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Airbnb to buy HotelTonight as it digs deeper into hotel booking industry

Airbnb wants to become the go-to place for anyone booking a trip, even if they want to stay in a hotel. The company, which has built a business valued at $ 31 billion by connecting travelers with owners with spare rooms, on Thursday announced plans to acquire the last-minute booking platform HotelTonight.

Airbnb will continue to manage the HotelTonight brand, including its website and booking app. HotelTonight CEO Sam Shank will now head Airbnb’s luxury hotel business line, and most of the company’s employees will join Airbnb, which has not disclosed the price of the deal.

This is a symbolic acquisition for the peer-to-peer travel company that has enjoyed a love-hate relationship with the hospitality industry for years. Even though Airbnb and the hospitality industry have fought fierce battles in cities like New York for the past 10 years, it has gradually warmed up to at least the luxury hospitality and boutique industry. In February 2018, Airbnb announced that hotels would be a separate category on its website. At the time, it already had 24,000 charming hotel rooms and more than 180,000 guest rooms. Those numbers have more than doubled in the past year, according to Airbnb.

The addition of HotelTonight will help Airbnb’s image of being a benchmark for more than just bespoke vacation homes or shared apartments. Started in 2010 by Shank, a travel entrepreneur, HotelTonight has become known for delivering great deals on last minute hotel bookings through its website and app. The San Francisco-based startup had already raised around $ 117 million in venture capital from investors such as Accel, Coatue Management and Battery Ventures. In 2016, HotelTonight achieved Forbes The next list of billion dollar startups after generating an estimated $ 60 million in revenue that year.

Play for business travelers

HotelTonight’s last-minute deals have also become particularly popular with business travelers, a market segment Airbnb has been trying to court for years. In San Francisco, for example, HotelTonight showed rooms at the Kabuki Hotel discounted from $ 769 to $ 162 for Thursday night. A Hampton Inn in San Francisco has reduced its rooms from $ 287 to $ 129.

There is already a cross between the boutique hotel brands that are listed on both Airbnb and HotelTonight, but there are no plans to immediately add the HotelTonight hotel inventory to the Airbnb website. Airbnb says hotels must meet its hospitality standards, so a chain like the Hampton Inn is unlikely to cut it.

Yet even having the option to book a chain hotel from an Airbnb-owned brand will be a major departure from Airbnb’s roots in shared and community-driven travel. Chesky has previously said he wants to get rid of Airbnb’s image as an alternative travel website.

“I like to joke that we are one of the greatest alternatives in the world,” Chesky said. Forbes in February 2018. “It’s very rare that 300 million people use something, and people say it’s an alternative. But it’s also rare that 300 million people use it and so many people say it’s not for me or that is an alternative.”

The company’s sinking into the hospitality industry also comes as it prepares to go public. Chesky has already pledged his company will be IPO ready by July 1, and the company has a high valuation it must comply with. Over the past few years, Airbnb has tried to expand its core business beyond homes and into new lines of business such as restaurant experiences and reservations. He also recently hired Fred Reid, the former CEO of Virgin America, to lead transportation experiments. With the acquisition of HotelTonight, Airbnb is also adding a last minute booking business.

To learn more about Airbnb’s big travel ambitions, read Forbes‘October 2018 cover story: “Old unicorn, new stuff: Airbnb has a sky-high valuation. Here’s his bold plan to win it. “