Using Group Booking Websites
A poor summer season and difficult economic conditions will encourage more business owners to consider the use of group buying websites over the winter. If these types of websites are used correctly they can provide welcome cash flow in difficult months, but if they are used badly they can damage your brand, generate lots of logistical issues and may not be as financially lucrative as originally thought.
Generally, hoteliers and restaurant owners will use a group buying site to sell a package. For example, you may offer a two night stay at your hotel with an evening meal on one evening and breakfast included for a discounted price. The stay at your hotel will then be advertised to the group’s members and the booking site will generally take around a 30% commission.
Applying discounts may therefore bring in higher customer numbers than normal but you are likely to generate significantly lower margins on these bookings than would ordinarily be expected.
Once you have sold the packages you will then have to fulfil the commitment to the customers. If your offer is popular this may generate a lot of extra work for you and your staff, so you need to ensure you don’t overstretch yourself by making too big a commitment. High demand may also have an impact on the type of experience you provide to guests who have booked directly with you.
Many hoteliers that I have spoken to who have experience of these types of discounted deals suggest that the discretionary spending from the people who take up these offers is generally pretty low and the likelihood of generating return business is fairly remote. However, if you have fixed overheads to cover, as long as you price the package correctly then such deals may be of benefit.
Top tips for using group buying sites
Get the detail right. Most group buying sites will help you design an offer. Make sure you go through the terms and conditions of the offer with a fine-tooth comb and be careful you don’t give away more than you’re prepared to.
Make sure you’re on site on the day of the deal. Sounds obvious, but if you can track the deal hour by hour on the group buying site, you’ll be better prepared to cope with demand.
Shop around. The market is becoming increasingly competitive so be prepared to shop around for the best deals. A 30% cut for the group buying site seems to be the industry average, but this may decrease as the market evolves.
Be aware of the potential pitfalls Make sure you know what you want to achieve out of a deal and don’t let the site bully you into offering more than you want to, or let them convince you that your package is overpriced.
Be prepared to deliver what you have sold. It can be easy to lose sight of all the hard work that follows in the excitement of the deal. You have to honour every package sold or you risk upsetting customers and damaging your brand.