With the pandemic heading into its second year, people all over the world are traveling more for work again. If you’ve flown anytime in the past few months, the packed planes are in part evidence of that.
Further evidence that travel is rebounding lies in the number of people staying in hotels, and the money going into startups that serve the industry as well as travelers. Hotel Engine is the latest such startup, having just raised $65 million in a Series B round at a $1.3 billion valuation.
Returning backer Telescope Partners led the financing, which also included participation from new investor Blackstone. Notably, the investment values the Denver-based company at nearly 9 times higher than the $150 million valuation it achieved when it raised $16 million in a Series A round in 2019 — its first round of funding after bootstrapping for four years.
Hotel Engine describes itself as a “Lodging Performance Network.” Or in other words, the startup is a B2B members-only, global booking platform that aims to provide companies access to better lodging rates as well as tools and insights designed to “optimize their travel programs.” Meanwhile, it partners with lodging providers (better known as hotels), who benefit from gaining access to more “high-value” business travelers, according to founder and CEO Elia Wallen.
Wallen started Hotel Engine in 2015 as a “simple” booking tool designed to support the hotel lodging needs of clients of another company he’d founded, Travelers Haven. That startup was more of a short-term corporate housing company.
For the first two years, Hotel Engine was more of a side project for Wallen with admittedly “limited investment or attention.” But in 2018, he began to get more serious about it and began dedicating separate resources to the company, which led to triple-digit growth in a year’s time.
“Since then, we’ve been on an incredible growth trajectory,’ he told TechCrunch. And notably, Hotel Engine is something that many startups are not: profitable.
Between the third quarter of 2020 and the third quarter of 2021, Hotel Engine experienced a 201% increase in core bookings revenue and increased its customer base by 60% to over 40,000 companies. It also added 100,000 people to its membership base, bringing the total to more than 550,000. Meanwhile, its headcount has swelled from 119 to 300 over the same time period. The company expects to hire another 400 people in 2022.
Wallen believes Hotel Engine is unique in the way that it leverages technology to connect businesses and lodging partners globally.
“Our approach allows our customers the ability to centralize their lodging needs on one platform from sourcing and negotiation to booking and reconciliation,” he said. “Our technology provides significant savings and world-class customer support on a no-contract platform.”
Looking ahead, the company is eager to expand its international footprint.
Ramzi Ramsey, managing director at Blackstone, believes that Hotel Engine provides “a unique and differentiated” experience, especially for industries that have historically been underserved by traditional travel booking companies that do not specialize in group or long-term stays.
By providing a set of fintech and expense management software tools to make the booking process less painful, Hotel Engine has seen “explosive growth” in recent years, he points out.
“For example, Hotel Engine has expanded the addressable market for hotel providers by facilitating upfront payments, as many companies do not have the working capital for large group or long-term stays,” Ramsey wrote via email. “As the economy reopens, we expect Hotel Engine to be a strong secondary beneficiary of the recently passed $1.2 trillion U.S infrastructure bill.”
Telescope Managing Partner and Founder Mickey Arabelovic joined Hotel Engine’s board as part of the new funding round.
“Since our investment in late 2019, we’ve worked closely with Elia and the Hotel Engine team, and are consistently impressed by their passion, tenacity and singular focus on business lodging,” said Arabelovic in a written statement. “There is no other company that delivers a friction-less, easy-to-use solution for travelers, and they’re just getting started.”