IN-DEPTH: Doug Miller, SVP New Business Initiatives, LivingSocial says the social commerce movement fills a gap in travel discovery and buying. It champions evocative travel stories and pairs these stories with transactional “buy” buttons like never before. Miller recommends do’s and don’ts for any hotel company that it is focusing on group buying and flash sales.

Published: 18 Jul 2011

IN-DEPTH: Doug Miller, SVP New Business Initiatives, LivingSocial says the social commerce movement fills a gap in travel discovery and buying. It champions evocative travel stories and pairs these stories with transactional “buy” buttons like never before. Miller recommends do’s and don’ts for any hotel company that it is focusing on group buying and flash sales.

By Ritesh Gupta

The social shopping space continues to heat up.

Washington, D.C.-based LivingSocial, one of the sought-after companies in this arena, launched its travel-oriented vertical LivingSocial Escapes in December last year.

LivingSocial Escapes is described as a travel site that offers “unbeatable savings on curated adventures”.

“At LivingSocial Escapes, we set out to inspire travel buying,” Doug Miller, SVP New Business Initiatives, LivingSocial told EyeforTravel’s Ritesh Gupta in an interview.

“If Facebook is where people share experiences, LivingSocial is where people discover and buy experiences,” added Miller, who is scheduled to speak at the forthcoming Travel Distribution Summit North America 2011, to be held in Las Vegas (19-20 September) this year.

Miller, who oversees all aspects of new business development, including overall strategy, new market segments, and managing the existing client base, spoke about the latest trends, the focus of the travel vertical, core audience and other issues. Excerpts:

Can you elaborate on the latest trends for both Group Buying and Flash Sales in the travel industry?

Doug Miller:

The overall trend starts with a very simple idea: creating travel demand. As travellers, we all get excited about watching Anthony Bourdain on the Travel Channel, reading glossy travel magazines or hearing amazing weekend getaway stories shared by friends. These travel stories inspire us, but often pass by without action since there’s no simple way to buy in the moment of inspiration.

The social commerce movement fills a gap in travel discovery and buying. It champions evocative travel stories and pairs these stories with transactional “buy” buttons like never before.

At LivingSocial Escapes, we set out to inspire travel buying. We don’t categorise what we’re doing as “group buying,” and the term “flash sale” only just begins to describe the bigger merchandising and marketing idea here. If Facebook is where people share experiences, LivingSocial is where people discover and buy experiences.

Can you highlight salient features of Group buying in terms of how it works? What is the potential as a viable distribution channel?

Doug Miller:

Escapes partners report selling as many room nights in a week with Escapes as they’ve sold all year with an OTA partner. This includes vacation destination & ski resorts, city-market properties, casino hotels and independents. The model is viable. It will change hotel distribution going forward. It’s on-demand distribution for an increasingly on-demand world.

It’s also notable that the social commerce model comes with unambiguous marketing benefits. Escapes pages link directly to hotel websites, by design. We want to create direct engagement between consumers and hotels. We want travellers to engage with hotel brands, hotel videos, hotel content…hotel stories. Moreover, our voucher-based redemption model drives all reservations through the hotels directly. Enterprising partners report more than doubling their revenues before travellers arrive because unlike other online travel distribution, they own and control the opportunity to upsell at the time of reservation, and for the weeks leading up to the traveller’s arrival on property.

LivingSocial offers daily deals on handpicked experiences that can be shared with friends. Which areas are you trying to address through your venture considering that consumers are overwhelmed by the research and decision process in the travel sector?

Doug Miller:

Imagine the ease of shopping a boutique retailer with a small collection of handpicked goods. The store is inviting, approachable and designed with the idea that less is more. Then, imagine that boutique has the capacity to invite 40+ million people each day. That’s LivingSocial.

We are not creating a comprehensive directory and jamming it full of every possible travel option. We do not want to overwhelm with choice. Rather, we feature one or two exciting nearcation options and select destination trips. We go deep in telling the story of places and properties, and why they’re special.

To make the process of buying even easier, each Escape is also a “trip-in-a-box,” filled with fun. Working with our hotel partners and our local LivingSocial staff, who are on the ground in over 300 markets around the world, we design just the right combination of amenities and experiences to make buying a quick getaway exciting and easy. The “trip-in-a-box” approach reduces consumer stress and planning fatigue.

The approach seems to be working: a surprisingly large percentage of LivingSocial Escapes are bought within just a few minutes of opening our emails. Again, it is our goal to publish trip ideas worthy of sharing with friends, spark the imagination of travellers and create demand.

