Hotel Tonight Raises $9 Million

With $9 million in new funding, could lodging-search app Hotel Tonight could disrupt online travel agencies?

Hotel Tonight, a San Francisco start-up that lets smartphone users book last-minute hotel rooms, has raised $8.6 million in a venture round led by Battery Ventures. In total, the company is planning to raise $9.1 million, according to regulatory filings first spotted by GigaOm.

Founded in December 2010, the company bills itself as "the biggest innovation in online hotel booking since online hotel booking." It offers only last-minute buys and only for five nights or fewer, which users can book using either iPhone or Android.

The app is free for users; the company makes money by taking a cut of the booking.

The company launched in just a handful of cities; it's now spread to 28. The app has been downloaded more than a million times.

How big is the last-minute hotel market? Priceline says it's 80 percent of their bookings—and it recently launched its own day-of hotel bargain platform. And Joe Megibow, vice president of Expedia, told GigaOM that 60 percent of Expedia mobile hotel bookings and 80 percent of its Hotwire bookings are for stays that very night.

Hotel Tonight was incubated in co-founder and CEO Sam Shank's previous company DealBase, a travel deals search engine that's a competitor to Kayak. Shank, a serial entrepreneur focused on travel, also kicked in some of his own money. His previous project, TravelPost.com, was acquired by SideStep in 2006—which was then acquired by Kayak. (Shank trivia: His bio notes he was an assistant to Wes Craven on the film Scream.)

Hotel Tonight closed a $3.25 million Series A round earlier this year, with backing from Battery Ventures, Accel Partners, First Round Capital and others.

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