So I saw this morning the news that Groupon and Expedia have partnered to create a new company offering called Groupon Getaways. This could be a big deal to the travel industry and really be massive new channel for hotels to sell their rooms. Of course, to the end traveller, it’s the chance to acquire a bargain hotel stay. To other channels, it may be a killer.
The idea behind the new company is that Groupon Getaways will offer consumers highly discounted travel deals from apparently over 135,000 hotels worldwide, connected by Expedia technology. The long-term plan is to also include package holidays, airline seats, car rentals etc. This will only be launched first for America and Canada, but I am sure upon success (and probably very quick success given Groupon’s standing in these countries) it will be rolled out internationally.
For those of you that don’t now Groupon, it’s a simple by effective model. Customers have a limited chance and time to buy a discount or voucher which they will then be able to use to purchase any discounted travel product which Groupon features.
“Everybody wins with our new partnership with Groupon: Travelers get amazing deals for spontaneous travel to dream destinations; travel suppliers get the ability to reach an enormous audience at no upfront cost to participate; Groupon gets to extend its business into new markets; and we advance our new ‘Expedia Everywhere’ strategy with a powerful new high growth channel to deliver daily deals,” said Scott Durchslag, President, Expedia Worldwide.
“Groupon Getaways with Expedia is a fitting complement to our local deals, helping people get out of the house and explore the world,” said Andrew Mason, Chief Executive Officer, Groupon. “We’re excited to tap into Expedia’s vast network of world-class travel providers, delivering unmatched exposure to them while offering a wonderful service to millions of our subscribers.”
So what does this mean for hotels? Well, it could mean a very valuable channel to promote their property in (as long as they don;t kind discounting). I really see this hitting the lates market hard, so for a hotel trying to shift last-minute room inventory they have lying around, it could be a fantastic channel. We all know that hotel rates vary greatly depending where you’re looking, with the utopia being to drive all sales direct. However, given the way Groupon currently operates, I don’t see this being a costly process. I would imagine that Expedia, supplying a lot of the content directly will be passing on contracted deals and discounts and shortening their selling margins in order to present these “heavily discounted” offers. I am sure there will be a direct sell option too for hotels to provide the lowest price possible.
What will the effect be on other hotel sources? It;s too early to tell. If it really drives the lat market, its your traditional travel agency and tour operators that could feel an impact. Of course, the GDS world and other distribution platforms will feel the competition of consumers checking Groupon Getaway and finding a cheaper deal there. Choice will remain at the forefront of people’s mind. A lot of people complain of Groupon that they are brand loyal and their brands not represented in Groupon – so maybe it will be the same for regular hotel guests too.
I am sure we will hear more and more about this in the coming months and will see how it evolves over the pond… but something to certainly keen in mind.