Can you describe your core audience? Can you explain the preferences in terms of travel planning and also buying behaviour of your core audience?

Doug Miller:

The Nielsen Company recently reported LivingSocial audience numbers that prompted one reporter to write that our customers are “younger, richer and smarter” than our nearest competitor. That said, I think what’s most interesting about our audience is their mindset. They are sociable and adventurous. They like to try new things, they’re curious about the new and unconventional, and they like to convince others to try new things as well. The LivingSocial customer wants to get out from behind the screen and experience the world.

Our customers also view LivingSocial as different than the other flash sale or social commerce channels. One guest at an Escapes hotel partner recently told the General Manager, “I like LivingSocial because it’s more like me; it’s more about cool experiences than cheap deals.”

LivingSocial is also much more than just a travel business. Our audience demonstrates uncharacteristically high levels of daily engagement with our site relative to an OTA, or other travel vertical flash sale sites. The LivingSocial customer checks in regularly on local deals, finds lunch with LivingSocial Instant on their iPhone, and shares offers on Facebook. Escapes travel partners benefit from this heavy daily engagement. We’ve sold over 400k room nights for about 400 properties since launching just months ago.

As far as buying behavior among our members, we see a reverse bell curve in purchase patterns meaning people open/buy as soon as the email hits on Wednesday, then there is a dip while people plan with families and friends, and then there is another spike near the end of the week that the deal is live. Moreover, Escapes partners report that they see huge spikes in their website traffic during the period their deal is live.

The concept of flash sales is gaining traction in the travel industry. For consumers, flash sale sites are becoming increasingly popular because they’re an attractive way to access overstocked inventory, or to get introduced to new offerings. How do you expect this concept to shape up going forward?

Doug Miller:

The trend toward social buying and flash sales will change and influence both travel media and travel distribution going forward. One partner recently said to me, “If you had told me I could get my hotel in front of over 20 million, and get more than 800 new customers in 10 hours, and do all of that with no upfront cost, I would have told you were crazy. Where else am I going to do that?” Enough said.

The travel industry has witnessed several new initiatives related to group travel. How do you assess the maturity level of group buying in the travel sector?

Doug Miller:

I think we are just scratching the surface and there’s considerable innovation ahead.

The field of travel social and flash commerce sites will grow, and clear differences will emerge. Some will bring travel industry expertise into the heart of the company, and some will outsource it. Some will create demand and inspire travel, and some will simply push deals on unsold rooms. Some will build a global audience, and some will focus on a select segment.

In general, the concept of social or flash commerce works for travel. It’s highly measurable and performance oriented. You don’t pay for impressions. You don’t pay for clicks. You pay for heads in beds and butts in seats.

Can you explain how you go about offering travel deals/ exclusive offerings to your subscribers? How do you make it enticing for them to avail the same?

Doug Miller:

It starts with our experienced team in the field, a team with deep travel and media backgrounds. They work with each individual property to develop ideas and packages. We do not believe in a “one size fits all” approach.

After an Escape idea has been crafted, we have an in-house editorial and design team that works with our partners to develop an offer page. The page presents the partner’s story using rich copy, imagery and video. Once each week, we published a collection of Escapes including both nearcation and destination trips, and our offers typically run for 7-days.

Importantly, LivingSocial’s members subscribe for email or mobile alerts from a home market. That means we can intelligently feature Napa getaways to members in the San Francisco Bay, promote Hawaii in key West Coast feeder markets, and Puerto Rico in New York. Of course, discovery of these deals is not limited to these markets as we’ve seen plenty of Napa Escapes purchased by our members around the world. Sometimes an escape means going a little further away so escapes.livingsocial.com is designed to encourage discovery of our entire collection – from near to far – each week.

How do you think hotels can play their part in terms of making the offers attractive?

Doug Miller:

The experiential “trip-in-a-box” approach is really important to the success of an Escapes offer. When developing these packages, we welcome creative ideas as we want to excite and inspire travel. One Escapes partner in Banff included an ice-walking adventure, a small property in Vermont included cooking classes, in Oregon a resort included a whiskey tasting experience, and in Arizona a partner included tickets to the family water park. The more value included in an Escape, the more attractive it becomes to the consumer. Properties that leverage other amenities such as an onsite spa or restaurant tend to run more successful Escapes than those who offer accommodations only. Of course, packaging also helps to protect rate integrity.