Tuesday, September 6, 2011
Flash Sales Reach the Travel Industry
News Observer: As the general manager of the new Hotel Breakwater on Miami's crowded South Beach, Axel Gasser is eager to drive traffic to his 100-room property. Factor in the threat of Hurricane Irene to South Florida - and its actual impact on some key tourism markets - and Gasser's eagerness turned to something more like nervousness.
Gasser and his staff found a solution in the latest travel fad: flash sales - short-term sales lasting from a few hours to a couple of weeks that help hoteliers and airlines to fill unbooked space at deeply discounted rates.
"We have to give a higher discount than we like to do, but the exposure is just absolutely tremendous," said Gasser, who said the hotel picked up more than 500 room nights from a quick sale on a few websites last week, before the Labor Day holiday. "It's a good investment to get the maximum exposure."
As the summer travel season winds down, one thing is clear: Travelers are still keeping a wary eye on the economy while they book their trips. According to an American Automobile Association travel forecast, about 31.5 million travelers nationwide planned to take a trip 50 or more miles away from home during Labor Day weekend - a 2.4 percent decrease from last year. AAA is blaming the drop on economic uncertainty.
Research shows that those who are traveling are motivated by deals: 20 percent of leisure travelers bought some kind of travel service as a result of a "flash sale" or time-sensitive offer received by email from a provider such as a hotel or airline, according to the Ypartnership/Harrison Group 2011 Portrait of American Travelers. Fewer booked through private-sale sites such as SniqueAway (7 percent) or a collective buying site such as LivingSocial Escapes (8 percent), the survey showed.
And more than 80 percent of leisure travelers who use the Internet for trip-planning purposes said low-price guarantees or the ability to check for the lowest prices are the most desirable features about travel sites.
While sites offering short-term "flash" sales for items such as clothes, shoes or home accessories have been around for the past few years, several new options offering travel-focused deals have entered the market in just the past several months.
HauteLook, for example, started more than three years ago as a women's fashion sale site and added travel last November after asking members what other products they'd like to see on the site. Other flash-sale sites include Jetsetter, Off & Away and Vacationist. "Everybody - and it doesn't matter what financial bracket you're falling in - everybody nowadays looks for a bargain," said Heiko Dobrikow, general manager of the Riverside Hotel in Fort Lauderdale, Fla.
The hotel was recently featured on Groupon Getaways with Expedia, a joining of two megaforces in daily deals and travel that launched in July. "It's really about kind of taking advantage of an evolving new segment of travel that's extended from the daily deal business that has proven to be quite successful," said Charlie Severn, Expedia.com's director of marketing for new channels.
Through the Groupon/Expedia partnership, the Riverside offered executive tower king rooms for $95 a night, parking included, which Dobrikow said represents a 51 percent savings. By late Wednesday, 322 deals had been sold. The idea, he said, is to attract business during a slow time and lure new loyalists.
"You try to dazzle the customers with your service, with your location so they will become repeat customers," he said.
Peter Yesawich, chairman of travel services marketing company Ypartnership, said hoteliers were initially reluctant to embrace these type of quick-hit sales. "The technique became popular in the darkest days of the recession," he said. "They did this on a very calculated basis." The sales, he said, "became very effective techniques to fill what were otherwise unfillable holes in their forecast."
Ed Perkins tracks flash sales and websites as a contributing editor for SmarterTravel.com. Like SniqueAway.com, it is owned by TripAdvisor. The field has grown increasingly crowded over the last year or so - a trend Perkins expects eventually will reverse. "I suspect that like so many other niches of the travel market that there's going to be a winnowing down and that two year from now, there's going to be fewer of these sites than there are now," he said.
He checks discount claims regularly and said he's found many great deals - but warns consumers to do their homework without blindly trusting that a hotel is representing the savings accurately. With that in mind, one of the latest flash sale sites launched with a savings guarantee. Spire, which launched in June, features luxury hotel deals for a minimum of 30 percent off the lowest price found anywhere.
"We wanted to give travelers that extra confidence when they book with us to know that the deal is exactly what we say it is," said Jennifer Gaines, Spire's senior travel editor. Recognizing that customers might suffer buyer's remorse after an impulse purchase, the site also has a 72-hour cancellation policy.
Like many similar sites, Spire requires buyers to become members of the site. Sales are sent only to those who are registered, which Gaines said is a perk for image-conscious hotels.
"Instead of just blasting these super-low rates out to the public for the entire world to see, they're able to keep it behind kind of a closed wall," she said. "That enables them to offer a really fantastic deal but in a way that doesn't hurt their brand value."