Groupon and Expedia, and their getaways – hoteliers beware

Innfinite advises its clients NOT to subscribe to these in any way, shape or form. It continues to amaze us how these parasitic merchants ride roughshod over the hotel industry. In a sentence, these deals spell losses at best, and potential disaster at worst, for UK hotels. If it becomes absolutely essential for you to market deals thro’ these channels, (for whatever reason we find hard to fathom out), consult with us so that we can explain all the pitfalls in more detail.

Also if we recommend any of these flash/group selling sites, we respect Mary Song of Yuupon, and would recommend www.yuupon.com as they take a far more reasonable view of this whole concept. You might end up with 50% of your desired room rate with Yuupon. And not the 5% mooted by Expedia in one of the most ridiculous articles ever slanted at hoteliers we’ve ever come across – at  http://www.tnooz.com/2011/06/22/news/expedia-what-groupon-getaways-with-expedia-means-for-hotels/ – a very foolish attempt to woo hotels from a monster which doesn’t care two hoots about hotels. Have a read at this post. These mega operators don’t think people understand the concept of opportunity cost. Turn it upside down and you’ll see what I mean. What they are saying is that you spend $190 to get $200. And this is assuming an ‘operating cost’ per room sale of 20% ($40), who are they kidding!!!  Clearly they mean direct cost, as no hotel in Christendom operates at a total cost of 20% of economic room rate, not even the moist budget of budget hotels! The opportunity is to spend $190 to get more than $200. A great targeted adwords campaign would do this standing on its head.

The reality also is that the operating costs are way above $40, meaning that the Expedia model actually demonstrates to hoteliers how to lose money, and fast, 1000 vouchers are more likely to lose you $10000 or more, far less make you that sum. Remember too you have to supply the product, take the full inventory risk (they take none), deliver the service, listen to the moans, not to mention cheapskate customers and brand erosion – we don’t even get out of bed for that money! Also how many of you could possibly tie enough room inventory up to sell 1000 vouchers!

As Max Starkov said, any booking via a more discounted channel (i.e. Flash Sales Sites such as Groupon, LivingSocial.com or SniqueAway.com or an OTA) is one less booking for the same hotel via the hotel website, call center, GDS, or OTA (in that order).

Also read his recent post http://www.hebsdigital.com/blog/it%E2%80%99s-official-the-dumbest-hotel-distribution-idea/ (note the title!!)

We have been quite active in posting comments to recent articles, all really worth a read on  http://www.socialmediaexaminer.com/will-groupon-really-boost-your-local-business/#comment-219849928

http://www.tnooz.com/2011/06/22/news/expedia-what-groupon-getaways-with-expedia-means-for-hotels/

http://www.tnooz.com/2011/06/14/news/is-groupon-a-killer-app-or-a-serial-killer/

http://www.tnooz.com/2011/07/13/news/are-flash-sales-the-sweet-spot-between-travel-inspiration-and-transaction/?utm_source=Tnooz+Mailing+List&utm_medium=email&utm_campaign=2d4d5201aa-RSS_EMAIL_CAMPAIGN

The comments are actually more interesting than the articles! You’ll notice there are just a few from yours truly, Robert Gilmour, CEO of Innfinite!

Hoteliers, are you with us on this? Let’s have your feedback. Do we just succumb to the new norm, the day of the deal? (these sites are proliferating, Booking.com are now doing it, Orbitz about to join them)

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