Making It Work in a Narrow Niche

BC Business Online, April 27, 2012

 

The Hotel Tonight app made their business model work by going an inch wide and a mile deep.
A new last-minute hotel-booking service in Vancouver shows that focusing your business to a narrow niche pays off.
Every adviser tells entrepreneurs who are determined to start successful new businesses to find an unfilled niche in a market, then fill it.

Sometimes entrepreneurs actually take that advice. And they become successful.

I was thinking of this while speaking to Sam Shank, CEO of Hotel Tonight, a last-minute hotel-booking application that has conquered the United States and launched its international division yesterday by making the service available in Vancouver and Toronto.

Hotel Tonight is a business built for the last-minute travel crowd, whether they’re constant travellers who find themselves in a city and decide to stay for an extra night, or are in from the suburbs and don’t want to make the long drive home

Each day at noon, Hotel Tonight offers three same-day hotel deals in each of its destinations, with discounts of up to 70 per cent off. Hotel rooms can be booked (up to 2 a.m.) in less than 10 seconds – not by phoning the hotel or going through its website (and getting the normal rate), but through a mobile app on the iPhone or any Android device.

In Vancouver, those rooms are at the Moda Hotel and the Pan Pacific hotel. Three different types of rooms – basic, hip or luxe – are offered.

What interested me about this was Shank’s business strategy; he ignored the usual hotel business methodology of wide-ranging service and 70 per cent bookings, because it was too broad and expensive.

Instead, he figured out how to access that remaining 30 per cent and turn it into a niche that no one had bothered to fill. And he didn’t bother connecting with everybody. Instead, Hotel Tonight can only be accessed by smartphone mobile apps, because Shank realized that his target market – constant travellers and last-minute decision makers – were probably younger, and therefore more likely to use mobile devices.

To me, this is the way we should all be thinking today. The days of trying to be everything to everyone are over, unless you’re some big megacorp with the scale that can service this kind of broad-based market.

But too many startups – tech-related or not – still try to serve a large market. Their reasoning is that, by going a mile wide and an inch deep, they will have more chance of survival.

But the opposite is true: you’ll have a much better chance by focusing intensely.

Go an inch wide and a mile deep.

 
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