Groupon is launching a travel deal service with Expedia. Groupon’s CEO Andrew Mason said that the new service will allow travelers to book hotel rooms and airfare from Expedia at a steep discount.
Only time will tell us what the deal is all about, and how Hotels and Travelers fit into the mix. While this is a good news for leisure travelers that are not attached to any particular brand and are always looking for great deals, it may not be such a good news for Hotels. But its clear its all about ‘steep discounts’, which obviously is a matter of concern for Hotels than Travelers.
Typically, any business will want to create loyal customers who will make repeat purchases than one-off ‘deal-looking’ customers. Hotels are no different. Hotels want to create loyal customers and brand advocates, who will make repeat bookings, and refer the Hotel to their family, friends, relatives and colleagues. It’s proven that recommendation by a loyal customer can produce better results than display ads.
So, is it high-time that Hotels start to look at ‘direct channels’ a little bit more seriously ? Focus on moving up the value chain rather than competing on price points ? Establish direct customer relationships, listen and innovate with your brand advocates ?
Hoteliers, I would love to hear your thoughts on this recent development !
Update to the post:
Within three days of the partnership, Expedia sold 15,000 travel deals. Recently, the management has suggested that it is no longer confident of the long-term value of sales made through Groupon. They are questioning the loyalty of customers acquired through Groupon deals.
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My thoughts on this is negative. If we keep discounting our rooms we are all going to be out of jobs! How much can a small privately owned hotel discount their rooms without going under? We still have the high mortgages, the payroll for maintenance, housekeeping, reservation agents, managers, supervisors, upkeep expenses, etc.
We do work a lot with online travel agents, but there comes a point when we need to say “no” to their increased demands of lower rates. Instead of putting all the profits in their pockets, I’d rather put the profits in ours.
That’s exactly the point, Pam ! Hoteliers need to start exploring ‘direct channels’ and be creative in offering ‘value-added’ services rather than yield to these price drag-down tactics !.