Booking.com's App for Last-Minute Deals Will Probably Kill HotelTonight

Need a place to stay in Kathmandu within the next two days? Booking.com has got you covered.

Today, the hotel booking giant, a subsidiary of the Priceline Group, launched a new app called Booking Now, which lets travelers find last-minute hotel deals anywhere in the world and book them with a single click. In doing so, Booking.com is going head to head with startups like HotelTonight, which has been an early leader in this mobile-first, last-minute booking space, and has raised more than $80 million since it was founded in 2010.

But while HotelTonight may be one of Silicon Valley's darlings, Booking.com is a mainstream, global juggernaut. With its network of 585,000 hotels all over the world—yes, even in Kathmandu—and millions of customers, it seems poised to trounce the smaller competitors that have, so far, ruled this market. And that could serve as a cautionary tale for other startups.

Some of today's most prized startups are the ones that have used mobile technology to make stodgy industries run more seamlessly. Uber did it to the taxi industry, by allowing users to hail a ride with the click of a button. Tinder did it to the online dating industry, cutting out lengthy personality tests and letting users find matches with a single swipe. In both of these cases, the strategy worked, resulting in businesses that are even more valuable than the entire industries they infiltrated. But sometimes that strategy can backfire.

In this case, Booking Now has co-opted an idea that's been proven out by a smaller competitor, and now, it's going to use its massive scale to bring that idea to the masses. Its smaller competitors may fail to keep up.

Uber Inspiration

According to Priceline CEO Darren Huston, the idea for Booking Now was inspired less by other competitors in the hotel booking space than it was by leaders of the on-demand economy, like Uber. "This whole spontaneous internet has become more real," Huston says. "People expect more things from their phones."

That convinced Huston that it was the right time to launch a single purpose app for this population of users. Well, that and the fact that 50 percent of Booking.com's last-minute reservations were being placed on mobile.

The result is a dead simple new service. Enter your name, phone number, and email address, as well as a few details about travel preferences, including price range, and preferred amenities, and the app serves up a map of nearby hotels. Each one is ranked based on how well it fits your preferences and comes complete with Booking.com's extensive library of reviews. Users who pre-load their credit card information can book a room with a single click.

Inventory Wins

It's all in the name of making the booking experience as quick and painless as possible. "Traditionally, you start off searching for a destination. You have a check in and check out date and a number of guests. You get a big list of hotels and you go from there," says Booking.com product designer Stuart Frisby. "For us, the breakthrough was realizing we could switch that around."

Of course, there are reasons consumers would stick with smaller competitors who can offer a more personalized customer service experience. Still, in the on-demand market, it's inventory that often wins.