Airbnb CEO Brian Chesky

Airbnb is set to acquire HotelTonight as it works to build up its expansion narrative ahead of its eventual IPO.

Airbnb is planning to buy HotelTonight, which could help the start-up push into more traditional hotel listings and ultimately bring more inventory to its platform.

Airbnb made the announcement as it continues to work toward an eventual initial public offering and experts say this is likely part of the company’s efforts to build an expansion narrative.

In recent years, Airbnb has expanded significantly, to the point where it now includes boutique hotels and luxury properties.

As part of these efforts, Airbnb has started to bill itself as an “end-to-end travel platform.”

At the same time, the company also faces increased competition from OTAs (online travel agencies) and hotels.

HotelTonight’s strategic value for Airbnb

Simply put, HotelTonight will help Airbnb push into more traditional hotel listings while bringing additional inventory to the platform.

Sources confirmed the price was a little over $400 million in both cash and stock and the deal would take effect in June. HotelTonight was last valued at $463 million in the private market.

In a press release, Airbnb said guests are using the platform for business and last-minute travel, leading to same-day bookings doubling year over year.

The two platforms will continue to operate as separate entities, but Airbnb said some HotelTonight listings will become part of the larger platform in the future.

Sam Shank, co-founder and CEO of HotelTonight, said in a statement that the merger will bring “more choices and the world’s best boutique and independent hotels a genuine partner to connect them with those guests.”

It could also help both companies compete better against the increasing number of major traditional hotel chains who have gone on the offensive to protect themselves from the disruption Airbnb has created in their sector.

The low-down on the Deal

Some news outlets have reported that Airbnb Co-Founder and CEO Brian Chesky and Shank have been friends for years and they both felt like underdogs competing against the hospitality goliaths in the market.

To research the deal, sources say Chesky did his homework, spending two weeks booking and living in different HotelTonight properties.

Airbnb is among the class of aging unicorns, including Uber and Lyft, that are starting to go public this year at multibillion-dollar valuations.

Airbnb has raised more than $4 billion in capital and was last valued at $31 billion. To justify a public market debut at that level or higher, Airbnb is expanding beyond its core business of short-term home rentals.

Chesky has said the company would be ready for its IPO this year, but never committed to a date.

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