Hotel Tonight: Can an App Revolutionize Last-Minute Travel?

After 10 VCs rejected his mobile app, Sam Shank persevered. Since then, Hotel Tonight has secured $35 million in funding and hired 100 employees.
Freelance Writer and editor, Self-employed
April 09, 2013

Sam Shank says entrepreneurs must be fearless. If you do experience nerves, he recommends “isolating the source of those feelings and working through them. Know that you will only fail if you don’t learn something through the process. And if you decide to start a company, you will learn a lot no matter what happens.”

Shank has certainly learned a lot, persevering through numerous rejections from venture capitalists to start Hotel Tonight, which produces a smartphone app that allows users to book hotels for about $100 a night with less than 24 hours' notice. Though the company is only a little more than 2 years old, it already has more than $35 million in funding and 100 employees in its San Francisco office.

That kind of rapid growth could not have been possible without Shank making sure those 100 employees fit into the company culture. He says each staffer he hires must embody Hotel Tonight’s three core values: Build, Question and Respect. “I want people who will dedicate themselves to building a lasting product, question the status quo and respect everyone they come in contact with,” Shank says. “Having those words and that definition has really helped us choose good people.”

Evolution of a Travel Tech Tycoon

Shank was just as focused on business success at an early age. Growing up in a small town in Virginia, he was inspired by his father’s architecture and real estate development firm and went to business school at Northwestern University to pursue a path in entrepreneurship.

While in school, he founded Travelpost.com, a hotel review site, even though friends questioned his idea. “I remember people telling me that it was risky for me to build a company while in school instead of look for a traditional job,” Shank says. “I didn’t think it was risky at all because even if I had failed, it would have made me a stronger employee later on.”

But Shank didn't fail. He graduated in 2004, sold Travelpost to SideStep.com in 2006 and ran business development for a year before Kayak.com acquired SideStep. From there, he took a few months off, batted around new business ideas and in 2008 settled on what would become DealBase.com, a site that functions, as he puts it, “like a Kayak.com for travel deals.”

Shank came up with the idea for Hotel Tonight while running DealBase. “I was disappointed with the quality of travel apps for booking last-minute hotels,” he says.

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Challenges and Determination

By 2011, Shank was well versed on the tech side of the travel industry. He saw weaknesses in established sites and decided to create a spinoff of DealBase—a company that would operate exclusively on mobile devices and allow users to get last-minute hotel rooms.

His idea was met with skepticism. “I got rejected at the first 10 VC meetings I went to,” Shank remembers. “There was a concern that people wouldn’t book last minute. I stuck with the concept because I believed that human nature doesn’t always allow us to plan ahead.” Finally, investors started coming. When Battery Ventures and Accel Partners signed on, many more flocked with term sheets in hand.

Today, Shank says Hotel Tonight is doing well primarily because of its focus on mobile. While traditional travel sites attract customers by spending millions on marketing, Hotel Tonight uses its entire budget on product improvement. “Marketing spend doesn’t matter in mobile because apps get rated in the app store,” he says. “No matter how much you spend, you need a quality product or no one will buy it.”

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Looking Ahead

At press time, Hotel Tonight was in 85 cities and 12 countries. Shank says the company has plans to grow beyond an app and into other cities and related travel verticals.

As for his personal aspirations, Shank wants to stay put. “I couldn’t be happier,” he says. “This is a dream job for me and I’m pinching myself every day.”

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Katie Morell is an independent journalist based in San Francisco. She regularly contributes to Hemispheres, USA Today, Consumers Digest, Destination Weddings & Honeymoons, Crain’s Chicago Business and others.