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Tourists take to group buying sitesSetting, timing of vouchers is the key to success for hotels
5 May 2014 Jana Liptáková Other
SERVICES and goods related to tourism, travel and wellness have become popular items sold via group buying websites. While some providers do not see selling such products via this channel as beneficial, operators of group buying websites believe that it is only a question of the timing and set-up of coupons. Selling such products via these websites not only brings higher occupancy, but also bigger promotions and other side effects, they say.
“The effect of deals sold on a group buying website is more complex than it might have looked at first sight,” Zdenko Hoschek from ZlavaDna.sk, one of the biggest group buying websites in Slovakia, told The Slovak Spectator, adding that group buying websites can serve to fill seasonal gaps, promotion, testing and launching of new products, as well as testing of staffers.
Hotel and restaurant operators differ on whether or not to sell their services via group buying portals.
“My opinion is that the most expensive room in the hotel is the empty one,” said Jozef Žigo, the director of the Hotel Regia in Bojnice, as cited by restauracie.etrend.sk, a restaurant website of the Trend weekly. A hotel with a strong business clientele does not need to reach for deals offered via group buying websites, but an empty hotel in a smaller town should consider it, he said.
Žigo pointed out that while earlier many hoteliers were critical toward group buying portals, many hotels now use them to publish their offers.
According to Ján Svoboda, president of the Historic Hotels of Slovakia, the association of hotels in castles, mansions and historic buildings, group buying websites may be an effective promotional tool when introducing a new product on the market.
“But the Slovak reality is different and alas not very rosy for operators of hotels or restaurants,” Svoboda told The Slovak Spectator. “Group buying websites have become a toll for the supply of fast money for operations from the sale of discount coupons, but the client with such a coupon will never be a loyal client; they will always look for an advantageous price. He will be loyal to the group buying website, not the hotel or restaurant where he will use the service.”
Svoboda is not an absolute opponent of this product, and notes that it may help to cover seasonal gaps, but he does not see it as beneficial in the long term.
While the association does not have a set rule over whether its member hotels can or cannot cooperate with group buying portals, Svoboda recommends avoiding them.
“The reason is simple: in my opinion the higher and luxury segments do not have any reason to degrade their services on such websites,” said Svoboda. “Nobody would persuade me that you can get full five-star service for €60.”
Two-thirds of the beds in Slovakia’s hotels remain empty, which puts Slovakia at the bottom of the EU hotel occupancy chart compiled by Eurostat. But Marek Harbuľák, president of the Slovak Tourism Association (ZCR), does not believe that selling stays in hotels or pensions via group buying websites is a cure.
“Group buying portals only move demand into facilities with the currently lower price, but do not increase the absolute demand for services,” said Harbuľák, as cited by the TASR newswire.
In Slovakia group buying portals have become instruments with a huge communication power and can be used to fill the seasonal gap in hotels or during periods with lower interest or when launching a hotel on the market, he said.
“But each hotelier should realise and calculate costs linked with offering [products via group buying portals] and the price for which it is selling its services to ensure that it is not loss-making in the end,” Harbuľák added.
According to Peter Sasák, executive director of Resolution Medial, a digital division of the media agency OMD Slovakia, collective shopping brings, from the viewpoint of a marketer, benefits, especially to the users of these services. However, selling such services via collective shopping websites may not be effective in the long run for the providers, since clients seldom return once the period when the discounted price is offered ends. But he added that the tourism sector represents a certain exception.
Group buying websites believe that selling products via such portals can also be beneficial for hoteliers, restaurants and other businesses in the tourism sector, as they help to fill seasonal gaps, serve for promotion and inspire people to travel more and, thus, also try services they otherwise would not.
Hoschek of ZlavaDna.sk lists four main effects that group buying websites bring: increased occupancy, and economic, referential and internal benefits.
According to him, a group buying website fills the need for “first minute” clients who reserve weeks or months ahead. They also help to improve cash-flows and generate extra profit as accommodation facilities pay fixed costs regardless of how the facilities themselves manage to fill their capacities. Hoschek also believes that marketing through large websites is massive and often reaches those clients who do not buy a voucher during a limited discount offering.
