Five star hotel for the price of 1 star. Free nights in the room. Too good, real hotel deals. Flash sales sites have sprung up around the world due to a weak economy, and hoteliers are desperate to get rid of unused resources. And consumers are cashing in on these instant-sales sites that unload hotel supplies at incredibly deep discounts. Sites such as Living Social, Haute Look, Snique Away, Travelzoo and JetSetter. True, consumers are finding that they are saving a lot of money. But is this model sustainable for the hotel industry? Or will all these growing flash sites ultimately undermine ADR and consumer confidence across the board, as was the case in the past?
Flash sites are capitalized if they are exclusive (e-mail membership is required), acting as auction sites or offering flash-bang promotions that are only available for a very limited time. To further complicate the process, websites such as Groupon and LivingSocial bring consumers together to lower hotel prices.
Currently, the model is working. Statistics show that consumers join these flash sites in crowds. And hoteliers, for the moment, are losing inventory. Luxury hotels are finally becoming available for the average traveler, since 4 and 5 star resorts offer cool deals of 40-60%. And many consumers find that now they can not only stay in more attractive hotels than they could afford in the past, but they can stay on these sites longer. Many services include free nights in the room, extending the length of stay for customers and free upgrades to other hotel amenities. Thus, one of the ways to see the phenomenon of flash sales is that it saves money for traveling communities when unloading hotel rooms for industry. Win-win, right?
The question arises, since these hotels jump aboard flash sales, do they support and build a model through which in a few years they will start to complain? Do these hotels lack creativity and desire to invest in direct sales (for example, flash sites) on their own?
Flash sales sites are useful for the retail market, which needs to unload unsold inventory from its shelves when new models appear or the next season line is launched. For these types of products, discounting is a method to get rid of non-hazardous stocks. This does not apply to the hotel industry. Since we saw what happened with OTA, strong discounting leads to cost erosion and lack of customer loyalty and confidence. Hotel owners so often redeem their inventory, and for such a discount the price will be almost impossible to convert rates back to where they should be when the time comes. All these short-term benefits will offset long-term growth and sustainability. Even if demand increases with a stronger economy, there is a danger that flash sales sites will be set too low for ADR and create an unstable foundation.
The time has come when hoteliers wake up, find out what they see on these sites for selling flash memory, and use them on their own sites. Shift the principle from the offset URL to your destination and reservations office, causing the same urgency, exclusivity and loyalty as Flash sales sites. As soon as all the advantages of the flash site (both in terms of marketing and in terms of consumers) will relate to the hotel’s own website, a real win-win situation will develop. Hotel hotels will be able to satisfy the expected rates, satisfying the desires of consumers for the best hotels. However, until this happens, instant sales sites seem to be the short-term answer to a long-standing question; Where can I find the best deal?
