Last-minute travel app HotelTonight books $23M in funding

Last-minute hotel booking is proving to be big business for HotelTonight, a one year-old San Francisco-based startup that just closed $23 million in additional funding.

Launched in 2011, HotelTonight makes elegant and easy mobile-booking applications for the iPhone, iPad, and Android devices that surface the top three same-night hotel deals in a city each day at noon local time. The applications, which are light on choice but heavy on convenience, are currently available to customers in more than 40 markets across the U.S. and Canada, and have been downloaded more than two million times.

The young startup’s sizable $23 million round was led by U.S. Venture Partners (USVP) with participation from Accel Partners, Battery Ventures, and First Round Capital. The funding will be used to hire aggressively, improve the mobile products, and ramp up international efforts, the company said.

“Our goal at HotelTonight is to revolutionize the way people shop for travel,” HotelTonight CEO Sam Shank said in a statement. “By building apps that allow users to easily book same-day hotel stays at great properties at incredible prices, we’re delivering on that mission.”

HotelTonight’s special sauce is its ability to solve the “I need a hotel room tonight” conundrum by featuring deeply discounted, same-night rates at high quality locales, all available to the mobile consumer up until 2 a.m. local time. The company works directly with hotels to ensure that rates are lower than rates offered by other hotel sites, and dramatically cheaper than regular stays. Hotels compete for exposure, as only the best three deals, as curated by the company, are shown to app users each day.

The new money, then, should come in handy as the company fights off competition from travel industry incumbents such as Priceline which have been quick to copy the same-night-only deal model of HotelTonight.

HotelTonight has raised $35.85 million in funding across three rounds since its 2011 launch, with early investors re-upping in the latest round. In conjunction with the raise, USVP general partner Rick Lewis is joining HotelTonight’s board of directors.

Photo credit: Shutterstock

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