Interview: Flash sales as a concept has grown considerably in several markets including the Asia Pacific region but hotel companies have realised that not all the players can deliver the goods.

Certainly choosing the right partners is not easy. By developing partnerships hotel companies hope to reach out to a new set of buyers or focus on increasing off-season occupancy. But such initiatives often fail to deliver, as we reported on EyeforTravel.com earlier this week. Among the unexpected results are: failure to attract the right kind of customer; insufficient revenue per room; no repeat business; and giving up too much revenue to the partner site. Flash sale sites, however, recommend that hoteliers (looking to partner with a social marketing channel) research all options thoroughly and select distribution and marketing partners that suit their brand and truly understand their business challenges.

In markets like the UK and Australia, the trading practices of such sites have been questioned and there have been specific concerns over practices such as reference pricing, advertising, refunds, unfair terms and the diligence of interactions with merchants. Groupon is one such company. Here EyeforTravel’s Ritesh Gupta talks to Adrian Tan, Groupon’s Singapore chief operating officer and head of APAC Travel who shares his thoughts on this crowded sector.

EFT: Social buying and flash sales are relatively new concepts. In your view how is the market doing and do you have a view on what is going to be the next big thing in hotel distribution?

AT: Digitalisation, especially mobile technology, is going to be the next big thing in hotel distribution.  As for social buying and flash sales, they are progressing well and this fresh distribution channel forms a part of our partners’ marketing strategy. Hotels need to understand this new channel better, have proper data processing structures and integrate this with existing systems.

EFT: The travel industry has not been overly keen on the idea of social buying.  Is this still the case?

AT: As of mid 2011, hotels were still relatively against the idea of social buying. The common perceptions then were dilution of average daily rates from huge discounts, displacement with guests from existing channels, lack of loyalty from deal site customers and all of it being damaging to brand image. I wouldn’t say that there has been a drastic change since then but for sure it has been recognised that more and more consumers are making purchases via this channel and this has caused a shift in hotel’s traditional distribution methods.

EFT: The number of sites offering flash sales continued to grow throughout last year. How can differentiate in this category?

AT: Quality of subscribers is the main differentiation. One can compare sites that simply buy database versus Groupon that acquires customers via careful planning and huge investment in marketing dollars, just to get the right subscribers, which ultimately benefits our partners.

EFT: There needs to be a distinction between retail and travel flash sale sites since travel is a far more complex purchase. Any thoughts?

AT: The main challenges are educating consumers to read all fine print thoroughly prior to purchase to avoid dissatisfaction and also sufficient training for hotel ground staff so every guest is being well looked after.

EFT: Flash sales sites inspire customers and some say they engage them higher up in the purchase funnel than online travel agents. Do you agree?

AT: Given that consumers are more affluent and have less free time, they expect the best possible experience for their getaway. Instead of providing a listing of hotels to choose from, Groupon first does stringent checks to ensure the featured hotels are of a certain standard to fit our subscribers. This happens before our editorial team puts together a copy using the ‘Groupon voice’ which is our unique light-hearted way of presenting the deal. Not only are all terms and conditions indicated clearly (no hidden cost or clause), the team also puts in additional efforts to do research on the destination itself, and providing a simple itinerary for our subscribers.

EFT: Some players emphasise price and destination rather than focusing on the unique selling attributes of each hotel. What do you recommend?

AT: Hotels need to be very clear of their objectives from a promotion, and work very closely with your partner to attain this.

EFT: Where do you see the social buying category headed this year?  

AT: More hotels will jump on the bandwagon, however, they will be more cautious about who they work with and put more controls in place.