Airbnb buys HotelTonight to build ‘end-to-end travel platform’

Analysts believe the company needs to expand and diversify
before going public

Airbnb has
signed an agreement
to acquire HotelTonight, the San
Francisco-based company that uses an app to sell last-minute,
unused inventory at boutique and independent hotels. Negotiation
talks were first reported by the
Wall Street Journal
, though at the time, the story suggested
talks had “gone cold.”

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 $463 million in March
2017, after a $131 million funding round, and is thought to be
worth much more now. Airbnb, which was valued at $31 billion after
its last funding round in March 2017, needs to broaden its

Many of the lodging company’s recent moves, including
Airbnb Plus
, a luxury offering, an initiative to
reach business travelers
, and its
Experiences program
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
), advising developers who are adding inventory to home
sharing sites.

Jan Freitag, senior VP for lodging insights at STR, a global consultancy focused on the
hospitality industry,
told Curbed last year
that he believed the site was becoming
more like an online travel agency (OTAs) or platform, 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?” Frietag said. “Hotels. It’ll start with a
few rooms in boutique hotels, then move to all brands that have a
cool reputation. And then, why not any hotel?”

Source: FS – All – Architecture 10
Airbnb buys HotelTonight to build ‘end-to-end travel platform’