Hotels with spare capacity will offer their rooms up to companies that sell them as a mystery deal. The companies that i most deal with are Wotif.com, Lastminute.com and Hotwire. Expedia also has Secret saver hotels but I have not used them.
As a customer, you are advised of the location, the Star rating, some of the amenities and price for the selected nights. Once you accept the mystery deal, it is generally not refundable or changeable in any way.
Is it worth it? Yes! I have got some great rooms at a great deal. I am fairly careful about ensuring the area is really good. I also often google the facilities to see if I can work out what hotel it is before I book.
Like the rooms obtained through Priceline which I blogged about last week, no frequent flyer points will be awarded. I also do not ever select a room that is 3 star or less. I always aim for 4 or 5 star. My experience is that often the rooms you get on these mystery rooms are the least desirable rooms – next to elevators or with views of brick walls (there is a reason why there is capacity!) so be warned. Sometimes, I have asked for a move, especially when I show them a Hotel membership card with some status.