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Airbnb Acquires HotelTonight As Part Of Expansion In Hotel Booking Industry

SAN FRANCISCO (Reuters) – Rental accommodation firm Airbnb has bought HotelTonight, an app for finding hotel rooms at discounted prices, as it digs deeper into the hotel reservation industry for attract a wider variety of travelers ahead of a much anticipated initial public offering.

FILE PHOTO: The Airbnb logo is displayed at an Airbnb event in Tokyo, Japan, June 14, 2018. REUTERS / Issei Kato

The acquisition, announced Thursday by Airbnb, expands the company’s inventory by adding a number of hotel listings, long considered Airbnb’s nemesis, and is part of a strategy to convince travelers who have avoided risks and oddities. to rent a foreigner’s house.

The offer to become a more traditional one-stop-shop travel service for tourists puts Airbnb more squarely in competition with big travel sites like Expedia Group Inc and Priceline.

Airbnb declined to provide the terms of the deal.

HotelTonight has raised over $ 115 million in funding and was last valued at $ 463 million in funding around 2017.

Airbnb chief executive officer Brian Chesky called the acquisition “a big part of building an end-to-end travel platform.” Airbnb has gradually established itself in new businesses outside the home, whose growth is threatened by regulations that cap short-term rentals.

The company has added tours and activities, luxury residences and restaurant reservations and continues to add transportation services. At the start of last year, it made changes to its site to make it easier for boutique hotels and guesthouses to list their rooms.

In 2018, Airbnb more than doubled the number of rooms available at hotels, resorts, hostels and similar locations. As a result, the company recorded three times as many hotel room bookings in 2018 compared to 2017, often by first-time Airbnb users, the company said. And more and more people are booking Airbnb rooms or homes at the last minute, many of them business travelers, the company said.

Last minute booking is the perfect place for HotelTonight. The San Francisco-based company recovers unsold inventory from hotels and offers discounted rooms to travelers, often targeting business districts and urban areas. It started as a same-day room reservation service, but now allows users to book months in advance.

Although the company has struggled to differentiate itself from the travel booking giants, HotelTonight is profitable. He spent much of 2016 cutting losses through layoffs and eliminating costly promotions to go from $ 2 million to $ 3 million a month at a profit, CEO and co-founder Sam told Reuters. Shank. But it faced immense pressure from investors to grow in a crowded industry.

HotelTonight’s listings include big hotel chains like Sheraton and Hyatt that Airbnb says won’t have space on its site. Airbnb and HotelTonight will operate as separate entities, Airbnb said, with HotelTonight retaining its own app and website. Over time, Airbnb will add some Boutique HotelTonight rooms, but will not change its standards for hotel listings.

Airbnb has been one of the most active acquirers among popular tech companies funded by venture capital. Valued at $ 31 billion and profitable, it is gearing up for an IPO this year, and investors will focus on its growth prospects.

According to a person familiar with the terms of the deal, three HotelTonight executives whose roles do not continue after the acquisition will be out of work, while the remaining employees will join Airbnb.

Reporting by Heather Somerville; edited by Dan Grebler and Grant McCool