Why Hotels Use (or Don't Use) Daily Deal Sites

By Brad Tuttle
October 3, 2012
blog_croppedpoolside_original.jpg
Courtesy <a href="http://mybt.budgettravel.com/_Cozumel-Hotel-Pool/photo/9450090/21864.html" target="_blank">jpeplow/myBudgetTravel</a>

When hotels use daily deal sites like Groupon, they're not necessarily trying to make profits.

If the purpose isn't to make money, why do hotels offer flash sales?

In a Cornell Center of Hospitality study, 42 percent of the hotel operators surveyed said that at least once they had tried a daily deal, which typically knocks about 50 percent off of a property's room or package rates for the consumer. According to a Travel Weekly story about the research, hotels have been using daily deals "as much for marketing purposes as for directly generating revenue."

The idea, by and large, is that hotels accept that they're likely to lose money or just break even with the offering of a daily deal or flash sale. But these deals give the properties a way to connect with new customers, who someday will, the hotels hope, become regular, full-paying customers.

Based on Cornell's findings, for the most part this isn't happening, at least not yet. The repeat-customer rate, according to the study, is just 11 percent. In other words, nearly 9 out of every 10 hotel guests that arrive via daily deal don't come back if they have to pay the regular rate.

Another recent survey, conducted by TravelClick, sheds some further light on why hotels may be reluctant to work with Groupon, LivingSocial, and other daily deal sites:

Of the 40 percent who have tried these sites, 38 percent have found it less successful than they had hoped and do not plan to use a flash sale site again. Hoteliers believed that the sales gave up too much revenue to the site operator (25 percent), did not attract the right caliber of customer reflective of the brand (21.7 percent) and did not see enough return business from the promotion (21.7 percent).

What does this all mean for travelers? While we're still very much in the early experimental phase of daily deal sites working with travel operators and hotels, thus far the pairing doesn't look especially promising. That could mean fewer daily deals for getaways and hotel packages down the line.

MORE FROM BUDGET TRAVEL:

Hotel Bonuses: 3 Deals That'll Each Earn You $50

8 New Hotel Booking Websites for Finding the Perfect Hotel

Coming Soon: Groupon for Travel

Plan Your Next Getaway
Keep reading
Travel Tips

Looking To Save Money On Books? Read And Return Them At The Airport

Great news for book lovers: The Read and Return program at most U.S. airports lets you buy a book, return it at another store location, and get half your money back. The service has been around since 2003, and is offered in any one of the 500–plus Paradies Shops, located in over 70 airports around the U.S. and in Canada. According to their website, books that are brought back in good condition will be resold at half–price, and if for some reason the returned book is not able to be resold, it will be donated to a local charity instead. Just imagine the possibilities. You could buy a book in New York's JFK airport and return it for a half–price refund in Los Angeles. You could then pick up another for the return flight and do the same in your home airport or any other place you fly within six months. Sounds like a sweet deal to me, especially considering the price of a brand new book nowadays. (Sticker shock, anyone?) What do you think about this program? Does it sound like a good idea to you? Have you used it before? Share your thoughts below.

Travel Tips

An Affordable Private Plane Tour Of The Caribbean?

It's just like a cruise, except that you're flying from one destination to the next on a turbo-prop plane that seats between 30 and 70 passengers. Orlando, Fl.-based Mauiva introduced this "AirCruise" concept as the company calls it a year ago when it launched with two North America itineraries: a seven-day Western Wonders Experience AirCruise around Northern California, and onto Bryce Canyon, the Grand Canyon and Las Vegas; and a six-day All American East Experience AirCruise that starts in Toronto, continues onto Washington, D.C., and ends in Arlington. Starting this September, Mauiva is adding a new, seven-day Sun and Fun Experience, which departs from Orlando and heads to the Grand Bahama Island, Grand Cayman and then Cancun for $1,999 per person, based on double occupancy. The itinerary includes at least two days in each destination, motorcoach transfers, 4-star resort stays, breakfast, lunch and dinner, several included activities such as a Chichen Itza tour and entrance to the Xplor Ecological Park &amp; Zip Lines, as well as additional optional tours and activities. The resort on Grand Bahama will be the Grand Lucayan Bahamas, and the other resort contracts are still in the works, but will be of a similar caliber, the company said. Customers can also book a $1,449 option, per person at the double-occupancy rate, for just the flights and accommodations. (Note: the rates do not include the customs fees, which are estimated at $162 per person.) The company charters its planes through Cleveland, Ohio-based Charter Air Transport, a FAA-certified carrier registered with the U.S. Department of Transportation. The pilots and flight attendants that Mauiva uses are certified by the Federal Aviation Administration, a company spokesperson told Budget Travel. The company started in 2009 as Mauiva Air Tours, offering flights over Central Florida. More from Budget Travel: Are You Okay With Allegiant’s New Carry-On Fees? Free Admission to National Parks Starting April 21 READERS' CHOICE: What's Your Favorite Tour Company?

