Last-minute hotel-booking apps, from HotelQuickly to HotelTonight, are reworking their customer-acquisition or unit-economics strategies now that all of the major players, from Booking.com and Kayak to Expedia, have introduced comparable products. The current phase may portend slower, but more sustainable growth.
Is this just part of the maturation process or a shakeout in the tonight-only and last-minute hotel-app sector?
Four months after U.S.-based HotelTonight layed off about 20 percent of its staff in a quest for profitability, Thailand-headquartered HotelQuickly fired 10 marketing team members, which was more than 10 percent of its staff prior to its acquisition last month of the Japanese last-minute app, Tonight.
Tomas Laboutka, HotelQuickly’s co-founder and CEO, says the app’s coverage has expanded from six countries to 16 in Asia-Pacific and the layoffs were part of a “strategy adaption,” which including consolidating teams in its Bangkok headquarters to focus more on product marketing as the company “reprioritizes our user-acquisition processes.”
HotelQuickly, which has been live for around three years, had been doing a lot of TV advertising and using outdoor signage, including in airports, to build brand awareness. The 10 marketing employees that were let go focused on partnerships and offline advertising, Laboutka says.
“These team members did a tremendous job over the past years in helping us to get to our current stage,” Laboutka says. “However, we are now in a position to accelerate and grow on more scalable channels that previously we weren’t able to maintain due to lower volumes in traffic.”
Asked to elaborate on the strategy, Laboutka says: “We’ve looked at the historical performance, analyzed what drove the business in 2014 and 2015, and decided where we want to put our focus on going forward. We are now in a position that we can maintain channels that previously were too expensive, but with economies of scale make sense.”
“This was a management decision and is fully supported by our investors,” he adds.
HotelQuickly has raised about $5.6 million in funding, according to Crunchbase.
HotelQuickly’s website lists about a half-dozen open jobs, including for developers and engineers in Bangkok. “We have many open positions and we’re strengthening our market management and product teams,” Laboutka says.
Hot Hotels Thinks Shakeout Affirms Its Strategy
Officials from Hot, the last-minute hotel-booking app that was founded in Spain, point to developments at HotelTonight and HotelQuickly as a confirmation of its “indirect” strategy, namely partnering with third parties such as metasearch sites for distribution.
A direct-selling strategy, such as employing lots of account managers to sell to and handle hotel relations, is not sustainable, Hot officials argue.
“The sector is maturing for sure and the land grab growth focus is now fading to a realization that the unit economics matter most,” says Conor O’Connor, CEO of Hot.
Referring to the relatively small Hot team’s expansion to the U.S., O’Connor adds, “We also relied more heavily on and invested more in technology and automation rather than expanding out marketing and contracting departments.”
In 2015, Hot moved its headquarters to Boston and participates in Techstars Boston.
HotelTonight Wants to Have It Both Ways
When Skift reported, based on a re/code podcast, earlier this week that HotelTonight is trying to renegotiate margins with hotels and had opted to slow its growth in order to focus on profitability, a spokesperson for HotelTonight claimed we had it all wrong.
The spokesperson cited a quote from HotelTonight CEO Sam Shank in the podcast that “We didn’t focus on unit economics I think early enough…now that we are, we can focus on growth and profitability at the same time.”
However, as countless startups can ascertain, there is a built-in contradiction between pouring money into marketing and growth and trying to get to profitability.
There is nothing wrong with changing strategy — as HotelQuickly is finding out, as well.
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Photo credit: Thailand-based HotelQuickly has fired 10 marketing employees as it reworks its customer-acquisition strategy. HotelQuickly