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HotelTonight to New York: Get a Room!

Date: June 16, 2017

Summary:
If you are looking for a one-night stand, HotelTonight wants your business -- and is not embarrassed to say it. 

Body:
If you are looking for a one-night stand, HotelTonight wants your business -- and is not embarrassed to say it. Flush with new marketing dollars, the hotel room booking app is running an outdoor campaign targeting local and regional residents in the New York City area rather than long-distance travelers.

Slogans urge people to make last-minute overnight plans, including some that have a steamy undertone. "Keep the night going," says one ad, while another ad asks, "What happens after the after party?" Others are more practical, such as "Book some personal space" and "Skip the commute" -- an attempt to get people to spend money on a room rather than endure a train ride back to suburbia.

"Have fun in your own city. Explore your own home," HotelTonight Chief Marketing Officer Ray Elias said, summarizing the campaign. Does that include trysts? "Absolutely," he said, laughing. "We are having fun with the brand. We are cheeky. We will say it like it is and we are not shying away from that. We are a challenger brand so we've got to set ourselves apart."

Founded in 2010, the brand has been built mostly with word of mouth by driving impulse room bookings via smartphones to hotel partners, including many boutique properties. In return for steering people to the hotels, HotelTonight takes a 15% to 20% commission. Users can book no more than seven days in advance. Tactics include so-called "GeoRates" that are special discounts targeted at users who are within a certain geographical radius of a hotel or a venue. In New York, the app is offering special hotel discounts for people attending events at Yankee Stadium or Madison Square Garden.

HotelTonight is stepping up its marketing after it raised $37 million in venture capital funding that Reuters reported in May will bring it one step closer to an initial public offering. "We are bringing marketing to the table now in a much bigger way," said Elias, formerly CMO for StubHub, who joined HotelTonight last year.

HotelTonight says it became profitable last year with more than $300 million in gross booking volume, according to figures shared by the brand with Ad Age. It is nearing 24 million unique downloads, according to the brand.

The goal of the New York campaign is to lure more first-time users. The ads target local and regional residents because convincing them to get a last-minute hotel is easier than changing the habits of long-distance travelers, who tend to book weeks and months in advance, Elias said. HotelTonight wants that business, too. But to gain loyalty, the brand must change the behavior of travelers who have been conditioned to bundle their trip planning purchases -- including airline, rental cars and hotel reservations -- all at once. Other online travel sites like Priceline have seized on bundling.

HotelTonight only offers hotel rooms. Executives are pushing the notion that it pays to wait before booking lodging.

"The fact of the matter is hotel prices go down over time and airline prices go up. So you may get the best deal booking advance on an airline but you actually get the best deal on a hotel by waiting," Elias said. "That said, not everybody is comfortable with that concept because they don't understand that the vast majority of hotels have distressed inventory and are not fully sold and if you wait you can get the best deals." So the new campaign seeks to "get people using the app for those close-in situations," and over time "they will expand how they use it," he said.

In 2016, 21% of U.S. hotel room revenue came from online travel agencies, compared with 20% via hotel websites, according to travel industry research group Phocuswright. By 2020, the share for online travel agencies is forecast to grow to 23%.

But hotels are trying to slow the rise of online travel agencies by running campaigns urging people to book direct. For instance, Hilton Worldwide last year launched a campaign called "Stop Clicking Around" that urged viewers to book directly through Hilton's branded websites and plugged exclusive discounts for loyalty program members who book direct. Hilton described the campaign as "the largest ever launched in the company's 97-year history." While external sites bring business to the chains, the commissions they must pay eats into profitability. So it creates a frenemy relationship.

HotelTonight's sweet spot is independent boutique hotels, Elias said. "The way I look at it, we are not taking their customers," he said. "This is truly incremental." He also pointed to the brand's business model of targeting a seven-day booking window. "We are not out there three months in advance bidding on your hotel keyword names and gobbling up your customers before you've had a chance to try to acquire them," he said. "We are not building our brand on the backs of these other brands."

 

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