Flash sales on Groupon, LivingSocial, other Web sites are changing travel buying

April 20, 2012

Step away from the computer for a moment and ask yourself these questions: Are you interested in the Spruce Point Inn because the Maine resort is on your life list or because it’s on sale at SniqueAway for $159 a night? Is the real appeal the seaside hammocks and the Adirondack chairs or the thrill of the get?

As you watch the deal’s countdown to oblivion — sale ends in 22 hours 44 minutes, 22 hours 43 minutes, 22 hours 42 minutes — do you worry that you’ll make a terrible mistake by not booking it? Or, conversely, that you made a horrible error by committing to a trip to Boothbay Harbor? Speaking of which, do you even know where Boothbay Harbor is?

Let’s be honest here: Flash sales are catnip to our feline appetites for travel bargains. The booking sites started invading our screens about five years ago, when such companies as Jetsetter, SniqueAway, Tablet, LivingSocial Escapesand others began trotting out time-sensitive sales on lodgings and vacation packages. The sites seduce travelers into the pressure cooker with sharply discounted prices. But they also open minds to vacations that we may never have considered but now desperately covet.

“This is the inspirational trip,” said Douglas Quinby, senior research director at PhoCusWright, which recently released a study of flash sale deals. “A key element is the spontaneity factor: ‘I wasn’t planning to go on this trip, but I found a good deal.’ ”

Travel is one of the largest segments in the e-commerce universe, yet flash sale sites currently supply only a small pinpoint of light. According to Quinby, in the U.S. market, these sites generated $71 million in sales during the fourth quarter of 2011, a drip compared with Expedia’s $3.8 billion. But their modest numbers belie their seismic impact on how we plan and book travel. Let me ask you again: Why are you really considering the Spruce Point Inn?


(Alla Dreyvitser)

“It’s a discovery,” said Daniel Craig, a Vancouver, B.C.-based hotel and travel industry consultant. With flash sale sites, “you’ll often book a vacation based on a great deal to a destination that you might not have thought of otherwise.”

Without question, the sites pluck our spontaneity nerve. Chekitan Dev, a professor of marketing and brand management at Cornell University’s School of Hotel Administration, said that 70 percent of consumers who respond to a Living Social deal buy within 15 minutes of receiving it. He compares the impulse purchase of a flash sale deal to impetuously grabbing a pack of gum or a magazine in the supermarket checkout line.

“One pattern is for certain,” said Karyl Leigh Barnes, senior vice president at Development Counsellors International, a travel marketing firm, “consumers are learning to book more quickly to take advantage of an offer.”

Another common behavior: For long-haul trips, travelers often approach the sales with a specific location in mind. “It appears that consumers know they want to go to Peru or Australia, et cetera,” she said. But with short getaways, bargain-hunters are more impressionable and willing to be swayed by the deal more than the destination.

The Greater Portland Tourism Alliance in Oregon and the Massachusetts Office of Travel and Tourism say that “consumers are booking regional getaways based on the hotel deals they see,” said Barnes. “The traveler is less likely to know where he wants to go.”

Despite the seemingly capricious nature of flash sales, the limited-time deals are an important link in the travel industry food chain. For the hotels, the specials help fill empty rooms that might be hard to sell because of a slow season or a room’s undesirable location, such as overlooking the maw of a dumpster. Meanwhile, the sales offer travelers an opportunity to learn about a new property or sample a hotel that would normally be beyond their financial means.

“It gives people access to hotel properties that are more luxurious and boutique-y for less,” said Anne Banas, executive editor of SmarterTravel, sister company of SniqueAway. “It opens the door for people to go a little more upmarket.”

The Web sites often tout staggering discounts of 65 or 70 percent, but Banas said that the reality is closer to one-half or one-third of the rate quoted by the hotel or third-party sites.

“It’s not always a flat 50 percent,” she said, “but 20 to 30 percent is still a good deal.”

The PhoCusWright study, which sampled 100 deals from Groupon, Travelzoo and LivingSocial, arrived at a similar conclusion. “Overall, the deals were pretty good,” Quinby said. “About 10 percent of the cases were not as good as advertised.”

Surprisingly, the report discovered that cost isn’t always the sole driving force behind the purchase. “There has to be the right cocktail of price, proximity and spontaneity to make the deal attractive,” Quinby said. For example, a LivingSocial package that included a brewery tour and a room at a Hampton Inn in Frederick enticed 1,000 takers; a Groupon trip to Tanzania nabbed only 110 bookings.

Despite the adrenaline rush of possibility, experts counsel restraint and research. Call the hotel and inquire about the rates. Check third-party booking sites. And squint your eyes and read the small print before pressing “purchase.” A deal loses its attractiveness when saddled with restrictions and exorbitant fees.

“Always double-check alternative options,” Dev said. “Trust but verify.”

For example, with 21 hours 40 minutes to go on the Spruce Point Inn deal, I had more than enough time to conduct an independent investigation. I learned, for instance, that the hotel charges $215 for a woodland-view room and $235 for a partial ocean view, the same category as the SniqueAway deal. The third-party sites said that the property was sold out on the same May dates available on the flash-sale site. Hotels.com suggested other nearby lodgings, some even cheaper. Yet I could not muster the energy to parse through the list of nearly 30 names. On SniqueAway, there was just the one and only.

“The savvy traveler knows that flash sale sites are particularly good at finding the newest destinations and properties,” said Donna Quadri-Felitti, clinical associate professor at New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management. “For the destination-agnostic, it’s a great way to explore.”

Quadri-Felitti, however, advises consumers to stick with sites that specialize in travel, such as JetSetter and Tablet, and be wary of ones that also shill prosaic goods, such as mani-pedis and rug cleanings.

“You don’t buy travel the way you buy a book or the newest hair treatment,” she said. “You get a bad haircut, it grows out. But with travel, you can’t get that vacation time back.”

Yet the trend is pointing to the more general flash sale sites. Quinby said that strong sales have shot Groupon and LivingSocial into the top 1 percent of U.S. travel agencies. “If the fourth quarter of 2011 is a valid barometer,” he said, “then Groupon and Living Social will be among the largest 50 or so travel agencies in the United States.”

Yet with every rise comes a fall, or at least a little dip.

The experts say that a shakeout is inevitable; only the strongest flash sale sites will survive. The next great innovations are already queueing up.

Quadri-Felitti, for one, is eyeing mobile searches for last-minute stays and side trips. Dev expects the focus to continue shifting, from destination to deal to dream trip. Looking into his crystal ball, he sees companies eventually replacing generic offers with personalized vacation ideas. They will learn our likes through, yes, our booking history on flash sale sites.

If this is indeed the future of travel planning, then let me save the Web sites some time. I like water and spectacular deals, such as the one ending in 20 hours 56 minutes.

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Andrea Sachs (not the one who wears Prada) has been writing for Travel since 2000. She travels near (Ellicott City, Jersey Shore) and far (Burma, Namibia, Russia), and finds adventure no matter the mileage. She is all packed for the Moon or North Korea, whichever opens first.
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