The group-buying phenomenon, which continues to attract unprecedented levels of consumer interest in daily deals websites since their emergence in 2008, has proven to be a viable sales and marketing model within the travel and tourism industries.
Daily deals sites capitalise on the concept of raising interest in a discounted product or service amongst a body of consumers. In order to take advantage of the discounted offer, a predetermined number of potential customers must subscribe to the deal. In accordance with the business model, if an offer is of significant value to a particular consumer they will encourage their social network to subscribe to it in order to generate enough interest to ensure that the offer can be obtained.
In periods when consumers have less disposable income to devote to holidays, flights, hotel rooms and tourist attractions, the daily deals concept can be a valuable means of driving new business for companies both large and small within the travel and tourism sector.
Here’s a simple illustration of how daily deals sites might benefit such a business. Let’s assume you own a hotel, the primary function of which is to host business conferences, sales demonstrations, corporate training days and suchlike. Room bookings are fine during the normal business week, but at weekends or during ‘non-business’ periods such as Christmas and Easter the hotel is scarcely occupied and the majority of rooms remain vacant.
Ordinarily, the hotel would be required to fund and run its own marketing campaign in order to attract guests during these quieter periods. This might stretch to advertisements in local newspapers or perhaps on local radio but unless the hotel is part of a well-funded chain, sufficient budget for national or international promotion may not be available.
A more beneficial approach to promoting the hotel would be to offer a compelling deal via a daily deals website. You might offer a weekend stay at your hotel for a 75% on the normal room tariff if a minimum of 250 potential customers sign up to the deal. The daily deals website takes care of all of the promotional aspects of this deal – emailing its subscribers (potentially millions of consumers) and giving the deal prominence on its website.
Daily deals are targeted regionally, which means that your promotion will reach the widest possible audience of viable new customers. The beauty of this marketing model is that if your offer is sufficiently compelling, recipients will tell their friends and relatives about it both online and offline. Only when the minimum number of interested consumers has been reached will the daily deals site email out a voucher enabling customers to redeem the offer via the hotel’s online booking system.
The price of this service is that the daily deals site takes a commission of up to 50% of the sales revenue generated by the offer. Generally, this is only payable once the promoted offer has actually ended. The potential benefits to the hotel are maximum exposure to potential new customers in the area and the chance to fill rooms at times when they would otherwise remain unoccupied and unprofitable.
Naturally, the onus remains upon the hotel to ensure that participants in the discounted offer are sufficiently impressed by their experience of the hotel that they are encouraged to stay again, paying an undiscounted tariff and that the hotel’s website is optimised to convert new visitors into paying customers.
The daily deals site marketing concept is benefiting many sectors of the travel and tourism industry, from local tourist attractions looking to increase ‘low-season’ customer numbers to package holiday suppliers and to owners of every size, standard and type of accommodation.
To put the power of the daily deals business model into context, the current daily deals market value is estimated at $2 billion, and is forecast to at least double in value by 2015. More importantly, the travel industry is a relative newcomer to the daily deals website marketing strategy but in Australia alone daily deals sites hotel promotions accounted for 44,000 low-season hotel room sales in just 12 weeks.