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Airbnb buys HotelTonight to build ‘end-to-end travel platform’

Analysts believe the company needs to expand and diversify before going public

Illustration with text “airbnb” against pink and blue graphics. Curbed illustration by Alyssa Nassner

Airbnb has signed an agreement to acquire HotelTonight, the San Francisco-based company that uses an app to sell last-minute, unused inventory at boutique and independent hotels. Negotiation talks were first reported by the Wall Street Journal, though at the time, the story suggested talks had “gone cold.”

The purchase illuminates how Airbnb, which is planning a public IPO, may be looking to boost growth potential and diversify, as a means of attracting investors. Purchasing a hotel booking site, or even buying hotels, analysts suggest, is an important step before going public, now likely to happen in 2020.

HotelTonight was previously valued at $463 million in March 2017, after a $131 million funding round, and is thought to be worth much more now. Airbnb, which was valued at $31 billion after its last funding round in March 2017, needs to broaden its offerings.

Many of the lodging company’s recent moves, including Airbnb Plus, a luxury offering, an initiative to reach business travelers, and its Experiences program (which hasn’t lived up to expectations), have been efforts to mimic the services and standardization of traditional hotel chains.

The company already lists hotels—The Wall Street Journal also added that Airbnb announced that it expanded its listing of boutique hotels by 152 percent—and buildings customized for home-sharing sites (via initiatives like Niido), advising developers who are adding inventory to home sharing sites.

Jan Freitag, senior VP for lodging insights at STR, a global consultancy focused on the hospitality industry, told Curbed last year that he believed the site was becoming more like an online travel agency (OTAs) or platform, such as Expedia or Priceline, and might be able to undercut these types of lodging sites. Since Airbnb charges just 3 percent commission to host, compared to the 9 to 10 percent charged by other OTAs, it’s an attractive proposition.

“If I’m Airbnb and looking at going public, knowing I’ll be under more scrutiny, and looking for more growth to satisfy Wall Street, I’ll do the math and say, how do I add the growth to make investors happy?” Frietag said. “Hotels. It’ll start with a few rooms in boutique hotels, then move to all brands that have a cool reputation. And then, why not any hotel?”