In Depth: A number of flash sales sites promise to inspire people to travel and introduce them to new destinations and properties. The argument goes that if hotel content is well presented, this is enough to convert customers. But should hotels companies always share their inventory? Ritesh Gupta finds out.
Travel planning has changed drastically in recent years. In the past most consumers would start with certain parameters such as location, experience, budget and so on. But today people are consuming a range of content on many different devices. So a customer with no intention of travelling may find themselves reading about a property online which also gives the option to purchase at a discounted rate. Before long they have booked the hotel.
Timing is crucial
Many businesses are focusing on how they trigger such buying behaviour and over the past 18 months several new travel businesses have emerged. Their aim: to serve up highly relevant content that surprises and delights those who have signed up. By and large the business model relies on attractive deals that consumers are willing to grab but for hotel businesses there should be more to it than that.
In February this year, Expedia surveyed 2,236 US adults to assess their behaviour around Valentine’s Day. For the travel industry the results were significant. Of those surveyed 27% had given the gift of travel in the past and 58% of those who celebrate Valentine’s Day would ‘definitely’ or ‘probably’ take advantage of an inexpensive getaway deal within a week or two weeks. It is clear then that travellers are open to booking a hotel room or package at an exceptional rate when the time is right. It is all about knowing how to inspire demand.
Consumers are ready to grab deals, and intermediaries are there to offer them, but are hotel companies ready to host these guests?
Unsurprisingly hotels have had their concerns about eroding brand value. With the proliferation of players they have been choosy about partners as flash sales sites increasingly fail to deliver. This is down to too many players in the market, deal fatigue, concerns about rate integrity and so on.
“The main difference between flash sale travel sites and normal online travel agents is simply the deep discounts that flash sales sites provide,” says Jean Francois Mourier, chief executive of revenue management specialist firm RevPar Guru, who is no fan of deep discounting. “I believe that the key to a successful hotel is to have competitive rates at all times to ensure the greatest RevPAR (revenue per available room). Flash sales are designed to encourage last-minute bookings, so it is very important to yield your rates up to the last minute every day.”
Still, one cannot ignore the benefits of flash sales.which are highly measurable and performance-oriented - you don’t pay for impressions and clicks, you only pay for what has been booked.
A hotelier based in Kuala Lumpur says that after witnessing heightened activity of players using flash sales models over the last six months, hotels are now experimenting with different possibilities. Among those being tested are: tweaking offers with various bundling options, twin or multi-destination packages, geographical targets, extended validity of for use of the offer and so on. The focus is moving away from being purely discount based. Two clear lessons have emerged:
With geographical targets flash sales companies can be of use. For example, if there is a flash sales company operating in the Gulf area, and your hotel wants to penetrate this region, then by all means tie up with them. However, doing flash sales in one’s regular market arena is not advisable.
The utilisation date for various vouchers is also being extended. Three to five months used to be typical but this is now more like 12 to 15 months. Voucher holders can now choose to take their intended stay over an extended period. For the hotel these so-called low priced room nights will not have a sudden massive impact on the hotel’s average rate over a short period.
As hotel companies get to grips with the flash sales model, they are finding that it can be viewed as the ultimate early bird special or as a money-down guarantee advance purchase scheme.
Four top tips for successful flash sales
So while it is not all negative firms should be clear about how to approach flash sale sites. Here are four recommendations.
Be selective: Do your homework before you sign up. Your partner should understand your business and the uniqueness of your property. They should look for the story behind your brand to best position you to your target customer. Don’t settle for less.
Restrict sales per year: The power of private sales is the element of surprise. When a partner is featured on a private sale site too frequently, then consumers will wait for that sale and this has the effect of cannibalising full price business.
Plan carefully: A hotel company should plan its participation in these sites as part of its overall marketing plan and should consider how this fits into the advance purchase strategy for peak and shoulder seasons.
Highlight your property in the best possible way: Be sure to include striking photography that highlights all you have to offer. Hotels should make sure that their offer is compelling across all fronts, including travel dates, room types, and the entire stay experience.
Watch out for interviews later this week where some players share their thoughts on flash sales
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There are two useful strategies that can boost sales and build the brand namely promotions and specifically targeted sales’ growth. These approaches should be familiar to all self-respecting parts of a hotel business and if successful can become an annual affair in the marketing calendar.
Gone are the days when one could talk about how challenging it is to view multi-channel digital data in one place. Today acting on available data and working out dynamic, real-time strategies that push a closer to making a decision must happen in the moment. EyeforTravel’s Ritesh Gupta investigates