Booking.com bets on last minute travelers

Booking.com
Source: Booking.com

Reserving a hotel room at the last minute is about to get a whole lot easier.

Booking.com, the top online travel agent for accommodations, introduced a mobile app on Thursday called Booking Now for people who had a flight canceled, need to stay an extra day for business or are leaving town for a family emergency. And some travelers just prefer not to plan in advance.

Booking, which is the primary revenue engine for Priceline Group, is diving headfirst into real-time mobile as consumer preference shifts from desktop to smartphones. Priceline Chief Executive Officer Darren Huston cites the mobile experiences of Uber, Starbucks and OpenTable (now owned by Priceline) as the inspiration for the new app.

"With millennials and the way they travel, the big new thing is you land in London and you wander into secondary, tertiary cities and do everything in a very spontaneous way," Huston said in an interview via video conference. "We're emphasizing this new way of booking."

Read MoreCustomers want non-hotel accommodation: Priceline

It's a new model for Booking, but not for some competitors. Whereas Booking vies with companies like Expedia and Orbitz in traditional online travel, San Francisco start-up HotelTonight has been working on the last-minute reservation problem since 2010 and raised over $80 million from venture capitalists. Jetsetter, owned by TripAdvisor, also offers deals on short notice.

For Booking Now, a user downloads the app and provides some contact information and personal preferences. From there, the app immediately starts offering deals in the area for that evening.

In San Francisco on Wednesday, a traveler who prefers moderately priced rooms could have stayed at the two-star Grant Plaza Hotel for $122.55, or swiped left on the phone to find the Post Hotel for 44 cents more. The luxury traveler could have chosen the five-star Omni San Francisco for $595, and for the budget conscious the Pontiac Hotel was available at $49.

Booking is trying to avoid the fate of so many past tech companies that failed to adopt new technologies fast enough to keep up with changing behavior.

Checking in with HotelTonight CEO
Checking in with HotelTonight CEO   

It comes at a cost. Booking has over 100 dedicated mobile app developers in its Amsterdam headquarters. And while Booking takes the same cut of each sale as on its main service, last minute reservations tend to be for a single night, so the total revenue per transaction will be less.

But if Booking wasn't in the game those consumers would be using a different service, "so it's all still good business for us," Huston said.

Huston says that Booking's advantage over the competitors is its massive scale. The company has operations in 203 countries with inventory at 580,000 properties. Many of those hotels have never had the ability to promote their same-day rooms in a novel way, so they've had to live with vacancies.

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Priceline, based in Norwalk, Connecticut, acquired Booking (then known as Bookings B.V.) in 2005 to expand globally and to focus more on hotels than on low-margin airline reservations. Since then, Priceline's stock price has multiplied by more than 45, and the international business accounted for 87 percent of bookings in the latest quarter.

The Booking Now app is first being rolled out on Apple's app store for U.S. users and will start going global in the coming weeks. An Android app is likely coming in the second quarter.