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Hotel Engine, a Denver-based travel tech startup, has recently secured one of the year’s largest funding rounds for a travel company, raising $140 million and achieving a valuation of $2.1 billion. The company, which initially focused on hotel bookings for business travel, is now broadening its offerings to include flights and car rentals starting this month. In line with this shift, the company plans to drop “Hotel” from its name, rebranding itself as “Engine” to reflect its expanded services.
Beyond serving travel managers, the company also provides technology tools for hotels to manage bookings, marketing, dynamic pricing, and more. Hotel Engine primarily caters to small- and mid-sized businesses across the U.S. Founder and CEO Elia Wallen spoke about the company’s competitive landscape and future plans, noting that while there are major competitors, there’s still a vast market to capture.
Among the competition is Navan, a New York-based travel company that recently raised $154 million, bringing its valuation to $9.2 billion. Navan has been preparing for an IPO and hiring a former New York Stock Exchange executive as CFO. Barcelona-based TravelPerk also raised $104 million at a $1.4 billion valuation. In addition, the travel sector has seen significant mergers and acquisitions, such as Amex GBT’s plan to acquire CWT for $570 million earlier this year.
Despite these strong competitors, Wallen expressed confidence in Hotel Engine’s focus on small- and medium-sized businesses, saying there’s still plenty of market share available. He highlighted that in such a large and evolving industry, there would be many winners and losers, but once a company reaches a certain scale, there’s room for multiple players. He believes Hotel Engine is poised to carve out its niche.
The Global Business Travel Association projects that business travel spending will surpass pre-pandemic levels of $1.4 trillion this year and exceed $2 trillion by 2028. Wallen shared that Hotel Engine is currently experiencing 70% revenue growth year-over-year and predicts “triple-digit” growth for the following year. The company is on track to sell approximately 10 million room nights in 2024, with about 5% of its business coming from outside the U.S. He also indicated that the firm plans to accelerate its international expansion in 2025.
Hotel Engine currently employs 700 people and expects to add another 300 to 500 staff in the next year. 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 revealed that the company had spent only $20 million of those previous funds before raising its latest round.
Wallen emphasized that the capital raised hasn’t been wasted, contrasting Hotel Engine’s approach with other companies that raise funds simply to stay afloat. He noted that the company’s cash flow remains positive and profitable, with a portion of the latest funding going toward its balance sheet. However, the majority of the funds were raised as a secondary offering, allowing early investors and employees to cash out some of their holdings, a positive sign of the company’s financial health.
The latest funding round was led by a growth equity fund under the private equity firm Permira. Wallen explained that the decision to expand beyond hotels was driven by customer demand for a platform offering multiple travel options in one place. Initially, the company focused solely on building a strong network of hotel partners, but the next logical step was to broaden its services, as most users expect a unified solution for hotels, flights, and car rentals.
Hotel Engine also recently introduced a feature allowing customers to book large blocks of rooms for corporate events, a service that is now available to consumers as well. Wallen sees significant potential in this area, describing it as a “broken space” with room for improvement.
Looking ahead, the company plans to integrate more artificial intelligence into its platform, though Wallen acknowledged that the full potential of AI remains to be seen. Hotel Engine, which has so far grown organically without any acquisitions, is now considering the possibility of mergers and acquisitions as the market dynamics shift. Wallen suggested that there is a higher likelihood of acquisition activity next year, signaling a potential new phase in the company’s growth.
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