Having built a profitable e-commerce site for hotel stays and moved on, Sam Shank has taken that experience and built the Hotel Tonight mobile commerce app that enables consumers to book same-day hotel stays at deep discounts.

Realizing from his experience at Dealbase.com that hoteliers usually have unsold rooms at the end of the day, Shank recognized that mobile phones could be an effective tool for selling these rooms.

“What does mobile do better than booking a hotel on a web site?” Shank says. “A traveler can book wherever and whenever. It creates a new source of demand for hotels.” Based on surveys of Hotel Tonight users, Shank says 91% of consumers who use the app to reserve a room said they had never previously stayed in the hotel they booked. Since the company’s launch in Dec. 2010, more than half of the room reservations made through app were made by travelers who otherwise would not have stayed in a hotel, Shank says. Approximately 40% of Hotel Tonight users are business travelers and 60% are leisure travelers, he notes. The recently updated app includes more cities and hotel types. Hotel Tonight now offers rates in 28 cities.

Upon opening the Hotel Tonight mobile app for the iPhone, a consumer first has to confirm his location. The app uses the smartphone’s built-in global positioning system ability to locate the device. Once a city is selected, a screen appears with a list of hotels and their discounted rates prominently displayed. A one-word description, such as Hip, Luxe or Charming, sits beneath each hotel’s price. Users select a hotel by tapping on it.

The next screen again displays the price for that night and an automatically scrolling set of photos from the hotel. A tap of the “Book a Room” button at the bottom of the screen takes the user to a log-in screen, where he can use his Facebook credentials or create a Hotel Tonight account to complete the reservation process.

Only hotels with a three-star rating or higher, based on reviews from popular travel web sites, are eligible for Hotel Tonight’s offering, Shank says. And, to ensure that hotel managers have the most time to sell their available rooms at higher rates, Hotel Tonight discounted rates do not appear in the app until noon local time.

Hotel Tonight serves up at least three hotels per city each day, with some cities, such as New York, offering more. In some cities, Hotel Tonight makes only three spots available as a way to increase competition among hotels for placement within the app, Shank says.