Partnerships / Acquisitions

Airbnb Buys Hotel Tonight

Airbnb Buys HotelTonight For More Travel Options

Home rental marketplace Airbnb has acquired Hotel Tonight, a company that aids travelers in finding discounted hotel rooms, according to a report from Reuters.

The move is a step toward expanding Airbnb’s business and attracting a wider customer base, including those who like to travel but might not like the idea of staying in someone’s personal home.

With the new acquisition, Airbnb is in direct competition with more traditional travel sites like Expedia, Travelocity and Priceline. Airbnb’s inventory will now grow to include hotel listings, but they will be separate from the site’s home listings.

The terms of the deal weren’t disclosed, but Hotel Tonight’s last valuation was $463 million in 2017, and it has raised upwards of $115 million in funding.

Airbnb Chief Executive Officer Brian Chesky said buying the hotel site was “a big part of building an end-to-end travel platform.”

Airbnb said many of its guests use the platform for business and last-minute travel, which translated to same-day bookings doubling year over year.

The company has been steadily expanding beyond home rentals, a sector where regulations allow only short-term rentals, thus limiting growth. The expansions include tours, activities, restaurant reservations and luxury homes. Airbnb also recently added boutique bed-and-breakfasts to its roster.

HotelTonight, which is based in San Francisco, started as a way for travelers to get last-minute deals on unsold hotel rooms at discounted prices. It has since expanded to allow advance bookings.

Although the company is not a marquee name, it is now profitable after spending much of 2016 trimming expenses. CEO and Co-founder Sam Shank said the company went from burning through between $2 and $3 million a month to earning a profit. He said the acquisition will bring “more choices and the world’s best boutique and independent hotels a genuine partner to connect them with those guests.”

One source told CNBC that Chesky and Shank have been friends for years, and they feel like “Davids going against the Goliaths of the hotel industry.”

The plan is for both sites to operate independently, with the Hotel Tonight website continuing to exist as its own entity. Airbnb plans to add boutique hotel rooms to the Hotel Tonight site in the future. Most Hotel Tonight employees will keep their jobs.

Airbnb is valued at $31 billion and is profitable. The company is preparing for an IPO this year and has acquired a few different tech companies in hopes that investors will focus on its growth capabilities.

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