal off of something that you’re not going to sell otherwise, because it’s same day and you know you’re not going to sell it.’”
The service only appeals to a certain type of traveller, either someone who is booking last-minute, or someone who isn’t afraid to book same-day to get a deal even though they planned their trip in advance. Shank said it’s clear that they’re competing in a large market, and it’s likely that existing players like Expedia and Priceline will launch a competitor. He believes his company will stand out because of their single focus, and attention to mobile design. While Shank said there are no current plans to expand to flights, tours and other travel-focused bookings (“it’s not called FlightTonight,” he said), Shank said he ultimately thinks the company is a platform for selling distressed inventory, and hinted at expansion into different verticals in the future. As a hotel booking app the company has already seen great traction, but allowing companies to offload their excess stock, regardless of industry or product, could be an even bigger market opportunity.