I used to (and am starting again) to think that they were basically a scam.
My first Hotwire experience was actually through my sister-in-law. I trusted her to book a room for me during a family emergency, and she did so through Hotwire.
I should have suspected something, because it was supposed to be at the same hotel she was booked at, and instead it was two hotels down the street. But the hotel was unbelievable for the price we paid, and we weren't inconvenienced at all. My sister-in-law said that she had NEVER had a bad experience with Hotwire, and she highly recommended it.
But, alas, my first instinct appears to be correct. Sigh.
Oh well, all I can do now is fight it and warn others.