HotelTonight bags $23M to get you a hotel-tonight

Faith Merino · June 5, 2012 · Short URL:

The mobile app is a rising star in the world of travel services

True story: the first time I went to Paris on my own, I somehow managed to navigate the airport and subway system all by myself, found my way to my hotel with my suitcase that weighed as much as a 10-year-old, only to learn that I had booked a room for the wrong date.  I actually booked a room for the night before—forgetting that the red-eye flight would not land me in Paris the same night I left. 

So for people like me who struggle with the time-space continuum, there’s HotelTonight, a last-minute hotel booking app that lets users book same-day rooms on the cheap from their phone.  The San Francisco-based startup announced Tuesday that it has raised a $23 million Series C round led by U.S. Venture Partners, with help from Accel Partners, Battery Ventures, and First Round Capital.  The new funding brings HotelTonight’s total raised to $38.85 million since it was founded in 2011.

What’s cool about this app is that it does exactly what it says it does: it gets you a hotel—tonight.  And it does it without needing much input from you.  Where booking with Expedia or some other online company requires planning ahead, HotelTonight uses your location to find available rooms nearby at deep discounts—up to 70% off the standard price.  And it’s a win for hotels, who can fill unsold rooms at the last minute.

The app, which is available for iPhone and Android, currently operates in over 40 cities nationwide, as well as Toronto and Vancouver, and has gotten over two million downloads to date.

CEO Sam Shank tells me that HotelTonight’s core audience consists of early adopters and urbanites between the ages of 25 and 35.

And since I’m a neurotic planner (apparently with no grasp of time zones and long-distance travel), I had to ask Shank when and why people use this app.  Doesn’t everyone plan their trips months in advance and then explode in a fiery rage when everything falls apart at the last minute?

“Ever been racing through traffic to another peewee sporting event while dreaming about that date night that always gets pushed back? Or had a big sales opportunity in a nearby city be rescheduled for tomorrow morning? Or wanted to turn a dinner in the city into an impromptu stay-cation? These are just a few of the countless predicaments that might cause you to want to book a room for the night – and that's where HotelTonight comes in,” he explained.

While he would not comment on the company’s financials, he did say that HotelTonight makes money on every transaction by taking a commission.  The service is free for consumers while hotels pay a cut to HotelTonight.

A recent survey from TripAdvisor found that 60% of mobile phone users have downloaded a travel related app, and 42% have used travel apps to research or book a hotel stay.

HotelTonight isn’t the only hotel-booking app on the block.  It’s contending with some big names, like Priceline and Hotwire.  But HotelTonight’s focus on last-minute bookings means users have to actually wait until noon to book a room that night, which equals cheaper rates and filled rooms for hotels.

The company plans to use the new funds from this round to build out its team—specifically in the sales, marketing, development, and customer service departments—drive product innovation, and expand internationally.

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