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

Habbo stemmed from a 1999 hobby project by creative designer Sampo Karjalainen and technologist Aapo Kyrölä entitled Mobiles Disco, for a Finnish band.

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.

By the end of January 2001, Habbo Hotel had been launched in beta mode.

The new hotel exited beta a few weeks afterwards, aimed at the teenage market, with marketing and payment partners in place, run from a HQ in London.

It featured a new credits system with community and safety features.

The next hotel was launched in Switzerland a few months later, in four languages.

It has since been expanded to over 31 countries in five continents, including Hotelli Kultakala in Finland which was made into a Habbo Hotel and has been invested in by venture capitalists.

In May 2006, the service, along with its domain names, were changed from au, etc.) to au, etc.).

In August 2007, Habbo's Chinese community closed down temporarily, the first time a Habbo website has closed.

The challenging Chinese market and high operational costs led to the decision of closing the service.

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