Founded in 2010, the brand has been built mostly with word of
mouth by driving impulse room bookings via smartphones to hotel
partners, including many boutique properties. In return for
steering people to the hotels, HotelTonight takes a 15% to 20%
commission. Users can book no more than seven days in advance.
Tactics include so-called "GeoRates" that are special discounts
targeted at users who are within a certain geographical radius of a
hotel or a venue. In New York, the app is offering special hotel
discounts for people attending events at Yankee Stadium or
Madison Square Garden.
HotelTonight is stepping up its marketing after it raised $37
million in venture capital funding that Reuters reported in May
will bring it one step closer to an initial public offering. "We
are bringing marketing to the table now in a much bigger way," said
Elias, formerly CMO for StubHub, who joined HotelTonight last
year.
HotelTonight says it became profitable last year with more than
$300 million in gross booking volume, according to figures shared
by the brand with Ad Age. It is nearing 24 million unique
downloads, according to the brand.
The goal of the New York campaign is to lure more first-time
users. The ads target local and regional residents because
convincing them to get a last-minute hotel is easier than changing
the habits of long-distance travelers, who tend to book weeks and
months in advance, Elias said. HotelTonight wants that business,
too. But to gain loyalty, the brand must change the behavior of
travelers who have been conditioned to bundle their trip planning
purchases -- including airline, rental cars and hotel reservations
-- all at once. Other online travel sites like Priceline have
seized on bundling.
HotelTonight only offers hotel rooms. Executives are pushing the
notion that it pays to wait before booking lodging.
"The fact of the matter is hotel prices go down over time and
airline prices go up. So you may get the best deal booking advance
on an airline but you actually get the best deal on a hotel by
waiting," Elias said. "That said, not everybody is comfortable with
that concept because they don't understand that the vast majority
of hotels have distressed inventory and are not fully sold and if
you wait you can get the best deals." So the new campaign seeks to
"get people using the app for those close-in situations," and over
time "they will expand how they use it," he said.
In 2016, 21% of U.S. hotel room revenue came from online travel
agencies, compared with 20% via hotel websites, according to travel
industry research group Phocuswright. By 2020, the share for online
travel agencies is forecast to grow to 23%.