After acquisition, will mainstream brands shun HotelTonight?

The major hotel brands can be expected to look skeptically at HotelTonight as the last minute booking site becomes part of their longtime antagonist, Airbnb. But the chains are unlikely to boycott it all together, analysts say.

The question may be academic, analysts say, because mainstream brands represent only about 10% of listings on HotelTonight. And Airbnb won’t exactly be chasing the big brands as it builds out a platform that features independents and caters to leisure and price-conscious travelers.

“Airbnb doesn’t want cookie-cutter hotels,” said Dan Wasiolek, senior equity analyst at Morningstar. “They’re building out their site with boutique hotels and enabling smaller operators to compete.”

San Francisco-based Airbnb announced March 7 it would acquire HotelTonight, accelerating its quest to become an “end-to-end travel platform,” and meeting demand for boutique hotels with the special personalities it says travelers increasingly prefer.

The acquisition is part of an industrywide consolidation as the major brands add products and geographic locations to offer one-stop shopping for travelers and build customer loyalty. “It’s about adding more dots on the map,” said Michael Bellisario, a hospitality industry analyst at Robert W. Baird & Co. “There’s an arms race for growth and scale.”

Indeed, the diversification could make Airbnb more valuable as it prepares for an IPO, said Bjorn Hanson, a professor at New York University’s Tisch Center for Hospitality and Tourism. “They stay close to their line of business but add revenue.”

Even as the home sharing craze has forced the hotel brands to add their own private home and apartment listings, the hotel industry has railed against Airbnb, arguing that the home sharing service avoids the regulations, taxes and safety standards that apply to traditional properties. The American Hotel & Lodging Association said in a statement that the acquisition of HotelTonight is “further proof the company is playing in the hotel space while evading industry regulations.”

“HotelTonight is not a partner of ours,” a Marriott spokeswoman said. A spokesman for Hilton said he doesn’t believe the company has a direct relationship with HotelTonight and “our focus will always be on creating direct relationships with our customers, so we can offer them the best price, perks, and more customized service. But he added, “we are committed to selling where consumers want to shop, and we believe online travel agents are an important part of the booking landscape.”

The brands are unlikely to encourage owners and operators to use HotelTonight but probably won’t stand in the way, Hanson said, adding, “The brands can’t say no if a hotel needs a way to get last-minute revenue.”

Bellisario agreed that the brands will honor management company preferences “If revenue managers believe posting rooms on HotelTonight will generate incremental demand, they’ll continue to use it,” he said “Owners care about the bottom line.”

The Airbnb announcement came a week after a HotelTonight competitor, One Night, announced it had received US$5 million in Series A funding. The app offers discounted last-minute bookings at independent hotels, and President Jimmy Suh said he doubts independent owners and operators are “jumping with joy,” since Airbnb has been a traditional adversary.

It’s challenging for a platform to curate its offerings while at the same time seeking scale, Suh said. “This inspires us to double down on our commitment to keep the curation and the aspirational value that guests seek in independent hotels and that hotels seek in their distribution partner.”