Awaiting Hotel Tonight's imminent arrival to Asia

Awaiting Hotel Tonight's imminent arrival to Asia

In the last several years we've seen a surge in new mobile apps that allow travelers to book hotels for same day arrival.  Headliner apps that recently emerged include Hotel Tonight, Hotel Quickly, and Blink.  In fact, last minute and same day bookings have become such a hot topic that most of the traditional heavy hitters have also jumped in on the feeding frenzy.  Priceline has its Tonight Only deals, and Hotels.com has its Local Deals for Tonight, and recently Hipmunk launched its own Tonight Only deals.  This space is getting more crowded as travelers quickly migrate to mobile platforms.

(Sep 9 update - Blink just bought by Groupon)

Of the new mobile apps, one of them seems to be breaking away from the rest of the pack.  Hotel Tonight, a product of San Francisco, just received another $45 million in funding.  Despite growing skepticism that some of these last minute booking apps won't be around much longer, Hotel Tonight's funding seems to validate not only its existence but actually underscores its future growth potential.  So where will its future growth come from?

The obvious answer is global expansion.  When I whip out the app here in Singapore, I'm told that I'm too far away from any destinations where Hotel Tonight has deals.  Hotel Tonight has roughly 3,000 hotel partners in North American and European destinations, and it won't be long before they start making room for popular Asian cities and resorts.

Having millions in its war chest will help spur product innovation and marketing strategies and ultimately make the penetrating road to Asia a bit smoother.  But the money won't buy the strong relationships with hotel suppliers the company needs in order to get the best last minute rates for customers.  To build up their relationships (and relevance) with suppliers, Hotel Tonight will need to demonstrate its ability to drive last minute demand when they need it the most.  This won't be so easy since the company's existing demand profile is largely from North America and Europe, and data shows that the long haul traveler typically makes hotel bookings well in advance.  To be relevant in the same day or last minute window, Hotel Tonight will need to localize its app across the fragmented Asian nations to tap the growing local demand from domestic or intra-region travelers.  After all, these are the travelers that not only book at the last minute, but they book in volume.  Competition is hot though, and Asia is home to Agoda, Hotel Quickly, and Check In Tonight who have been sourcing deep hotel discounts on mobile platforms for a couple years already.

Apart from global expansion, I can see Hotel Tonight increasing their bookable inventory beyond same day arrival.  Although this will deviate from its current consumer messaging of booking a hotel for tonight (as the comapny name clearly suggests), I believe that adding inventory for a last minute booking window of within 7 days or so would still maintain a clear value proposition to both bookers and hotels.  I estimate that more than 50% of online bookings are made under seven days prior to arrival, so the size of the opportunity in this booking window is tremendous . . . especially for a company that has to date limited its focus to just same day arrival.

No Asian cities for now.  No . . . San Francisco and Vancouver don't count as Asian cities!