This is the transcribed interview with Sam Shank the Co-founder and CEO of HotelTonight.
August 10, 2013
Matt Zito: The Travel Startup Founder’s Series are short inspirational stories direct from travel CEOs, founders, and entrepreneurs. Today we are with Sam Shank, the founder of Hotel Tonight. Hotel Tonight is last minute hotel deals tonight. Hotels give Hotel Tonight last-minute deals on their unsold rooms for booking tonight only, with discounts up to 70%. Travelers book the deals easily and securely on their mobile devices.
Welcome to the Travel Start Up Founder Series, Sam.
Sam Shank: Hey, it’s good to be here.
Matt Zito: Thanks a lot for being here. I know you’re busy. We met back in the fall of 2011 in Las Vegas at the Eye For Travel Distribution Conference and we briefly spoke, and you gave a presentation and really what impressed me the most was how you simplified the process for hotels to do business with Hotels Tonight by creating an extranet that I think was literally three or four data in points for the revenue manager, and it was really brilliant.
Are you still using that sort of simple extranet? Has it evolved? And can you tell us a little bit about Hotel Tonight?
Sam Shank: Yeah, sure. One of our big philosophies on product and on user experience is simplicity. And that is evident in the consumer product where we show you deals for tonight and hotels that you can book for tonight, and just the vital information you need to make a decision about which hotel to stay at. And then you can book a hotel in just ten seconds and three taps and swipe. And then, as you mentioned, it’s very important that on the other side of our marketplace, which is on the hotel side, that things are just as easy there and just as magical. And so we started with this really simple extranet and interface for hotels and have kept that. And we strive to make it even more simple and give hotels more control and power, but retain that simplicity.
So it’s very easy to add things to a product. It’s very hard to not add things or take things away, and taking things away is just as hard as not adding things. So the canvas of a website or an app it just lends itself to adding more, but keeping things off while you’re adding functionality and control is very, very difficult and challenging. So we’ve kept that simplicity with the hotels. We only ask for two pieces of information. We ask them for how many rooms they want to sell and what price they want to sell them for.
There is some optional information they can add in terms of if they want to present a special offer or talk about something interesting happening at the hotel, but that’s optional. But the core of the experience just around those two numbers and two pieces of information which really can be done in about that same sort of ten seconds of time. Revenue managers are busy. at the front desk they need to have a tool that they can use and get out of and get back to the other things they need to do as quickly as possible, and that’s what we’ve designed it all around.
Matt Zito: That’s great. You know, one of the reasons I love Hotel Tonight and I think you’ve been successful is for a couple of reasons, and you already touched on one about simplifying not only the process for the hotels but also the booking process for the guests. And you know, mobile is just a great platform for buying impulse travel and especially for today only.
And I think one of the other things is, as I’ve studied a little bit of your background and you’re sort of I guess, even though you’re young, you’re still what I would call a veteran entrepreneur. You’ve experienced both prior successes and failures. there are two sides to everything. It’s not always going to be success.
We have a lot of entrepreneurs, especially startups that are going to be listening to this, and so can you tell us a little bit about from your experience on both success and failures as a startup entrepreneur, why do you think Hotel Tonight has been successful so far?
Sam Shank: Well, I think it gets into a couple of things that I look for when starting a business. One is the ability to focus on a very specific problem, and then be able to do that better than anyone else in the world. And that’s what we saw with the opportunity in mobile, and the shift to mobile, and then the shift in mobile that enabled a new type of booking behavior for hotels, which were truly last minute and spontaneous, or incremental demand for hotels. So we decided to focus on that.
The hard part about this and what really separates entrepreneurs in terms of success and failure is that you don’t know for sure how big your very focused market is when you launch it. If it was very big then there ought to be a lot of companies doing it, so you have to find something early before others find it, and find it at the tipping point when it’s just about to become big. And I tell people that with Hotels Tonight we just hit the timing right. Some of that was guts, some of that was feel, and a lot of that was just luck. And if we had launched it six months earlier, there wouldn’t have been enough people using IOS to generate enough demand to fill rooms for our hotel partners. If we’d launched six months later, there would have been other apps. We launched six months before the Expedia had a hotel booking app, before Orbitz had a hotel booking app, before the other guys that were in the market really were paying attention to their apps. So we were just at the right time, and so I think that’s part of it.
