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Last-Minute Booking Service HotelTonight Lays Off 20 Percent of Staff

The cuts affect 37 people worldwide.

TechCrunch / Flickr

HotelTonight, a company that offers last-minute deals on hotel reservations, is laying off 20 percent of its staff. The cuts affect 37 people across the company’s global offices, which HotelTonight confirmed in a statement to Re/code.

The service launched in 2011, and has raised more than $80 million in disclosed funding through 2014. In September of 2013, the company raised a $45 million round led by the hedge fund Coatue Management, with participation from GGV Capital, Battery Ventures (which led previous funding rounds), First Round Capital and Accel Partners.

Despite raising such large sums, making money on booking hotels is a tricky business; there are lots of smaller competitors like Hipmunk or Jetsetter, in addition to powerful recognized big names like Expedia or Priceline. In July, Google introduced a service similar to what HotelTonight offers, and HotelTonight has since tried to retain its customers by introducing a personal concierge feature for travelers.

In an email, a spokesperson for the company denied that increased competition is what induced the layoffs, saying, “The company is streamlining to better focus on customer needs. But nothing will change for our hotel partners or our customers.”

You can read more about the “streamlining” in a statement from CEO Sam Shank below:

Today my leadership team and I made a decision to reduce our staff by 20% – 37 people. Decisions like this one are never easy, but they are necessary. At a startup especially, it’s critical that we have the right people in the right roles in order to stay on track, and hit our growth and revenue targets. But this is also a decision that affects people’s lives, and we’re painfully aware of that.

Compounding the difficulty of this decision is that we’ve built an amazing company culture here. We like each other and we spend time together, which made today’s move especially difficult. The people who left today made amazing contributions to our success, and we’ll miss them. We’ve made plans to ensure they have as easy a transition as possible, including a generous exit package that will pay them through the end of the year.

This decision was hard, but it was also necessary: HotelTonight is now a more streamlined and focused company. We’re well-equipped to accomplish our mission to help people live a more spontaneous life. The business is doing very well: We grew over 100% in booking volume this year. Word of mouth drives the majority of this growth, which tells me we’re achieving our goal to give people a fantastic experience. We’re on track to reach profitability next year. We’ll continue innovating and providing value to our customers and hotel partners.

Today’s decision was about making the best choice for the company in the long term. This agonizing decision is also the right decision. We thank everyone at HotelTonight for your contributions, which have been invaluable, and wish you the very best.

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