Last-minute booking service HotelTonight confirmed that it has laid off 37 staffers in a round of cuts that hits 20% of its workforce.

“Today’s decision was about making the best choice for the company in the long term,” CEO Sam Shank said in a statement. “This agonizing decision is also the right decision.”

HotelTonight raised at least $81 million in venture funding through early 2014 and attracted a post-money valuation that is estimated to be $320 million. HotelTonight’s app for iOS is consistently in the top 20 travel apps.

Skift’s Dennis Schaal wrote extensively about HotelTonight’s prospects in a profile in August. At the time, Schaal wrote:

As HotelTonight approaches its fifth birthday in December, skeptics see its brightest days as being behind it as big competitors have caught up. After disclosing more than $81 million in venture funding through early 2014 and attracting a post-money valuation of perhaps $320 million or so, HotelTonight can’t possibly grow fast enough in the face of such competition to bring substantial returns to investors and make a successful exit, critics charge.
But the jury is out and likely won’t issue a verdict on the exit strategy issue for several years, and some admittedly bare bones performance statistics from HotelTonight tell a different story.

Although investors and analyst expressed doubts, hoteliers were relatively enthusiastic in the support for the company. HotelTonight was winning favor with hoteliers by pre-buying rooms during peak periods, setting the price, and sharing any upside above the net rate but minus HotelTonight’s commissions.

Full text of Shank’s statement:

Today my leadership team and I made a decision to reduce our staff by 20% – 37 people. Decisions like this one are never easy, but they are necessary. At a startup especially, it’s critical that we have the right people in the right roles in order to stay on track, and hit our growth and revenue targets. But this is also a decision that affects people’s lives, and we’re painfully aware of that.

Compounding the difficulty of this decision is that we’ve built an amazing company culture here. We like each other and we spend time together, which made today’s move especially difficult. The people who left today made amazing contributions to our success, and we’ll miss them. We’ve made plans to ensure they have as easy a transition as possible, including a generous exit package that will pay them through the end of the year.

This decision was hard, but it was also necessary: HotelTonight is now a more streamlined and focused company. We’re well-equipped to accomplish our mission to help people live a more spontaneous life. The business is doing very well: We grew over 100% in booking volume this year. Word of mouth drives the majority of this growth, which tells me we’re achieving our goal to give people a fantastic experience. We’re on track to reach profitability next year. We’ll continue innovating and providing value to our customers and hotel partners.

Today’s decision was about making the best choice for the company in the long term. This agonizing decision is also the right decision. We thank everyone at HotelTonight for your contributions, which have been invaluable, and wish you the very best.

Photo Credit: Sam Shank, CEO of HotelTonight, speaking at the Skift Global Forum in New York City on October 9, 2014. Skift