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It was a virtual chat room running on Aapo's Fuse technology. It launched in August 2000 on the ISP's web portal.After having been contracted to design a virtual game and chat called Lumisota (Snow Wars) for a Finnish internet service provider, they were contracted for another project. Aapo, Sampo and Dee Edwards, an entrepreneur from the UK, wanted to create an international business based on the virtual hotel concept, drafting a plan in Autumn 2000, and raised finance.The popular games Battle Ball and Snow Storm were replaced with Freeze and Battle Banzai to coincide with the new Flash client.By buying certain furni, players can build their own rooms for other players to play these games.

The website is owned and operated by Sulake, a Finnish corporation.

When a user accesses the Hotel they are brought to a screen colloquially known as Hotel View/Landing View.

From this screen, members can navigate to rooms via the Navigator and browse the rooms of the hotel, look for items to buy in the catalogue, read user-made stories on the Habbo Stories widget, private message friends on their Habbo friends list or enter their preset Home room.

The service began in 2000 and has expanded to include nine online communities (or "hotels"), with users in over 150 countries.

As of August 2012, over 273 million avatars have been registered with an average 5 million unique visitors monthly.