Four in ten hotel rooms around the world remain empty each night – even in big-name places like Berlin’s famous Adlon. And that’s exactly where Sam Shank, co-founder and CEO of San Francisco-based startup HotelTonight, stayed when he arrived in town last week ahead of his company’s launch into the German market.
Shank is announcing the initial expansion into Berlin, Munich, Zurich and Geneva at the DLD conference which kicks off in the southern German city today, having been in the capital to take part in hy! Berlin – and showing off his company’s app by refraining from booking accommodation until after he had arrived.
Founded in December 2010, HotelTonight hand picks around 15 hotels across different price brackets (Basic, Hip and Lux) in each new city it enters, basing its decision on user ratings. Then each day at midday, the mobile app (Android and iOS) displays which hotels have the best deals for that night, offering one in each price range and those closest to you. Users can then choose and book a room within ten seconds – confirming the booking by tracing the outline of the HotelTonight logo.
Currently, the service is available in around 65 American cities and 15 across Europe, including London, Paris and Amsterdam. The launch into Germany and Switzerland comes shortly after the release of the localised German-language app.
HotelTonight sells its service to hotels as being a great way of filling rooms as well as gaining new customers – while users get great deals. But it depends on generating demand; persuading people to stay in a hotel who otherwise wouldn’t bother.
Talking to Silicon Allee ahead of the launch, Sam Shank said: “Every night, you have to sleep somewhere, and sometimes at the very last minute you don’t have a place to stay. In Germany, the usecase may be that you had a last minute change of plans, or an emergency or a business trip that got changed. Or it could be that you are having a really nice night out and you say, hey, let’s not go home; let’s stay in a hotel. And that’s a usecase that we really developed for the hotel industry. We were saying, there are people that are out and about; if you get the right deal to them at the right time, they might book a room for you instead of going home, so we’re going to create a demand for you.”
HotelTonight faces stiff competition from established online travel agencies such as Expedia and Booking.com – which has a Tonight app aimed at the same market – but it has proven to be a success despite initial reluctance on the part of investors and potential customers, who Sam says usually need to look at the hotels on offer several times over the course of a few days before getting with the idea of booking accommodation so late.
“People get comfortable with it,” Sam added, “but we got kicked out of probably ten VC firms where they said this is crazy, I will never use it, it’s never going to work. And now we have four million downloads, we’ve got $35 million in venture funding, we’ve got 2,000 plus hotels that sell their rooms on a weekly basis on HotelTonight. So we have proven that it works.”
The curation aspect of the hotels is interesting – with bigger, more general hotel finding platforms, there can be hundreds which show up if you are in the middle of a large city. HotelTonight, however, has a team selecting which hotels they want to use, with editorial content and images for each one.
But Sam believes that they also face competition from people not wanting to book a hotel room at all: “It’s abouts encouraging people to say, let’s be spontaneous, let’s trust HotelTonight, and say instead of going home which will cost us €60, we’re going to stay in a hotel room for €80, and our life is going to be a lot more fun.”