Partnering with Daily Deal Websites
By Brandon Dennis VP of Marketing, Cloudbeds.com | August 16, 2015
Current data is hard to come by. In the first 6 months of 2014, consumers spent $1.6 billion with Groupon alone, according to The Motley Fool. This places the industry right on track to realizing BIA/Kelsey's predictions. Clearly, consumers are still using daily deals. The question is: How profitable are daily deals for hotel businesses?
How Profitable are Daily Deals for Hotels?
In June of 2012, Rice University published the results of a 1-year study tracking activity with daily deal websites. They found that between 54.9% and 61.5% of businesses make a profit. Profitability varies by industry, with health and beauty businesses coming out on top. Travel and tourism still did well, with 68% of participating businesses turning a profit using daily deals. At the bottom were restaurants and bars. Only 44.2% of them reported success.
The Goal of Daily Deals
Many criticize daily deals for bringing properties an influx of low-quality business that cashes in on the daily deal, and then never visits the business again. This is particularly pronounced with restaurants, bars, and cafes. However, data is more promising for other businesses like hotels.
80% is the number to remember--it pops up everywhere. About 80% of business generated by daily deals is from new customers. Business owners have been concerned that only their repeat customers would use the daily deals, thereby eating away at revenue they would have made anyway. The data shows this not so. Additionally, 80% of customers who used a daily deal ended up spending more money at the business than the value of the deal. This can include hospitality upgrades, additional night stays, restaurant purchases, and more.