Denver business-travel firm Hotel Engine is expanding to Ireland and the United Kingdom in early 2023, hoping to head off international competition looking to get into the unique niche of the sector that the rapidly growing company has developed.
The overseas move, which is expected to happen as soon as next month, is its biggest and newest area of growth, however, and it’s one that founder and CEO Elia Wallen admits he didn’t originally include as part of the company’s business plan.
Hotel Engine, which differentiates itself from other travel firms by not asking customers to sign any kind of contract tying them to repeat business, had assessed the U.S. business-travel market as big enough to sustain its expansion for many years, and it still approaches its near-term future largely with a domestically focused lens, he said.
But as he and other leaders in the 434-person company began to think further out, he realized that Hotel Engine’s success — it’s on pace to double revenues again this year after securing a $65 million Series B funding round last year that vaulted it to unicorn status — could spur imitators.
And they saw other English-speaking countries with similar cultures — including Canada, to which the firm plans to expand a few months after its overseas growth — as a somewhat easier way to extend its reach and plant its flag as a pioneer of its business concept.
“We have to get out in front of copycats. Once they are established, it’s hard to get them out of a market where they originate,” Wallen said. “We could just stay in the U.S. forever and be a very big business, but the idea is that it’s harder for copycats to come up this way.”
The move comes as Hotel Engine has added some 170 workers this year, benefitting in some way by picking up employees being laid off by other large players in the tech sector, Wallen said in an interview.
Hotel Engine is defying expectations in many ways. After all, its niche market of business travel remains at least 20% down compared to pre-pandemic levels, according to most studies, and it may seem like the wrong time to be a tech-centered company focused on a still-lagging sector of the travel market.
But Wallen said the firm’s approach, which involves working closely with both customers and hotels holding excess inventory to get the cheapest price for its clients, has allowed it to continue growing organically. And because the total business travel market is so large, Hotel Engine has been able to dig into it even when some businesses are pulling back.
He also credits the fiscal approach of Hotel Engine and sister firm Travelers Haven, a short-term housing-rental agency he launched to help businesses whose workers are in other cities for extended amounts of time, for avoiding some of the problems facing other tech firms. Many of those companies spent big and expanded staffs significantly, particularly in recent years when the pandemic seemed to push a lot more business and activity online, and now are cutting jobs — something Hotel Engine and Travelers Haven haven’t had to do.
“We were not burning money when burning money was cool,” Wallen quipped. “We’ve always been a scrappy and efficient company, and I think that is landing well with people.”
Indeed, the company has reinvested many of its earnings into the development of new products that it hopes will continue to set it apart. And two of those are planned for initial or continued rollout over the next year.
One will allow planners to do group bookings at hotels online rather than having to call each hotel individually, as is now the typical practice when seeking large blocks of rooms. This tool also will allow hotels to submit availability on certain days and more easily be able to capture larger group business when planners are searching for specific times, he said.
The other tool is focused on the hotels themselves, allowing them to extract more data about their properties from sources ranging from customer reviews to market-share information — data that isn’t always easy to come by, Wallen emphasized. The tool launched four months ago with the goal of giving operators more intelligence that can help in rate-setting activities, and there’s been a good amount of interest in it so far, he said.
About the only thing that hasn’t gone according to plan so far is the labor shortage that most businesses are encountering, which has led to slower growth of Hotel Engine’s staff than the 400 workers who Wallen initially was expecting to hire this year. He hasn’t been starved for applications — the company got inquiries from more than 12,000 job seekers in the third quarter, he said — but he’s been careful to go for quality rather than quantity.
Hotel Engine also will end 2022 without moving out of its Cherry Creek office and into a new downtown headquarters, which Wallen initially had said he wanted to do this year. It’s still looking for space in Denver’s Central Business District, but as he’s seen workers perform so well remotely, he’s now looking for something with less desk space than originally envisioned and more area to hold workers who may fly in from across the country once or twice a year to have team meetings and get oriented with each other in person.
This article has been updated to reflect the accurate number of workers hired this year, as the information initially supplied by the company was incorrect.
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