You’ve just arrived, ready to leave the airport,
but you haven’t booked a hotel room yet - sounds familiar, right?
Rushing to get a room at the last minute is no fun,
but there’s a bright side – hoteliers love filling their rooms to full capacity.
What you need is accommodation in a few clicks,
and what a hotel needs is to show that there are rooms available.
Connecting those two pain points is how HotelTonight operates.
So what is HotelTonight?
HotelTonight came on the scene as the original platform for booking discounted hotel rooms minutes before guest arrival.
Launched in 2011 as a mobile-only app, it quickly gained popularity with travelers as it helped them find good deals on room rates.
Only a year after its launch, the app was downloaded 3.7 million times.
Now, the service, available in 30 countries with more than 25 thousand hotels, has become an alternative to industry giants such as Expedia and Booking.com.
But, how did they make it work?
Imagine the hotel business as a farmers’ market:
traders want to get maximum revenue, from the products on their counter.
To make it work, the trader should sell out all the products before they spoil.
Now imagine there are thousands of farm stands in one place, and each trader wants to put a “sold-out” sign.
Whenever there a few products left and they are about to perish, the trader would drop the price in order to sell them.
Now, it’s great that there are lots of enticing offers on the market… but only if customers can see them.
In a real-world hotel business, everything works the same way.
Hoteliers are interested in visibility to fill all the rooms available.
An empty room generates no money, so hotels try to sell them cheaper at the day of expiration.
Lower rates set for expiring rooms help hotels reach higher occupancy and gain at least something from these rooms.
Considering the opportunity, Sam Shank, CEO, and co-founder of HotelTonight
launched a mobile app that collected expiring hotel rooms.
Soon, it became one of the most popular booking instruments.
The secret of the app was in its simplicity.
HotelTonight allowed users to search deals for tonight, and book them right from the search page.
Choose your location, pick a room, and you’re all good.
On the flip side of what a user sees, there is a channel manager,
a tool used by travel managers to connect with hotel inventories.
To propose the most recent deals, HotelTonight has to operate inventories of thousands of hotels at once.
Think of this as a big screen in the mall that shows what’s left on the counters,
and what you can buy right now for a good price.
So, a channel manager does it all.
Whenever somebody cancels a booking or simply doesn’t show up for check-in, HotelTonight receives an update from the hotel on room availability.
And after the booking is finally done, HotelTonight receives a commission.
And that is how travel agencies work.
So, you might ask, how was HotelTonight different?
At the beginning of 2011, Booking.com was already offering last-minute bookings through its mobile app.
If there was a well-known all-purpose Booking.com, why would anyone prefer HotelTonight to it?
Here’s the answer to that riddle.
Hotels and online travel agencies in most countries were bound by an agreement called rate parity.
According to that agreement, hotels can’t set lower rates than those on travel agents’ websites,
and agents agreed to rate each hotel equally.
Such conditions allowed hoteliers and distributors to be on par. That’s why we see “the best price” everywhere.
But there’s one exception – the mobile distribution channel.
Because of being mobile-only, HotelTonight wasn’t bound by rate parity and could offer lower prices compared to other booking platforms.
Hoteliers, in turn, could sell cheaper rooms via HotelTonight.
So the app has proven to have 15 percent lower rates for Sunday/Saturday bookings, which is a big difference in price.
However, according to various customer reviews, HotelTonight is not always the cheapest option.
Users report hidden taxes included in their total price when booking through the HotelTonight app,
which makes the nominal and total prices different.
Consequently, rates listed in the application can sometimes be the same as on other travel aggregators and booking platforms.
The concept of collecting remaining deals wasn’t new to the world:
Priceline.com has been selling expiring airlines tickets since 2000.
But, it had never spawned numerous clones as HotelTonight did.
Though it started as a mobile-only, last-minute booking app,
in 2014 HotelTonight expanded with week-in-advance bookings to withstand the growing competition.
Today, HotelTonight is slightly different, as it offers rooms up to 100 days in advance, as well as working on both desktop and mobile channels.
While last-minute bookings remain the priority, the business model has changed.
Experiencing serious financial problems during the last 3 years
and in the very recent past, HotelTonight had become nearly unprofitable.
That led to an agreement between Sam Shank and Airbnb owners, and further acquisition of HotelTonight in 2019.
Which is probably the last challenge of a last-minute-booking app,
as it became a part of a larger hospitality marketplace.