Is there enough growth in the last-minute or same-day hotel booking app space? With HotelTonight raising $45 million in Series D funding earlier this month, the consensus amongst the Silicon Valley investment community would appear to say yes. But one player, Berlin-headquarted JustBook, which is backed by European VCs Index Ventures and DN Capital, has had a change of heart.
Timed to co-incide with its U.S. launch this week, the German startup is pivoting slightly away from the model pioneered by HotelTonight to allow users to also book a curated selection of hotels at “last-minute” prices even when they book well in advance. Less hotel tonight and more hotel sometime in the not-too-distant future.
In addition, JustBook, whose U.S. expansion sees it initially target New York, San Francisco, Chicago, Miami and Los Angeles, is rolling out weekend deals, offering its “hotel shopping club members” discounts of up to 50 percent on the best hotel rooms at weekends. That said, it’s still keeping the last-minute model in place, although by broadening its proposition the company is undeniably putting itself up against incumbent hotel booking aggregators/sites, including major players like Booking.com.
“Honestly, how often do you need a hotel on the same day?,” says JustBook co-founder and Managing Director Stefan Menden. “It is a huge market, but our customers gave consistently the same feedback: they love our simple UI, they love the curation (especially on the go you don’t want to sort through hundreds of hotels). But many times they want to book in advance.”
Menden says the company has carefully added “just a few options”, including advance bookings, and filtering hotels with free WiFi etc., in order to offer more choice. “We kept the same simple 3-step booking process,” he says, emphasising that the company keeps its mobile-DNA, despite also rolling out a desktop Web version of the service. In fact, mobile accounts for 80% of bookings. Another reason for pivoting slightly, says Menden, is that a broader use-case should see usage of the app increase and enable the startup to “acquire customers profitably, more easily”.
Does Menden think that HotelTonight will follow suit? (Or indeed other last-minute hotel booking apps such as Groupon-owned Blink, or Hot Hotels). “I am sure they have similar discussions but so far have opted to focus on a very clear USP,” he says. “But I am sure everybody will agree that customers will value the broader use-case. At least that’s what we see our customers doing.”
Interestingly, in a quintessential European story, JustBook’s tweak to its model comes hot on the heels of a ruling in JustBook’s favour by Germany’s Federal Cartel Office that paves the way for greater competition in the online hotel booking space. When the company first launched back in January 2012, it upset legacy players who, Menden says, routinely put pressure on hotels to give them the best rates or threatened to delist them. “We complained with the Federal Cartel Office which ruled in our favour, effectively making it impossible for the big portals to continue their practice and allowing more competition. Similar action is happening across the EU,” he says.