Airbnb is buying into the hotel industry by acquiring HotelTonight

That hotel thing is looking pretty good after all.
That hotel thing is looking pretty good after all.
Image: REUTERS/Mike Segar
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Airbnb is buying its way into the hotel industry.

The $31 billion home-sharing site said today (March 7) it had signed a deal to acquire HotelTonight, a curated booking site for boutique and independent hotels. The companies will operate as separate brands for now, while over time it will add select boutique HotelTonight rooms to the Airbnb platform.

The deal price was not disclosed. HotelTonight’s fundraising round in 2017 valued the company at about $460 million.

The acquisition follows Airbnb’s efforts to add more professional and curated listings—more hotel-like, you might say—to its site ahead of a rumored initial public offering. In January, Airbnb said the number of rooms available on its site that hosts classified as hotels, bed and breakfasts, hostels, or resorts increased 152% over the previous year, though it didn’t provide the underlying numbers on that inventory.

HotelTonight curates listings from boutique hotels and the occasional hotel chain. The company is beloved by millennials for its mobile app, which offers limited-time deals designed to trigger a decision and help buyers avoid getting lost in the vast universe of online booking options. The company makes money by taking a cut of bookings generated through its site.

It’s easy to see why hotel bookings are attractive to Airbnb: The listings make it easier to accommodate customers with last-minute travel plans, which can be difficult for Airbnb hosts renting out a home or spare room. Hotel listings also create strong customer retention, with nearly 90% of guests who initially booked a hotel room returning to the site for their next trip, according to Airbnb.

“A big part of building an end-to-end travel platform is serving every guest, whether they plan their trip a year or a day in advance,” Airbnb CEO Brian Chesky said in a press release. “Working with the incredible team at HotelTonight, we will offer guests an unparalleled last-minute travel experience.”

The Wall Street Journal reported in January that Airbnb had held talks to buy HotelTonight (paywall), but that negotiations had stalled. The Journal reported that Chesky was seeking other ways to expand Airbnb after a costly foray into “experiences”—local activities like tours and cooking classes designed to get guests to increase their average spending on a trip—had so far failed to generate much revenue.

The deal could reassure investors as Airbnb eyes an initial public offering (or a direct listing). Risks to Airbnb’s business likely include competition from major online travel booking platforms like Expedia and (Airbnb recently bragged that it had more listings than, at 6 million compared to 5.7 million). The company also continues to do battle with cities over how its short-term home rentals should be regulated, putting the business at risk in some of its biggest and more important markets, like New York City, Paris, and Barcelona.

Airbnb was founded in 2008 as an explicit alternative to hotels, but in recent years company has inched closer to hotel-like listings and operating practices. The company invited boutique hotels and actual bed and breakfasts to join its site in December 2017. The following year, it unveiled a curated, pricier tier of “plus” listings, vetted for amenities and guest experience on an 100-point scale.

“We welcome listings hosted by professional hospitality providers on Airbnb as long as they offer unique spaces and personal hospitality to the Airbnb community,” Airbnb says on the help portion of its website, in a section titled “What are Airbnb’s standards for hotels?” The company says it looks for guest rooms “with personal touches” and “spaces that incorporate local influences.”

In other words, Airbnb wants in on hotels, but it isn’t ready to book rooms for Hilton and Marriott quite yet.