Airbnb is taking another step into the broader travel industry with a new expansion into boutique hotels. The company, which built its business on renting homes, has agreed to purchase HotelTonight for an undisclosed amount.
A travel app that helps users find last-minute hotel rooms at discounted rates, HotelTonight was valued at $463 million in March 2017, when it raised $130.7 million in funding, according to Pitchbook. Founded in 2010, the company has more than 250 employees and serves more than 1,700 cities and 40 countries.
Airbnb, which claims 6 million listings worldwide, says the acquisition helps the company accomplish three goals: accelerate plans to build an end-to-end travel platform, meet demand from and for boutique hotels, and attract more customers.
It could also signify Airbnb’s attempt to boost revenue as it faces rising competition, pushback from some of the markets it enters, and plans for a possible IPO later this year.
“A big part of building an end-to-end travel platform is serving every guest, whether they plan their trip a year or a day in advance,” Brian Chesky, Airbnb’s co-founder and CEO said in a statement. “Working with the incredible team at HotelTonight, we will offer guests an unparalleled last-minute travel experience.”
Over time, Airbnb plans to add HotelTonight rooms that meet Airbnb’s hotel standards its listings. Airbnb’s hotel standards include things like unique and local design, unique or locally relevant amenities, and an owner or manager that is available on the property at all times.
Airbnb’s purchase of HotelTonight comes as the company is working to expand into other areas of travel.
Last month, Airbnb hired the founding CEO of Virgin America Airlines Fred Reid to serve as its global head of transportation, a brand new role at the company. Reid is expected to develop partnerships and ideas that help Airbnb users with transportation.
In 2016, Airbnb launched “experiences” to provide users access to activities with local residents. In 2018, the company expanded locations for experiences and invested another $5 million into the project two years later.
After the acquisition is completed, HotelTonight will continue to operate as a standalone business. HotelTonight CEO Sam Shank will report to Greg Greeley, Airbnb’s president of Homes, and lead the company’s “boutique hotel category.”