Compete recently authored two blogs on the Future of Daily Deal Sites in general. The Travel industry has its share, too, including LivingSocial’s Escapes product. Some, such as jetsetter.com and tablethotels.com, are travel only while others (ruelala.com and livingsocial.com) are more retail-oriented but have added travel. Many of these sites are affiliated with much larger and more familiar brands such as TripAdvisor (Sniqueaway), Travel + Leisure (Vacationist), and the Gilt Groupe (Jetsetter).
Like the others, travel flash sale sites focus on discounts, typically on lodging, offered only briefly. Most require membership, but that’s often free (just provide an email address). TabletHotels is open to the public, except for access to their “private sales,” which requires consumers to “like” the site on Facebook or follow them on Twitter. Vacationist also offers access through social networking sites. Voyageprive.com appears to be the most exclusive, requiring an invitation from an existing member. However, a Google search for “voyageprive invitation” returned pre-formatted links to the member sign-in page.
Using its patented ability to track and normalize consumer behavior across the internet, Compete assessed how successful these travel-dedicated flash sale sites have been in attracting consumers and what type of consumer. Starting with traffic volume, there are clear initial winners.
Riding the coattails of its successful parent site, escapes.livingsocial.com jumped into the lead in December and is already driving more than twice the demand of its nearest competitor, jetsetter.com.
Because deals are offered only briefly, the sites are ripe with social media potential and it shows in referral source data. However, the different sites are leveraging different sources. For example, offandaway.com relies more on Facebook. Reading across the referral sites (not shown), Facebook is 2nd only to direct-type-in as a source of traffic (overall % share)*. Direct Traffic, Facebook and Google together account for 40% of all referrals (14%, 13% and 13% respectively).
*Note: Groupon, LivingSocial and Rue La La excluded because they offer more than travel. Additionally, referral source data here is limited to domain-level only, so not shown for subdomains, such as escapes.livingsocial.com.
How important is social media in the organic proliferation of these flash-sale offerings? Facebook reports 95,741 users “like” JetSetter as of mid-March. For context, OTA giant Expedia has only 120k fans. And JetSetter has more fans than Orbitz, Priceline, Marriott, and Hilton.
Wonder who’s visiting these sites? It’s not the average internet user. Flash sale site visitors are older and—despite being deal-centric—wealthier. They are 32% more often 55-64 years old and 76% more often have over $100,000 annual income. They also over-index on female shoppers. The age differences make sense: the short-term offering of the deals may preclude many family-oriented consumers (25-44 years of age) who require longer planning cycles (and so may still turn to traditional travel sites to research and book vacations). The income difference also makes sense: the sites offer deep discounts on luxury, 5-star properties. Even discounted luxury requires more disposable income, as does the requirement of spot decisions.
Consumers will always seek deals, so the potential for these sites in aggregate to gain visitors is significant, though some individual sites may decline. And power shoppers may join multiple programs because rarely, if ever, will the same deal be offered on more than one site. They likely won’t replace the OTAs, however, they may just begin to infiltrate the consumer’s travel planning process on a more frequent basis.
More companies and consumers will likely enter the flash-sale arena. Some, such as OTAs and perhaps suppliers, may even consider their own takes; Expedia already has with ASAP. The down-side may be thin margins and price dilution, but the upside is moving inventory, and using a third-party site may partially avoid diluting the brand. To help frame the potential from partnering with flash sale sites, it is important for brands to:
- Monitor cross-shop behavior to understand the extent to which travel shoppers in general and your consumers in particular start or continue to use flash sale travel sites, and compare to the same for your rivals
- Understand the extent to which consumers book on flash sale sites after visiting your site, whether or not they booked on your site
- Inform a strategic response by quantifying the extent to which flash sale site visitors are becoming brand-loyal (visiting fewer sites on a recurring basis) or more aggressive (shopping more sites more often)
- Evaluate the effectiveness of OTA and supplier sites in creating their own flash deal properties and programs
- Survey visitors to these sites to best understand their motivations
Ryan Williams is the Director of Travel at Compete. At Compete, Ryan is responsible for interpreting online consumer behavior data and delivering custom competitive insight and recommendations to top brands across the travel industry. Prior to joining Compete, Ryan spent 14 years with major online retail and travel brands such as Expedia and Amazon. Connect with Ryan on LinkedIn at http://www.linkedin.com/in/ryanewilliams.