HotelTonight books swanky hotels on the cheap (video)

More times than not, hotel booking is a last minute affair, and it’s usually not much fun. But with a $15 billion hotel market, there’s a great opportunity for an app-maker that can make this process seamless and fun. HotelTonight may just be that app. Stylish and elegant, HotelTonight connects nearby consumers to boutique hotels with empty rooms.

“We’re setting out to be the next $1 billion company in travel,” HotelTonight co-founder and chief executive officer Sam Shank.

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That’s a pretty bold claim for a company that specializes in a tiny niche of the hotel market. But merchants apparently like HotelTonight, because it helps them deal with the problem of “distressed inventory,” another way of saying a product that is getting close to its expiration date. You can’t sell yesterday’s empty hotel room to today’s traveler, but with HotelTonight the hotelier has a chance to push out a last-minute discount on rooms that would otherwise earn no money.

HotelTonight’s timing may be good, since more than 35 percent of travelers plan to book a hotel room on their mobile device in the next year, according to a study released by PhocusWright, a global travel market research company.

HotelTonight joins companies like WillCall for event tickets and appointment manager Schedulicity (which launched at DEMO ’11), that help merchants sell distressed inventory, which Shank calls the on-demand economy. It also competes with more established travel-booking sites like Expedia, Travelocity, Kayak and Hipmunk.

HotelTonight is expanding the market of potential hotel occupants, says Shank, rather than cannibalizing hotel profits by forcing them to offer discounts, a la Groupon. The app instead is targeting an affluent user base who can afford to stay in a hotel, but might not have even thought to do so. Part of the appeal is that HotelTonight doesn’t list every hotel in every city, just the cool ones, like New York’s Ace Hotel, or the Talbott Hotel in Chicago.

HotelTonight recently expanded its offerings to include Charleston, SC, which was recently listed as the top tourist destination in the U.S. The company is based in San Francisco, has 20 employees, and has raised $3.25 million from Battery Ventures, Accel Partners and First Round Capital.