HotelTonight, a last-minute hotel booking service, announced this week that it would be reducing its staff by 20 percent.
These layoffs come on the heels of a weak Q3 performance by the startup and steepening competition from booking services, both large and small, honing in on the last-minute space.
In a statement from a company spokesperson (shared by Re/code), HotelTonight denied that the layoffs were a result of financial belt-tightening and said, “The company is streamlining to better focus on customer needs. But nothing will change for our hotel partners or our customers.”
The Re/code story also includes a statement from HotelTonight CEO Sam Shank, which read in part: “Today’s decision was about making the best choice for the company in the long term.” Acknowledging that the decision was a hard one, Shank added, “We like each other, and we spend time together, which made today’s move especially difficult. The people who left today made amazing contributions to our success, and we’ll miss them.”
Founded in 2011, HotelTonight raised more than $80 million in 2014, in addition to the $45 million round it closed in Sept. 2013 that was led by Coatue Management, with participation from GGV Capital, Battery Ventures, First Round Capital and Accel Partners.
This hefty influx of capital helped skyrocket the service into prominence and contributed to a banner year, according to Shank. “We grew over 100 percent in booking volume this year,” he said. “Word of mouth drives the majority of this growth, which tells me we’re achieving our goal to give people a fantastic experience. We’re on track to reach profitability next year."
However, in July 2015, Google released an instant booking service, which runs from its omnipresent search engine, allowing browsers to book hotels directly from Google search results. This offering, with similar convenience to HotelTonight’s mobile app and simple desktop interface, has undoubtedly taken a bite out of the startup’s business.
In a seeming effort to stay competitive, HotelTonight has since introduced new features, including a personal concierge for travelers. But as the field of competitors continues to thicken with new names like Hipmunk and Jetsetter, in addition to well-known travel industry staples like Expedia and Priceline, it seems HotelTonight may be losing its footing and its mission to “help people live a more spontaneous life.”
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