Travel On The Sidelines As Discount Deal Fever Escalates

Spreets founders Dean McEvoy and Justus Hammer
Spreets founders Dean McEvoy and Justus Hammer

The latest online sales craze – discount coupon sites – reached fever pitch yesterday with the sale of Sydney-based Spreets to Yahoo!7 for an amazing $40m million. Spreets is less than a year old and did just $4000 in revenue  last February. This month it will turn over $6 million marketing heavily discounted daily deals for “restaurants, experiences and more” to its database of 500,000 members. Other major Australian  players include Cudo, OurDeal and JumpOnIt.

The sector was pioneered in the US by Groupon – described by Forbes magazine as “the fast growing growing company in web history” – which Google reportedly tried to buy for $6 billion late last year. Yet despite apparent synergies, travel has not been a significant part of the deal mix, which tends to focus on local businesses such as restaurants, and there are doubts that it ever will be. Why?

Brad Gurrie from Travelzoo, an email deals newsletter with 3 million Asia Pacific subscribers, thinks travel is too complicated.

“Selling coupons in travel is something that will come with challenges.  Our industry is built around availability, single image inventory and categories / classes.  Coupons style sales are not governed by any of these principles, it is essentially “free sell” leaving the operator to deal with the logistics after the sale.”

Gurrie says buyers are likely to be leisure travellers who will all want to stay on the weekend, presenting issues for the hotel in question. A major difference between the Travelzoo and coupon models is that sites like Spreets are the vendor – they sell the consumer a coupon and take a cut of the revenue, up to 50% – while Travelzoo takes an advertising fee for the listing then links through to the relevant booking engine.

But that doesn’t mean Travelzoo has no time for the concept. Indeed, it’s launched a coupon model in the US and London that has been doing extremely well and “has not ruled out launching Local Deals in Asia Pacific.” Gurrie says ” Travelzoo Local Deals focuses on high quality offerings primarily in the spa, dinning, entertainment and beauty categories.”

But – Gurrie notes –  Travelzoo Local Deals is not selling travel products.

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