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Habbo first began operation in 2000, but the planning originally started in 1999; it stemmed from a hobby, which founders Sampo Karjalainen and Aapo Kyrola previously did. Before Habbo was born it was named as Mobiles Disco, named after a Finnish band it was a chat room that Aapo had set up. The founders were then contracted to design a virtual game that would be named Lumisota, translated to Snow Wars and this would be given to a Finnish ISP. After this had passed another contractor contacted them for another project, with would then go on to become Habbo as players know it today. They originally named and devloped Hotelli Kultakala, translated to Hotel Goldfish. A small team of developers were employed to help run it and it launched in August 2000 on the ISP's web portal.

When Hotel Goldfish went live Aapo and Sampo teamed up with Dee Edwards, a British entrepreneur and decided to create an international business including the virtual hotel that they had not long since made live. The finance needed was raised and they originally drafted a plan in Autumn 2000; by the end of January 2001, Habbo Hotel was live and had reached beta mode.

Habbo then expanded over the teen market and was originally run from the headquarters in London - the expansion reached 31 countries in 5 continents, including 4 languages. New hotels were made in various countries such as Switzerland and Hotel Goldfish was then changed to Habbo Hotel.

As the name grew the domain changed from 'HabboHotel' to just Habbo in May 2006 and this lead to the closure of some hotels such as Habbo Chinese - this was then closed permanently and players were redirected to other hotels. Over Habbo's time more and more hotels closed such as Habbo Russia.

In 2010 merges occurred, which saw all English speaking hotels and all majorly German speaking hotels merge. Habbo has been quiet for years, but has been accused of sexual allegations and the final hotel currently was open in 2012, named Habbo Turkey.

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