“Moreover, a positive experience of hotel’s visitors, who bought the voucher via the discount website and spread this experience further among their friends and family, brings another immeasurable but not negligible effect,” said Hoschek.
Hoschek also believes that group buying websites and a flood of clients can enable the more sophisticated facilities to check processes and improve their employees’ ability to work during high occupancy, as well as to collect evaluations and test new products.
According to Tomáš Sroka, the director of one of the biggest group buying websites in Slovakia, Zľavomat.sk, such websites have a positive influence over tourism in Slovakia as they encourage Slovaks to discover their country as a place for spending holidays.
The experience of Zľavomat.sk is that over 90 percent of hotels come back with new offers, and hotels confirmed that clients of Zľavomat.sk return to hotels in spite of the widely held opinion about disloyalty among people who shop via deal-of-the-day websites. The experience of the hotels is that clients also order more upper-standard services or more high-end meals in restaurants.
“This is because they get the stay for a more convenient price and, thus, they treat themselves to more services, like massages, tennis or bowling,” Sroka told The Slovak Spectator.
Operators of group buying websites see the setting and timing of the deals as very important to ensure that the provider of the service or product benefits as much as possible from the deal.
“Clients of group buying websites are quite sensitive even to the 10-15 percent differences between offered packages,” said Hoschek. “When we have a client, for example, who wants to address a rather solvent clientele, we recommend filling the package with relevant and valuable services instead of a very basic product. This is because clients when shopping logically orient themselves based on whether or not they are willing to pay a certain value and, thus, this already creates pre-selection.”
Hoschek points to mistakes that service providers should avoid. One of them is having staff that are unprepared for the influx of tourists.
“When the human factor, the staff, fails, the clients leave disappointed and they will not return,” said Hoschek. “They will not spend money beyond the coupon and of course, they will not spread the positive reference.”
Another mistake which hotels and restaurants should avoid is categorisation of clients, for example, when ordinary clients have buffet tables but clients with coupons have a served dinner.
Tourism-related products make up about half of the turnover and a third of all vouchers sold at Zľavomat.sk. In 2013, it sold almost 124,000 holiday stays, which is more than 500,000 bed nights, double the amount compared to two years ago. The average price for a voucher for a stay in Slovakia per person was €127, according to Sroka.
In the case of ZlavaDna.sk, which also reports an increase in this sector, these services and products make up 64 percent of the turnover on average and 40 percent of the vouchers.
For the Slovak Association of Portals of Collective Shopping (SAPKN), a cluster of group buying websites ZaMenej.sk, More zliav.sk, Prima Zľavy, Zľavodom, Cenynadne and BratiZlava.sk, the share of tourism-related vouchers out of total vouchers sold by SAPKN members depends on many factors. In general, the share of tourism-related deals on turnover of SAPKN members is between 40-90 percent, depending on the website and its focus, according to Marian Tar, spokesman for SAPKN.
Tar says that group buying websites have contributed to a change in consumer behaviour and thinking about holidays and how to spend free time.
“While in the past people selected and planned holidays carefully several weeks and months ahead, nowadays many clients decide from one day to the next,” Tar told The Slovak Spectator. “Because the offer is colourful throughout the year and affordable for most people, it is nothing special or unusual that clients treat themselves to several holidays or relaxation weekends throughout the year.”
Hoschek agrees that group buying websites replaced exceptionality with habit, enabling people, whom only money prevented from going skiing in the Tatras or enjoying wellness in Hungary, for instance, to enjoy these experiences.
“Because prices are actually halved, the clients can afford two times more for the same price, and because they like spending time like this, they often also allocate a higher portion of their budget for travelling,” said Hoschek.
According to Tar, buying holidays via group buying websites has become popular among Slovaks and SAPKN expects even higher interest among clients in deals as well as from travel agencies and accommodation facilities in presenting themselves at such websites.
Hoschek points to the increasing share of holidays and other related products as a percentage of total deals. This creates more pressure on group buying websites to be prepared to help clients get oriented and to be a consultant for providers of these services to help them with which programme to offer and so forth.
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