Group Buying – Is it right for the travel industry?

Are group deals a flop or not for the travel industry?

With a study having revealed that a third of Australians have bought a travel deal from a group buying website, flash sales sound like a great solution to fast marketing. On the contrary, it seems like daily deals for travel are dying.

In a 2012 global survey of 400 hoteliers, TravelClick found that only 27% of hoteliers would repeat flash sales, citing disappointing revenues and high commission rates as the reason.

Flash sales are useful to drive up sales during low-occupancy periods, but the truth is that the sales fail to reach the targeted customer base because most customers are only out for a quick and cheap deal. While restaurants and beauty centers have the benefit of returning customers, for hoteliers, they lack this perk, especially when their customers are from abroad. Often, small businesses find themselves unable to cope with customer flow and hence are unable to provide the best service possible, leaving bad impressions on customers. It has even been suggested that Groupon actually hurts small businesses and drives the tourism industry to a race to the bottom by setting rates too low.

A quick search on the internet about the leading group buying site, Groupon, turns up plenty of negative reviews about Groupon’s travel deals. The confusing fine print resulted in many disgruntled customers, and it doesn’t help that Groupon has a less-than-stellar reputation for customer service. In the event of a deal falling through, the negative experience might actually turn customers away for good.

 

Groupon only scored a meagre 49.43% rating on the global customer service rating site, customerservicescoreboard.

So, to all hoteliers and travel agencies, take up that offer from Groupon only after careful consideration, or it might be end up becoming an expensive business lesson and a blow to the company’s image.