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Habbo Ltd was founded by Internet entrepreneur Dee Edwards in January 2001, and is backed by the venture capitalist company Electric Mother Ventures.

The site was developed in partnership with Sulake Labs Oy - a private software development company located in Finland, which uses Fuse technology to create unique spatial Internet communities. The concept underlying Habbo Hotel originated from 'Hotelli Kultakala', a site developed by Sulake and launched in Finland in August 2000 for the Internet Service Provider Kolumbus.

Habbo Hotel is using the freedom of the Internet to create a cost-effective and mainstream youth brand. Its ultimate goal is to become the most popular online teen service in the markets where Habbo Hotel has a presence.