{"id":3672,"date":"2017-02-24T15:29:12","date_gmt":"2017-02-24T20:29:12","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/the-procrastinator-gets-the-worm-hoteltonight-creates-a-win-win-for-hotels-and-last-minute-travelers\/"},"modified":"2017-02-24T15:29:32","modified_gmt":"2017-02-24T20:29:32","slug":"the-procrastinator-gets-the-worm-hoteltonight-creates-a-win-win-for-hotels-and-last-minute-travelers","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/the-procrastinator-gets-the-worm-hoteltonight-creates-a-win-win-for-hotels-and-last-minute-travelers\/","title":{"rendered":"The Procrastinator Gets the Worm: HotelTonight Creates a Win-Win for Hotels and Last-Minute Travelers"},"content":{"rendered":"

The Platform<\/em><\/strong><\/p>\n

Launched in 2010, HotelTonight is a mobile application that connects travelers seeking last-minute hotel accommodations with hotels eager to monetize vacant rooms. Unlike competitors in the travel industry focused on traditional bookings via a web-based platform (i.e. Priceline, Booking.com), HotelTonight strategically chose a mobile-first \u2013 in fact, mobile-only \u2013 platform to capture the increasingly prominent spontaneous travel market. True to its name, HotelTonight initially offered discounted hotel bookings for the upcoming 24 hours in just three cities. Given the company\u2019s model has powerful indirect network effects, it focused on gaining scale in hotel partnerships, geographies, and users. Today, millions of users can choose from 15,000 hotels in hundreds of cities in 35 countries.[1]<\/a> Its most recent rumored valuation was greater than $300 million and the company reportedly turned a profit in 2016, a feat countless billion-dollar-valuation platform businesses fail to claim.[2]<\/a> By building and sustaining a platform that expands the hotel marketplace and createsvalue for both accommodators and travelers, HotelTonight creates a defensible and differentiated role in the industry.<\/p>\n

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Value Creation<\/em><\/strong><\/p>\n

In the two-sided hotel marketplace, HotelTonight has to worry about generating both supply and demand in order to increase the value of the platform. On the supply side, the value creation is relatively straightforward: the platform creates a new way for hotels to monetize unsold rooms. Over the past five years, U.S. hotel vacancy rates have averaged 37%.[3]<\/a> Decreasing this statistic even marginally equates to significant dollars for hotel sales managers. CEO Sam Shank has shared that after convincing a hotel to join the platform, if HotelTonight can show a small incremental bump in bookings and revenue within three months, the hotel will be committed to remaining on the platform.[4]<\/a> Additionally, as the platform gains scale and travelers become more comfortable with last-minute books, it becomes a competitive disadvantage for hotels to be absent from the marketplace.<\/p>\n

Generating demand is slightly more complicated. Using HotelTonight allows users to garner cheaper rates at quality hotels. The app aggregates data of vetted hotels and makes it easy to compare and ultimately book within a very user-friendly, mobile-first interface. The catch is that users must be comfortable with gambling on availability and with not being loyal to a particular chain. To counter these sacrifices, HotelTonight has strengthened its platform with innovations that bolster its value proposition.<\/p>\n