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Effective-but-costly marketing tool

DISCOUNT or collective shopping websites are an effective but expensive marketing tool, which do not attract regular customers. Companies from the restaurant and hotel sector admitted as much at the HORECA conference in Žilina in April, the Hospodárske Noviny business daily wrote.

DISCOUNT or collective shopping websites are an effective but expensive marketing tool, which do not attract regular customers. Companies from the restaurant and hotel sector admitted as much at the HORECA conference in Žilina in April, the Hospodárske Noviny business daily wrote.

Thousands of Slovaks shop on collective shopping websites, acquiring goods or services at a fraction of the original price. While the service may offer hope to hotels and restaurants wanting to increase their clientele, it may also be a trap.

“Discount shopping portals are undoubtedly a tool with huge communication power,” Václav Stárek, the president of the Association of Hotels and Restaurants of the Czech Republic, said during the conference.

According to Stárek, the fundamental question is whether these portals, which make offers of products immediately visible to large groups of people, function as a tool for marketing or communication. The association conducted a survey among its members, of whom a third sell their products through collective shopping portals. But the survey revealed that as many as 80 percent of the clients never return, and that more than one half of the hotels reported a drop in profits.

“The practice has shown that collective shopping websites are a very expensive marketing tool,” said Stárek. Clients enjoying discounts increase occupancy rates, but only a small portion of them become regular clients, i.e. the kind most valued by hotels.

“When the guest realises that he gets a certain service for a given price, he does not have a reason to pay more for it in the future,” said Stárek. “Apart from this, this does not create a good picture of the hotel among regular clients.”

He believes that when two clients getting the same service for a different price meet, there is the risk that the hotel might not gain a new client and could lose the loyal one. According to Stárek, for hotels it is more effective to sell fewer beds at a higher price than to have more guests at a lower one. He recommends that hotels never sell their services or products at a price below their costs.

Rastislav Sliško, from the collective shopping website zľavomat.sk, agreed with Stárek, saying that these websites should, 90 percent of the time, serve as a tool to fill in the periods between the main seasons. Stárek agreed, saying that hotels can use the service in this way to cover operating costs.

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