To Deal-Travel or Not? That is the Question
As the popularity of group buying grows, so do the number of industries participating.
A significant player in the industry is travel. Following in the footsteps of sites like Expedia, Travelocity, major daily deals players have teamed up with such sites, or stated travel deals of their own.
A few that come to mind: LivingSocial Escapes, Group Getaways (Groupon + Expedia = love), Travelzoo, TripAlertz, the list goes on.
Some of these sites put their own little spin on travel deals.
TripAlertz sets its prices to the number of bookings, and SniqueAway caters to those who are looking for luxury travel, and is available by invitation only.
Most deals are available for the same time as other daily deals, but you can book up to a year.
Aggregators are getting in on the deals too. Travel packages can be found on Yipi
t and Dealery (who consolidate them from other sites), but I personally, am a little wary.
Now, this is what puzzles me. In order to purchase a travel daily deal, would one already have to be looking for a trip? Or is it one of those spontaneous things? How many details are included in the deal description? Is there are a specific hotel that you have to stay in? Are there restrictions on airlines and flight times? As a travel snob (and crazy-planner-girl), I need to know these things!
I’m the kind of person who researches hotels, looks at reviews, location, whether I’ll need a rental car; there are so many things that go into travelling. Would daily travel deals work for me? Maybe?
Another factor that goes into the travel deals, is the essences of the group buy in general. There’s always a “tipping” point. A required number of people must buy the deal. So, if you decide you want this deal, you get all hyped up for it, make sure you have enough money on the credit card, and no one else buys your deal, you’re stuck at home, potentially never going on a discounted vacation.
Travel deals seem to work best for people who are spur of the moment and on a budget, but not stuck on a specific location. Before you buy a travel deal, check the hotel’s prices to make sure you’re really getting a deal. When it comes to travel, I find planning works best, but even I would be tempted by a trip to the Big Easy in the cold bitter days of February.
Daily Dealer Travelzoo Sees a Marked Improvement in Billings – Competition Intensifies
Improved billings – lack of loyalty – increased competition
November numbers are in for Travelzoo (NASDAQ ticker symbol: TZOO) and the company registered a solid 44% growth in local deals gross billings. This is a significant increase over October billings and places the company in third position trailing only Groupon and LivingSocial in terms of dollar gross billings for the month.
The TREFIS article states that they believe “a major threat to Travelzoo Local Deals is that its business model is very easy to replicate. This has spawned a large number of deal-based clone sites that provide similar discounts to subscribers.” The article also sources the Susquehanna/Yipit survey. In a nutshell, that survey stated that “businesses that have offered an online deal-of-the-day in the past aren’t planning to do so again in the next six months due to concerns on low rates of repeat business from new customers.”
It’s really the same argument that has been verbalized ad nausea. Low barriers of entry, more competition, and lack of customer loyalty…yada yada yada. Travelzoo is not stupid. They went into the deal space with their eyes open. The company continues to differentiate itself by leveraging its existing relationships with hotels to offer high-end deals. It also relies on its other travel-advertising and search products to boost volumes for its local deals segment.
Travelzoo continues to expand its local deal offers via the ‘Getaways’ business model. That platform produces a larger amount of revenue as the ticket items are typically much larger. Travelzoo contends that its approach to daily dealing is very difficult to replicate owing to its rigorous deal quality standards. We have touched on this in several Daily Deal Media posts how important quality standards are.
The TREFIS post re-iterates how competitive the social buying space has become. The article estimates that there are over 200 social buying site clones in the U.S. alone and over 500 worldwide. I think those numbers are way off. Our sources show somewhere between 400 and 600 U.S. sites and literally thousands world wide.
There is always the possibility of eroding take rates (percentage of gross revenue kept by group-buying platforms). Daily dealer Kgbdeals charges 15% from merchants verses the 40% charged by Travelzoo. Competitive pressures like those could lead to a decline in take rates charged by Travelzoo over time. In the meantime, the growth rate of this portion of Travelzoo’s business model continues to be stellar. I am looking forward to their December numbers as well as 2012.
Source: Trefis
