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Is the Hospitality Industry Too Dependent on Deal Sites for Bookings?

Restaurant, hotel, spa and even gym owners are increasingly finding themselves looking to online deal sites such as Groupon and Secret Escapes to take bookings and boost memberships.

We look at how important they are and whether those in hospitality can perform just as well by going at it alone with their marketing efforts.

 

Just how popular are deal sites? And importantly, why?

There are, quite literally, hundreds of deal sites with millions of active users and almost all of these sites and apps offer both local experience and travel deals – making a presence on them a must for many hospitality businesses.

Groupon is the most popular, with 370,000 active deals, 500m+ active users and revenues topping $3bn in 2016, but other sites such as LivingSocial, Wowcher, Mr & Mrs Smith, Allthedeals.co.uk and Secret Escapes are also gaining popularity all the time.

Essentially, these sites simply act as brokers between businesses or agents, connecting them with a huge customer base. So why are they so popular? Answer: the ‘bargain feeling’.

 

According to a new study conducted at the University of Michigan, the act of shopping—especially when it involves a bargain—gives consumers the same satisfaction that is experienced after having sex, reports ABC News.

 

So, if bargain-hunting is the driver behind the popularity of deal websites, then can hospitality businesses compete without using them? And if so, how?

 

Although deal websites do give hospitality access to a large potential customer base, the typical Groupon customer spends less than £150 with the site in total – meaning holidays, expensive meals and hotel stays are not at the top of the list for shoppers using deal websites.

Additionally, experts argue that consumers can get access to good prices and even better incentives by booking with the venue direct – meaning businesses simply need to communicate this with their customers in order to reap the benefits.

 

Adam Raphael, editor of The Good Hotel Guide: “Agencies are rarely competitive because the hotel has to pay a charge. By contrast, there is no shortage of incentives for booking direct.”

 

We believe that it is perfectly possible to both compete with larger brands and avoid dependence on offer sites. In fact, it is becoming ever-more so with developments in automated marketing, social media and digital advertising – which have all opened up an increasing number of marketing possibilities at competitive rates.

This means that although businesses may not be exposed to the large pools of consumers signed up to deal sites, they can accurately target those that they are most likely to convert and effectively communicate the incentives of booking or signing up directly to them. Focussing on quality over quantity and effectively communicating the perks of booking direct across-channels year-round will give you the opportunity to both offer good deals and convert a higher % of your audience, without the expense of commissions and other fees.

 

At AlphaGraphics, we specialise in helping hospitality businesses deliver data-driven, automated marketing campaigns that include direct mail to improve lead generation. To find out more, visit: https://hospitality.alphagraphics.co.uk/