Expedia Wades Into Groupon Waters

Expedia’s new deal with Groupon is not, in and of itself, intended to be a huge moneymaker for participants. “It is, first and foremost, a marketing play,” Amy Severson, Expedia’s director of industry relations, said.

While Groupon says 97% of the businesses that participate in an offering want to be featured again, some businesses have been disappointed, saying the deals attract large numbers of customers who don’t come back. Henry Harteveldt, principal analyst at Forrester Research, told delegates to the recent OpenTravel Alliance conference that no travel company has ever made a profit on a Groupon offer.

But Severson noted that Groupon purchasers often end up spending much more – up to 80% more in some cases – than the face value of the Groupon offer. She said hotels are well positioned to sell up and to capitalize on the sale of extras, such as golf, spa treatments and dining.

The Expedia-Groupon deal, expected to launch toward the end of June, will be entirely voluntary for participants, Severson said.

Wanted: new customers
The motivation to participate is expected to vary widely: New suppliers will want to introduce themselves; established operators might want to show off a renovation or cool new feature, and all will be hoping to reach out to – and keep – new customers.

The two companies will launch a new website, Groupon Getaways, which will focus initially on North American hotels and clients. Down the road, the program is expected to expand to cruise, rental car and other types of travel deals. Severson also foresees an international expansion, both in terms of customers and suppliers.

Groupon Getaway deals can be made available on a national basis or can be regionally targeted.

Gains for both companies
Expedia, already a powerhouse in the online travel market, also will gain exposure to new potential customers. Groupon is wildly popular among consumers, particularly college-educated single women – a prized demographic – and had 12 million users at the end of last year. It has already begun marketing the Getaway program to its members.

Severson is not concerned that Groupon Getaways will cannibalize the business of SniqueAway, a unit of sister company Trip Advisor. SniqueAway’s flash sales require users to commit to certain travel dates, while Groupon Getaways offers can be as flexible as the hotel desires: good for one year, or limited to a “lull” period.

A recent survey by Bloomberg/YouGov of 1,166 consumers indicates that Groupon has the potential to double its number of customers by the end of this year. The portion of survey respondents who said they have purchased from Groupon is about equal to the number who said they plan to try it for the first time in the next six months.