Survey shows dissatisfaction with group discount model.
Tuesday, 3rd April 2012
Source : Travel Distribution Summit Europe 2012
A survey has indicated that hoteliers across Europe are yet to be convinced of the value of group discount websites as a way of filling empty rooms.

According to TravelClick's survey, flash sale websites such as Groupon and Living Social divide opinion when it comes to driving business with only 27 percent of properties claiming it as a sales tactic they would repeat. The company mentioned that even though group discount websites are a real success story and have grown incredibly quickly, it seems word has spread in the accommodation sector that they don't always deliver the results that hotels are anticipating.

The survey, conducted amongst almost 400 chain and independent properties in mainland Europe and the UK, shared that of the flash sale sites, Groupon was used the most (60 percent), ahead of Living Social (28 percent) and JetSetter (15 percent).

Thirty-three percent of hoteliers claimed they would not use flash sale sites, while 17 percent said they had tried group discounting once but would never do it again. It also revealed five main reasons why hotels were unhappy with the group sale experience. These were:
  • Did not make enough revenue per room
  • Gave up too much revenue to the sale site
  • Deal wasn't as successful as expected
  • Failed to see any repeat business, and
  • Did not attract the right calibre of customer
Jan Tissera, President, TravelClick International said, "Anecdotal evidence has indicated that hotels are also concerned that a large percentage of the customers who book had actually stayed with them before and cannot be ‘up-sold', which discourages incremental business."

Hotels reported a number of reasons that featured in their decision to consider flash sale sites, with increasing off-season occupancy (70 percent) and raising the property's profile (60 percent) leading the way. Reaching a new demographic (35 percent) and keeping up with competition (24 percent) were also mentioned.

Selecting Partners

In a recent interview with EyeforTravel.com, Nick Stafford, General Manager, LivingSocial said that the key factor for hoteliers looking to partner with a social marketing channel is to research the options thoroughly and select distribution and marketing partners that suit their brand and truly understand their business challenges.

"A partner who will understand your business, and your property is unique, and look for the story behind your brand, to best position you to your target customer, will be the best placed to offer the maximum benefit over the long term," said Stafford.

He mentioned that while opportunities for market entry abound, the sector holds somewhat more challenges when it comes to succeeding over the long term and scaling operations. "Over the last 12 months, we have seen two quite distinct approaches to social commerce in the travel category; those who really understand the category, keep travel at the heart of their business and have experienced staff, working with merchants on meaningful multiple market promotions, and those with expertise in other areas who view travel as an additional, rather than a core, element of the business," he said.

It is being pointed out that the niche that flash sales sites is covering in the distribution model is that it provides hotels with an avenue to manage yield/ inventory over a predicted slow period as well as providing hotels with an effective advance purchase programme tool which previously could not be implemented effectively.

"Although that is a commonly-cited assumption, there is an argument this falls somewhat short of the reality, and underestimates the true potential of social commerce in the travel realm. At LivingSocial, we successfully sell inventory across the year –our hotel partners are looking for certainty in demand, not necessarily generation of last minute traffic. Whilst we do offer ‘Instant Escapes' for those later purchases, the majority fit in the advance booking category," said Stafford, who is scheduled to speak at the forthcoming Travel Distribution Summit Europe 2012, to be held in London (April 17-18) this year.1

"Ultimately, we are in the business of creating demand – our business is founded on telling stories to our members, the propensity of those stories to be shared via social media and the resulting purchase of travel experiences on a material scale. If there is in fact a ‘niche' that we operate in, I would perhaps be inclined to say it is the niche of intense demand fulfillment," he added.

The company's model is all about inspiring demand and telling great stories of fantastic properties and experiences. In fact, 70 percent of LivingSocial Escapes customers indicated in a recent survey that they weren't actively looking to travel when they purchased their LivingSocial Escape.

However, inspiration is just one element – it's also important that the purchase path is simple (for both web and mobile) and that it is really clear what the customer is buying –transparency and simplicity of user experience must combine to create a journey consumers will want to repeat time and again, said Stafford.

1 - http://events.eyefortravel.com/travel-distribution-summit-europe/agendas.asp
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