The trade-off is supposed to be that you can't always get a last-minute room at the Four Seasons when you book it for "tonight" -- sometimes they'll be sufficiently full that they won't have sold that block to HotelTonight, and instead of having a plush room right across the street from where you'll be working early the next morning, you'll need to settle for a "motel" right on the highway, 10 miles away.

I'm not sure how these things end up playing out (and if HotelTonight shows data that maps how often selected hotels actually have rooms available, that might undercut the hotels' stance a bit), but I know I wouldn't want to rely on it; even planning in advance, in my experience it's not terribly rare that hotels are booked up if you don't call early enough (and it's an in-demand area).

Edit: ah, yup -- that's HT's pitch to the hotels. From the section for "hotel partners": The key to targeting these unique and valuable guests is the IMPULSE DEAL, a rate so you good you only use it when you absolutely need to move rooms at the last second. Since you don’t have that need everyday, our display changes everyday, meaning guests can never predict when your hotel will be offered.

That is a big draw. Most revenue comes through loyalty programs and most properties are terrified if they give to much to OTAs their numbers will drop and they'll be fired. Plus, people who book online are usually price sensitive and indifferent to the actual service and amenities - their loyalty comes from price not past experience. To make matters worse, companies like expedia/hotels.com have HORRENDOUS customer service which makes better brands even more hesitant to help them out, because its trouble they can't control. The vast majority of GMs are promoted from within, which means working class and under educated. They're not going to take chances because jobs are hard to find and not one of them wants to go back to housekeeping etc

Its not only Hotel Tonight that does that, even priceline's negotiator, hotwire's hot deals and travelocity's last minute discounts. It wasn't something new that HotelTonight tried, but by creating an app for a narrow vertical 'discount rooms for tonight', they attracted lot of people's attention.

The problem with HT is that it can't do enough volume to actually build a profitable business. It's primary customer is someone bigger to buy them out.

Four Seasons selling blocks of rooms for pennies on the dollar to HT doesn't hurt their brand? Do you think HT is paying $500 for each of those rooms?