HotelTonight raises $45M in Series D funding

Last-minute hotel booking application has doubled its downloads in the last year

Financial trends and news by Steven Loeb
September 5, 2013
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Somehow, throughout my entire life, I have only had one bad hotel experience: it was a place in Boston where the room had not been cleaned. I found the last person's hairs in the bed, and their garbage in the trashcan. I got my room changed and only stayed there one night.

It used to be that you would be stuck in a disgusting room like that because, seriously, what kind of place were you going to find at the last minute? And how would you even find it?

Luckily, when those type of situations arise, now last-minute hotel booking application HotelTonight. The company has now secured $45 million in Series D financing, it was announced Thursday.

The round was led by Coatue Management, with participation from GGV Capital, Battery Ventures, Accel Partners, U.S. Venture Partners, and First Round Capital. The company had previously raised over $38 million, including a $23 million Series C from U.S. Venture Partners, with help from Accel Partners, Battery Ventures, and First Round Capital in June of last year. This latest round brings the company's total funding $80.35 million.

The money will be used in three ways, HotelTonight COO and co-founder Jared Simon told me in an interview.

The first will be to expand the company's geographical presence.

Right now, the service is available across North America and Western Europe, but HotelTonight wants to be "ubiquitous," he said, and that means expanding to new markets, especially Asia and Latin America.

But, before the company does that, there are still many places in its current markets that are not covered, and HotelTonight will focus on those areas as well.

The money will also go toward expanding and enhance the platform.

"We are the only end to end mobile-only hotel booking service, and so there is a lot we can do because we are mobile only," Simon said. That means enhancing the backend, including connectivity and logistics, but also offering more features for users.

"Out core value proposition is that the app is so easy to use, and we do that by curating results. A user wont see 500 hotels, but will see a heavily curated list that are perfect for them," Simon told me. "We can do a whole lot more to do with that personalization and ensure that the results are exactly what they wanted to see and what they needed 

More features will be coming out over the next few weeks and months to "ehance this personalization."

And, lastly, the money will go toward hiring new staff. The company currently employs 100 people, and it plans to double its product, sales and support staff in the next year.

"Writing great code, building great relationships with hotels, that requires great people," said Simon.

HotelTonight is a last-minute hotel booking app that lets users book same-day rooms on the cheap from their phone. The San Francisco-based company was founded in 2010 has seen significant growth in the past year. Since its Series C round, the company says that it had doubled the number of downloads of its mobile apps to over 6.5 million.

It also tripled its geograph reach, and is currently offering its app to customers in 12 countries and nearly 120 destinations. In addition the company has partnered with thousands of new hotels around the world, and now counts over 3,000 partner properties.

The company makes its revenue by taking a 20% commission when a hotel room is booked. While the company does not disclose its revenue, Simon did tell me that the company is set to make 300% more than it did last year.

The hotel booking space

A number of other companies in the space that have raised money in the last couple of years.

There is Hipmunk, a series of travel site, which raised raised $15 million in a Series B last year. In May, the company announced that users could now book hotels directly through the site or mobile app.

In January, hotel metasearch engine Room 77 raised $30 million in a Series C round, bringing its total raised to nearly $44 million.

And, in July, GetGoing, a travel site founded in January 2012 that lets you find discounted flights moved into the market for hotels.

The San Francisco-based startup, with backing from Y Combinator, Digital Sky Technologies, Lightbank and Data Collective, partnered with Expedia to get access to cheap rooms across 140,000 hotels worldwide.

Simon, though, does not see any of these companies as competitors. 

"The value of those sights is when you need a broad search. They allow you to compare across channels, when you have a lot of time to plan," he said. "They are for comparison shopping."

HotelTonight, on the other hand, is for when someone needs to make a spontaneous decision.

"Driving home or sleeping on a friends couch, those are our competitors because they are the alternatives to staying in a hotel," he said. "Lets say you live in Palo Alto, and you're in San Francisco and you've had a few drinks. You can take an Uber home or you can crash on someone's couch. We want to inspire people by offering them a great deal, so that it becomes so easy to book that they might as well spent the night there."

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