Financing a Life Less Planned

As chief financial officer at HotelTonight, Tony Grimminck credits spontaneity, transparency, and unit economics in making the books work so that guests can get the best room possible

Tony Grimminck and his family recently found themselves among the scorched ochre canyons of a southern Utah desert in need of a change in scenery. “We’d been on a road trip through Yosemite and out to Zion National Park for a week,” Grimminck recalls. “After another hike in 105-degree weather, there was a spontaneous family meeting: three votes to drive back to Las Vegas and one vote to continue the drive down to the North Rim of the Grand Canyon. I like hiking. . . . A few hours later we were poolside at the Mandalay Bay in Las Vegas, all enabled by HotelTonight at the last minute.”

According to the chief financial officer  of HotelTonight, embracing spontaneity is vital to the company’s core culture as an on-the-go, mobile-only lodging platform. Premier hotels will load unreserved rooms onto the app, which then acts as a booming marketplace for what otherwise would be something Grimminck refers to as perishable inventory. This allows guests to book potential luxe, yet often steeply discounted, rooms at desirable locations from their mobile device at a moment’s notice. “We actually say we like to live a life less planned. Be spontaneous. Check something out. Go away for the weekend. If you’re in the city, spend a night out. Don’t go home. Don’t plan as much,” Grimminck says.

That same characteristic is just as essential to driving the Silicon Valley start-up toward both growth and profitability. “At a start-up, things happen extremely quickly. You’re on one initiative and then to the next, and then the next. And you have to have the ability to react to the market extremely quickly,” he says. “In the Bay Area, for so long it’s been about growth almost at any cost. But the market changed last year. We’d be talking to investors and the tenor of the conversation changed from growth to, ‘So, when are you guys going to be profitable?’”

In order to reach profitability, Grimminck and the executive team realized they needed to make some dramatic changes. In November 2015, HotelTonight reduced its workforce by 20 percent, which he says allowed the start-up to reprioritize and greatly reduce operational costs. Grimminck also advocated paying increased attention to the unit economics of individual bookings. “Something I tried to do when I first came to HotelTonight was to really embed into the culture a focus on each transaction,” he says. “What is the profitability of every transaction? How can we improve that profitability?”

This also included asking pointed questions about the amount of coupons offered on the app, what the optimal contractual take rate from each hotel should be, and how the company could drive down transaction and support-related costs. From there, Grimminck and his team could establish a set of concrete actions in order to fill any gaps in the operating model.

Given his awareness of intricate infrastructural detail, it should come as no surprise that Grimminck entered the workforce as a civil engineer for the Australian Army. “Out of the military academy, I served as a troop commander in a combat engineer regiment and then moved into more traditional engineering roles equivalent to the US Army Corps of Engineers and, in doing so, became interested in large-scale development projects,” he says. As part of his journey, Grimminck spent time in uniform in Africa, in East Timor with the United Nations Peacekeeping forces, and in Iraq in 2003. With all of that excitement and after meeting his wife, Grimminck explains, he decided to leave the army and move to New York for a change of pace.

Having always been interested in how large-scale development projects were
financed, Grimminck applied and was accepted to Columbia Business School. “Through that process and being so close to Wall Street, I transitioned from wanting to do infrastructure financing to doing more in the way of traditional investment banking,” he says. “I tried my hand at a travel-based Internet start-up at business school and was highly interested in how digital media was evolving, so I matched two interests through technology and media investment banking.”

After his tenure with JP Morgan and Goldman Sachs, Grimminck moved his family from a seemingly shrinking apartment in New York to San Francisco, eventually becoming the director of strategy and corporate development for eBay’s StubHub. “I suppose it harkens back to my engineering days, where it was always about building things. I wanted to be part of a team that built something,” says Grimminck about transitioning to the Silicon Valley start-up culture. Now, as the CFO at HotelTonight, he oversees the accounting, financial planning and analysis, risk and payments, and business analytics.

Grimminck credits an internal culture of openness as a key factor in HotelTonight’s budding success. “Typically, as a finance executive, you’re less about sharing financial results and metrics with the company. In certain cases, of course, due to regulatory requirements, you can’t. But at HotelTonight, we share our metrics and how we’ve been performing at weekly meetings,” he explains. “Transparency definitely has produced amazing results for us because everyone understands how the company is performing in real time.” When business is going well, Grimminck says, people are able to celebrate successes in tandem, and when times go awry, everyone is alerted to the situation and can take mutually beneficial action to craft creative solutions to the problems.

Sporting this ethos, HotelTonight achieved profitability in April 2016. The start-up currently has offices in Berlin, Paris, London, and San Francisco, as well as rooms available in thirty-five countries. With the profitability, there are no plans to deviate from being a mobile-only platform.

“We believe that being mobile increases relevance,” he says. “We’re able to offer the consumer the right price at the right hotel and the right time by having them interact with our marketplace on a mobile device. If you’re opening the app in San Francisco in the afternoon, there’s a high probability that you’re looking for a room in San Francisco for that evening. And so hotels can compete with each other to get consumers into their rooms and offer the consumer a great price in order to do that.”