Skift Take
Hotel Engine has its sights set abroad next year to take advantage of fast-growing business travel demand.
Hotel Engine recently raised one of the year’s largest rounds of capital for a travel startup: $140 million, which valued the firm at $2.1 billion.
The Denver-based company provides a tech platform that travel managers use to book business trips. Historically, the focus has been on hotel bookings, but flights and car rentals are joining the mix starting this month. Once that happens, the company is dropping “Hotel” from its name and will go by Engine to reflect that expanded focus.
The company also offers hotels tech tools for bookings management, marketing, dynamic pricing, and more.
Hotel Engine is focused on small- and mid-sized companies in the U.S. Skift spoke with its founder and CEO, Elia Wallen, about what comes next.
The Competition
Hotel Engine has a lot of competitors. Navan, based in New York City, most recently raised $154 million in equity at a valuation of $9.2 billion. This year, Navan hired a former New York Stock Exchange executive as its CFO ahead of an anticipated IPO.
TravelPerk, based in Barcelona, most recently raised $104 million at a valuation of $1.4 billion.
There’s been some significant M&A activity, as well: Amex GBT earlier this year announced plans to acquire CWT for $570 million.
All of these companies have been growing and expect to continue. But especially for small- and medium-sized companies — which is where Hotel Engine is focused — there’s still a lot of business up for grabs.
“It’s a really big market, and there’s going to be a lot of winners and a lot of losers — you see these little companies pop up and down all the time,” Wallen said. “I think once you get to a certain scale, that there’s room for everyone, and we’re going to carve out our corner of the market.”
The Global Business Travel Association expects travel spending to exceed pre-pandemic levels of $1.4 trillion this year and exceed $2 trillion by 2028.
Business Growth
Wallen said that Hotel Engine is seeing 70% growth in revenue compared to last year. And he projects “triple-digit” growth next year. The company is on track to sell about 10 million room nights this year.
About 5% of the company’s business comes from outside the U.S. With the three product lines, the company will ramp up its effort abroad in 2025, he said.
Hotel Engine has 700 employees right now, and he expects to hire another 300-500 in the next year.
‘We’re Cash Flow Positive and Profitable’
The company raised $65 million in 2021 at a $1.3 billion valuation and raised $16 million in 2019 at a valuation of over $150 million.
Hotel Engine had spent only $20 million of that total before it raised its most recent round, Wallen said.
“All the money that we’ve raised has not just hit the balance sheet and been lit on fire, as many do.” Wallen said. “A lot of people have to keep raising money every year to keep the lights on. We’re cash flow positive and profitable.”
A small portion of the latest funding went toward the balance sheet, but the majority was raised as a secondary offering, he said, which essentially allows early investors and employees to cash out some of their holdings. Completing a secondary offering is often a sign of financial health for the company because it shows it doesn’t need outside capital to continue operations.
The round was led by a growth equity fund under private equity firm Permira.
What’s Next: More Products, AI, and Maybe Acquisitions
Hotel Engine has been focused solely on hotels, but Wallen said customers wanted a place where they could more purchase products in one place.
“The first five years, it was heads down, build the best network we can with our hotel partners,” he said. “As we had this nice foundation of lodging, it was the next natural evolution. Most people are expecting three in one.”
The platform also has a feature for booking large groups of rooms, such as for a corporate event. And the company recently opened that feature to consumers, who can book blocks or rooms for at least nine people. He believes there’s more opportunity in that specific area of the sector.
“It’s a pretty broken space,” Wallen said.
Users should also expect to see more AI integrations.
“We are definitely investing heavily there. And I think we’ll see how far it goes. The story’s being written currently.”
Hotel Engine doesn’t have a team dedicated to searching for M&A right now, but the company is going to start considering those types of deals.
“We’re fully organic to date – we haven’t done any acquisitions. But just given the dynamics of the market … it does seem like there’s a higher probability that it happens next year than ever before.”
