Skift Take

You can't make this stuff up. Airbnb's payout to HotelTonight of 3.2 million shares didn't appear very attractive when Airbnb's business almost collapsed in the spring. On paper, though, it's all looking very good right now.

When Airbnb acquired HotelTonight in 2019 for what Skift described as “more than $400 million,” with about half in stock, the exit appeared to be humbling for the much-hyped startup.

Consider, too, what HotelTonight investors and management must have thought in the spring of 2020 when Airbnb took its potential IPO back into a drawer, and then the homesharing giant’s revenue dropped about 80 percent.

But there’s nothing like a record-setting IPO — the largest travel company stock market debut in history and the largest IPO of the year — to turn around a narrative. After all, Airbnb’s private valuation nosedived to around $18 billion during the onset of the pandemic, and its market cap has flirted with $100 billion during its first two days of share trading.

In its registration statement Airbnb disclosed: “The Company acquired all outstanding shares of HotelTonight for a total purchase consideration of $441.4 million funded primarily with cash and 3.2 million shares of the Company’s Class A common stock.”

Skift Research Senior Analyst Seth Borko, who noted at the time of Airbnb’s buy of HotelTonight in 2019 that the startup’s valuation had room to grow pending Airbnb’s IPO, crunched the numbers on what the Airbnb share price means for HotelTonight’s investors at this moment.

“Airbnb paid $204 million of stock to HotelTonight — today worth $480 million. The purchase price goes from $441 million to $718 million if you use a $148 ABNB price per share,” Borko tweeted.

HotelTonight declined to comment on the Airbnb’s IPO and its implications.

HotelTonight broke new ground in being a mobile-only company, and offering the sleekest hotel-booking app on the planet when it debuted in 2010. It had grand ambitions but ran into the Google buzzsaw, and competition from the larger online travel agencies. So one can debate if even $718 million was disappointing given HotelTonight’s potential and ambitions.

But it sure looks better for the moment than $441.4 million.

Skift reported in 2017 that HotelTonight generated about $60 million in 2016 revenue, and that mark was presumably considerably higher when Airbnb pulled the trigger and bought HotelTonight in 2019.

Along with HotelTonight, as well as Airbnb employees, who will be able to exercise long-held stock options in coming months, there are probably several other startups that Airbnb purchased that are basking in the IPO this week.

Airbnb said in August 2019 it issued 581,740 shares of its Class A common stock and 735,620 restricted shares to acquire Urbandoor.

In 2017, Airbnb paid $224.1 million for Luxury Retreats in cash and stock.

After acquired about two dozen startups since its founding, many of which received the payout at least partially in Airbnb pre-IPO shares.

There must be a lot of champagne glasses clinking in startup land this week.

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Tags: acquisitions, airbnb, hotels, hoteltonight, Luxury Retreats, m&a, mergers, startups

Photo credit: Sam Shank (left), Airbnb head of hotels and HotelTonight CEO, speaks at Skift Global Forum in New York City on Sept. 19, 2019. Skift

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