But I there’s something else I’ve talked about and thought a lot about and that’s the distribution of a product and thinking about and recognizing distribution opportunities and then working backwards to find out what product would be best for that distribution opportunity. I think a great example of this is Trip Advisor which saw the opportunity in SEO and said, SEO is going to require a lot of unique content. Unique content is best generated in mass by individuals contributing to that content, and in the form of reviews and opinions, and we’re going to build a great platform for that, that will then rank very well in Google Search Results. And eight or ten billion dollars later that’s absolutely an amazing strategy for recognizing the natural search opportunity for distributing travel information. Likewise with HotelTonight, when I saw that shift to mobile, and there was going to be opportunity created in the brand. There was going to be a place which could distribute a product that was unique to the market, that wasn’t actually [inaudible 00:06:40]. And then I started thinking about what was the ultimate product for that distribution opportunity, and that’s where Hotel Tonight came in to place.
Matt Zito: That’s interesting, and it leads into one of the questions I want to talk to you a little bit about. I work with a lot of travel startups, and I have a strategy I call the power 100, and it’s basically pretty simple. The strategy is to build the business in the beginning around having sort of an initial sales goal of 100 bookings, or 100 reservations, or 100 users, and I think you had mentioned something–I think I asked you a question on LinkedIn. You wrote an article and I asked you about the beginnings of when you built Hotel Tonight. Did you have a goal? And can you comment a little bit about the beginnings and sort of like what was your initial goal for sales, or downloads, for Hotel Tonight?
Sam Shank: We launched it at the end of December, 2010, and we had a goal for January of 2011–this is before we launch, before we received any funding. We had just had a couple hundred thousand dollars that we were using to fund the business and grow the business, and market the business, merchandising, and get hotels, etc. And we set some goals of around. We wanted really strong PR and validation from the press. We wanted really strong user derivatives. We wanted a certain number of downloads, a certain number of daily users. And it’s your power of 100. We wanted 100 bookings in January. We knocked it out of the park on every goal, except for bookings. And we did 55 bookings in January. And of those 55 I think about half of them were probably us, or our very close friends who we heard were going on a trip and we said, hey, just wait to book, we have a really good inventory and we’ll book it for you. And it’d be great to have you. So it was a challenge for us, because getting people to use the product is the most important thing, and everything was going well. People loved the product, but people just weren’t using it at the level that we wanted them to.
Looking back on it I think that it was a big challenge and I think it’s amazing that we achieved what we achieved given what we were asking people to do, which is trust a new brand, trust something that they never heard of before and used before for a last night accommodation need when the stakes are so high if it doesn’t work out, and you won’t have a place to stay, or potentially wouldn’t have a place to stay. So it’s not like, you know, ordering a pair of pants, and if the pants don’t come or they don’t fit that’s okay because you can wear another pair of pants. The stakes are much higher in hotel bookings, especially at the last minute if it doesn’t work out.
Now it’s different because we’ve been downloaded six million times, and there’s a lot of social proof. Most people find out about Hotel Tonight because their friends have had a great experience using it, and that perception of, hey, who are these guys? Should I really trust this new brand for hotel booking is gone, but I think that’s a challenge for anyone new to the market, that the stakes are high with somebody trusting you for doing a hotel booking, for trusting you with their night’s sleep, which is, if it doesn’t work out you might have to sleep in your car, or you might have to sleep on the street. And if it’s cold, then it’s a life or death decision. So people are trusting you with their lives, and that’s a little facetious, but made that point over and over again to our support team and to our product team, that we need to think of this akin to a life and death decision for people. We need to make them feel 100% confident in using Hotel Tonight.
Matt Zito: Yeah, I think that’s a great place to end, and in closing is that, you know, you’re really customer oriented and you really are thinking from the perspective of them and you want to build the trust and you want their experience to be great and everything. And so, kudos to you for what you’ve done so far. I know you’re a hard worker and you’re a great entrepreneur. I appreciate having you up here on the Travel Startup Founder’s Series. Thank you so much, Sam.
Sam Shank: Thank you.
Matt Zito: Take care.