THE fight for suppliers and heavily discounted product among flash sales sites is intensifying with two recent incidents highlighting not only the cut-throat nature of this new online sales channel but also the fact that many major hotel brands want nothing to with it.
Earlier this week Accor’s corporate office pulled a deal from sector heavyweight Groupon that had been negotiated direct with the property, a Mercure in Sydney, because it flouted company policy.
“We do not participate in flash sales,” says William Roberts, Accor’s Director of Revenue Australia. “They want an exclusive low rate and it contravenes our agreements with Online Travel Agencies, who pick them up and come and bash us up around the head.”
Numerous other international groups have a similar policy for the same reason. The hefty commissions from flash sale operators, regularly at 50%, also don’t help.
The second, related incident concerns flash sales newcomer Getaway Lounge demanding that a supplier remove a similar deal from rival website, TravelCandy, prompting co-founder Sam Friend to lash out at the “heavy handed” approach from his well-funded rival, backed by Nine Entertainment.
“I think relationships with suppliers are key,” says Friend. “At the end of the day it’s their product – we are just here to help them market it successfully.”
Getaway Lounge CEO Tim Hughes refused to discuss the matter.
“I don’t see any pressure or controversy,” he says. “I don’t think it is fair to air discussions we have had with suppliers. It’s not for me to talk about those things.”
Quite an introduction to the sector for Hughes, who joined Getaway Lounge just a few days before the site’s official launch last week.
“I am extraordinarily happy with our first week. We already have 7000 subscribers and are driving huge amounts of brand exposure.”
Hughes says “hundreds of thousands” of people have been exposed to the brands through a 22 second promotional slot on the Getaway TV program on Saturday afternoons.
But exposure does not equal sales, which are slow at best and non-existent at worst.
One four night package at Bells Killcare that’s been up for a few days hasn’t had a single taker. The most any other package has sold is eight in a week. Prices range from $299 to $4999.
Contrast this with the seemingly spectacular success of a Scoopon deal for the… “Ultimate Port Stephens beach getaway! Just $169 for a TWO night retreat for TWO in a self-contained cottage! PLUS enjoy a bottle of bubbly + Continental breakfast daily + round of golf + unlimited tennis AND late check-out!”
According to Hughes, almost 2000 coupons were sold on this deal in just a couple of days.
The only problem is that the Colonial Ridge Resort has just 42 rooms. Do the math and it’s clear that getting one of those rooms at a convenient time is likely to be a major problem.
Hughes says this is a situation he would never put consumers in, not that he is likely to face such an issue for some time as his site builds momentum.
He says “we are very happy with sales”, is convinced the deals they have are pitched just right and that there are many benefits to the supplier, which must pay Getaway Lounge a 50% commission.
“We offer sales, customer acquisition and brand exposure. There are marketing benefits the OTAs cannot match.”
In conclusion, Hughes says Getaway Lounge will prevail over other much larger flash sales such as LivingSocial Escapes, Groupon, Scoopon etc because “our brand is better known than theirs.”
PS: Wego.com is launching its own flash sales product any day now while, according to the Associated Press, Google is launching “Google Offers based on the daily deals offered by Groupon, which Google unsuccessfully tried to buy last year.
“Google’s offers initially will be available only in Portland, Oregon, before expanding to New York and the San Francisco Bay area later this year in the US. The offers are part of a new mobile payment service Google unveiled last week.” Read more.