Hotel Tonight Disrupts Internet Travel Sector

The process of booking hotel rooms is evolving onto smartphones along with many other mundane and ho-hum tasks. Bloomberg reports the hotel room reservations have increased from 3 to 10 percent of all bookings in the last year, and almost half of those reservations were made for the same night that the reservation was made.

The Hotel Tonight app appeals to this last-minute, fly-by-the-seat-of-your-pants crowd. The app has been downloaded more than 1 million times since it became available in January and offers same-night reservations in 28 US cities. Sam Shank, CEO and co-founder, told Bloomberg, “Our customers are high-quality smartphone users who have usually never stayed at the hotels they book in.” In recent months Expedia (NASDAQ:EXPE) and Priceline (NASDAQ:PCLN) have also released this-nigh-only reservation apps to try and capture this market as well.

These last-minute apps often make reservations available at a deeply discounted rate unlike their on-line counterparts. Bloomberg found a hotel featured on the site for more than 20% off the rate featured on the hotel’s website. Even though the hotel industry only averages a 57.6% occupancy rate, hotels are often reluctant to discount rates for fear of undercutting their normal rates.

Hotel Tonight only features 3 hotels in a particular city at any given time and rotates the hotels so that no hotel gets a reputation for being cheaper. It also enables the hotels to offer their rooms at regular rates on-line at the same time. Hotel owners also like the lower commission charged by the app which is just 20% compared to 25% with Expedia (NASDAQ:EXPE) and Priceline (NASDAQ:PCLN).