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many users. “Forty percent of hotel rooms are empty on any given night,” Shank says. “Generating demand is really hard. We worked really hard on it, and took care of the few customers we had.” Word of mouth and positive reviews helped, and today HotelTonight has been downloaded around 10 million times.
The app has its fans, but some users wanted a better sense of how much they should expect to pay if they bought their hotel rooms the day of their stay. If a potential user wanted to book a room for Saturday night, for example, checking prices on Wednesday probably wouldn’t give an accurate estimate.
So last week, the San Francisco-based company introduced a new feature called Look Ahead, which allows users to see prices seven days in advance. Though they still book their rooms the day of their stay, they’ll have notice about how much they might pay, as well as see hotel availability and the events that are happening in a given city, like a huge convention or marathon. “The idea of planning to be spontaneous is really important for how people are using the app,” Shank says. “We see people looking every day in a row leading up to the date, but that’s not necessarily the best way to get information about what rates are going to be like.”
Planning to be spontaneous may sound silly, but to Shank it makes a lot of sense. If you know, for example, that you have to work late in the city on Wednesday, it’s good to know how much it would cost if you decide you’d rather shack up in town than rush to the last BART train. If you know you want to head into New York City for a weekend of shopping with friends, but the date doesn’t matter, you can check prices and mobilize when you find a cheaper day to go. “We ended up building these tools to predict supply and demand,” he says. “We got those tools in a place where we felt really good about accuracy.”
Look Ahead is also helpful for convincing potential users afraid of sticker shock that buying a hotel room last-minute really is cheaper. “We could tell people that until we were blue in the face,” Shank says. “Being able to show people data around it allowed us to put our money where our mouth is.” The feature is currently available in New York, Las Vegas, Los Angeles, Miami, Washington, DC, Chicago, San Francisco, San Diego, and Dallas.
HotelTonight does compete with standard travel booking sites, but their missions are very different. And though a few startups with the same model have popped up in Europe and Asia—Spanish startup Hot Hotels just raised $1 million—Shank says they haven’t really been able to scale up to lots of users.
In the meantime, HotelTonight now offers lodging in 300 destinations. The company has grown over the last four years from a small team to 110 employees and raised $80.35 million from backers including Accel Partners, First Round Capital and Battery Ventures; the company also secured a private investment from Starwood Founder Barry Sternlicht in January, but it declines to disclose the amount.
Though most of HotelTonight’s competitors—travel sites like Expedia, Kayak (part of Priceline.com), TripAdvisor, and others—offer flights, rental cars, cruises and more, Shank plans to stick solely to hotel rooms. “It’s the largest category in the industry,” he says. “There’s a lot more profit in it, a lot more margin in it. We’re just laser-focused on that.”
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