Travel Tips

Are You Okay With Allegiant’s New Carry-On Fees?

It seems like only yesterday that low-cost carrier Spirit Airlines had us gasping in disbelief upon announcing that it was going to start charging for carry-on bags (the nerve!). It was actually exactly two years ago, and Spirit Airlines continues to thrive in spite of (or perhaps because of) its carry-on bag fees. Now fellow low-cost carrier Allegiant Air has followed suit. The Las Vegas-based Allegiant introduced the new fees last week. According to the company's website, passengers are allowed one personal item, such as a purse, briefcase, laptop computer, small backpack, small camera or food container, at no charge provided it is no larger than seven inches high, 15 inches wide and 16 inches deep. The fee for an additional carry-on bag such as a small rolling luggage, garment bag or tote bag, not to exceed 25 pounds, ranges from $10 to $30 depending on the route and if booked in advance, and will be $35 if purchased at the airport. The carry-on bag must be no more than nine inches high, 14 inches wide and 22 inches deep. Oversized or excess carry-on baggage will be assessed a fee of $35 at the airport, Allegiant informs passengers. Following the news that Allegiant had implemented the new fees, U.S. Senator Charles Schumer asked the U.S. Department of Transportation to require airlines to fully disclose fees, including carry-on baggage fees, in the initial airfare quote so customers can accurately compare airfares. "While I understand and agree with the need for transparency in airline pricing, Allegiant's approach of allowing passengers to pay for only the services they desire allows passenger to pay the lowest price for air travel without being misled," Maurice Gallagher, chairman and CEO of Allegiant Air’s parent company Allegiant Travel Co., wrote in a letter to Schumer, the Las Vegas Review-Journal reported. Allegiant operates flights in Washington, Florida, Nevada, Arizona, South Carolina and California with scheduled service from more than 70 U.S. cities. The company also operates charter flights throughout the U.S., Mexico and Canada. Budget Travel readers had plenty to say when Spirit first instituted the fees two years ago. How do you feel about them now? Have you gotten used to all the added fees, or are they just as upsetting now as they were then? More from Budget Travel: Feds to Airlines: Stop Hiding Ticket Fees and Taxes How the Most-Hated Airline Fee Became a Huge Success Obama Plans $32 Billion in Air Traveler Fees to Cut Debt

Travel Tips

Tips On When To Book Summer Flights Amid Rising Fares

This week started out with several airlines implementing domestic airfare hikes of between $6 and $10, FareCompare.com reported, marking the third such hike already this year and perhaps causing concern among travelers preparing to make their summer flight arrangements. On Monday, Southwest Airlines implemented an increase of between $3 and $5 for a one-way flight, or between $6 and $10 for a round-trip fare, depending on the flight distance. Soon thereafter, Delta, Frontier, United, US Airways, Virgin American and American Airlines all followed suit. Rick Seaney, FareCompare.com’s CEO, predicts that air prices could continue to inch up. So what are summer travelers looking for the best airfare deals supposed to do? Depending on when travelers are heading out the door, they should either book now or wait, according to the airfare comparison shopping site. FareCompare.com recommends that for travel through early and mid-June, travelers should buy their airline tickets now. For travel beginning in late June and beyond, travelers might benefit from holding off for a little bit before they book, the site advises. "Most airlines have not begun releasing their cheapest seat inventories for travel from late June onward so - for the bulk of summer vacation travelers - it is still too early to ding your credit card. Those who do will find they will likely pay more than they have to," the site explains. But taking a wait-and-see approach for transatlantic flights is probably not a great idea, according to airline industry analysts, who predict that the capacity crunch on flights to Europe makes the likelihood of any last-minute transatlantic air deals zero to none. In other words, if you want to travel abroad this summer, book sooner rather than later. More from Budget Travel: GuestMob: New Site Offers Top-Shelf Hotels, 20 to 50 Percent Off READERS' CHOICE: The Best Airport To Get Stuck In 7 Questions to Ask Before You Book an All–Inclusive Vacation