Hotel Engine CEO talks about growth after raising $140 million

Skift Take

Hotel Engine plans to expand abroad next year to capitalize on rapidly growing business travel demand.

Justin Dawes

Hotel Engine recently raised one of the year’s largest rounds of capital for a travel startup: $140 million, valuing the company at $2.1 billion.

The Denver-based company provides a technology platform that travel managers use to book business trips. Historically, the focus has been on hotel bookings, but from this month, flights and car rentals will be added to the mix. When this happens, the company will drop its “Hotel” name and will use the Engine name to reflect its expanded focus.

The company also offers hotel technology tools for reservation management, marketing, dynamic pricing and more.

Hotel Engine focuses on small and medium-sized businesses in the US. Skift talked to its founder and CEO, Elia Wallen, about what’s next.

Competition

Hotel Engine has many competitors. New York-based Navan recently raised $154 million in capital at a $9.2 billion valuation. This year, Navan hired a former New York Stock Exchange executive as chief financial officer ahead of an anticipated initial public offering.

Barcelona-based TravelPerk recently raised $104 million at a valuation of $1.4 billion.

There has also been significant M&A activity: earlier this year, Amex GBT announced plans to acquire CWT for $570 million.

All these companies are growing and hope to continue to do so. However, especially for small and medium-sized businesses – which is Hotel Engine’s focus – there is still a lot of work to be done.

“It’s a really big market and there will be a lot of winners and a lot of losers. These small businesses are coming up and down all the time,” Wallen said. “I think once we get to a certain scale, there will be room for everyone and we will 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 Development

Wallen said Hotel Engine is seeing a 70% increase in revenue over last year. He also predicts “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 United States, he said, with three product lines, the company will expand its efforts overseas in 2025.

Hotel Engine currently employs 700 people and plans to employ another 300-500 people next year.

“We have positive cash flow and profitability.”

The company raised $65 million in 2021 at a valuation of $1.3 billion and $16 million in 2019 at a valuation of over $150 million.

Wallen said Hotel Engine spent just $20 million of that total before it raised its latest round.

“All the money we raised didn’t just go on the balance sheet and set on fire like many do.” Wallen said. “Many people have to raise money every year to keep the lights on. We have positive cash flow and profitability.”

A small portion of the latest financing ended up on the balance sheet, but most was raised in a secondary offering, he said, essentially allowing early investors and employees to cash in some of their shares. The completion of a secondary offering is often a sign of a company’s financial health because it shows that it does not need outside capital to continue operating.

The round was led by growth private equity fund Permira.

What’s next: more products, artificial intelligence and perhaps acquisitions

Hotel Engine focused solely on hotels, but Wallen said customers wanted a place where they could buy more products in one place.

“For the first five years, we had to build the best possible network with our hotel partners,” he said. “Since we had a nice base of accommodation, it was the next natural evolution. Most people expect three in one.”

The platform also has the function of booking large groups of rooms, e.g. for a corporate event. The company recently rolled out the feature to consumers, who can book blocks or rooms for nine or more people. He believes there are more opportunities in this particular area of ​​the sector.

“It’s a pretty dilapidated space,” Wallen said.

Users should also expect more AI integrations.

“We’re definitely investing a lot there. I guess we’ll see how far it goes. History is being written now.”

Hotel Engine does not currently have an M&A search team, but the company will begin considering these types of transactions.

“For now, we operate fully organically – we have not made any acquisitions. “But given the market dynamics… it seems more likely than ever that this will happen next year.”