*This is an interesting article we found about Flash Sales Travel Sites – thanks to the good folks at Travolution
European hoteliers have yet to be convinced of the value of group discount websites as a way of filling empty rooms, a survey claims.
Flash sale websites such as Groupon and Living Social divide opinion when it comes to driving business.
Only 27% of properties saw it as a sales tactic they would repeat, according to the research by hotel market intelligence firm TravelClick.
A further 33% of hoteliers claimed they would not use flash sale sites, while 17% said they had tried group discounting once but would never do it again.
The survey, conducted amongst almost 400 chain and independent properties in the UK and mainland Europe, revealed five main reasons why hotels were unhappy with the group sale experience:
- 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
- Did not attract the right calibre of customer
Hotels reported a number of reasons that featured in their decision to consider flash sale sites, with increasing off-season occupancy (70%) and raising the property’s profile (60%) leading the way.
Reaching a new demographic (35%) and keeping up with competition (24%) were also mentioned.
Of the flash sale sites, Groupon was used the most (60%), ahead of Living Social (28%) and JetSetter (15%).
Travelclick president Jan Tissera said: “Group discount websites are a real success story and have grown incredibly quickly, but it seems word has spread in the accommodation sector that they don’t always deliver the results that hotels are anticipating.
“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.”
While it’s understandable that these types of sales were a benefit to businesses in the recession years of 2008 – 2011, too many Hotels, Resorts and Lodges have become reliant on them as a central part of their strategy and are running several of these offers a year. The problem with this is that too many potential travel shoppers are now becoming conditioned and trained to shop solely by price and not by value – and how many Hotels and Resorts…or for that matter, businesses in general can expect to operate when they earn only .25 to .40 cents on the dollar for their products or services? The outcome of this is well run, well marketed properties, in similar or the same destination are now fighting unfair price wars and are less able to charge a competitive rate. We recommend looking at other options. Our Company is a big proponent of maintaining rate integrity – (especially in an improved market) and selling value over price. This isn’t always possible, I just feel flash sales and Groupon style offers are the easy route and should be approached with caution. I recommend a highly diversified direct to consumer strategy that reaches high value guests that want a fantastic experience, rather than a deeply discounted rate. While you might not see the fast up front Blast that the flash sale drives, you should see consistent, steady, top line sales at a higher ADR with a healthier RevPar over time.
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About Matt Renner
Matt Renner is Vice President of Business Development for TravelNet Solutions and has over 7 years experience in the Online Hospitality Marketing arena.