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Can Groupon gain ground in the UK? (Published in TTG 30.06.2011)

September 25, 2011

(Published in TTG 30.06.2011)

Can Groupon gain ground in the UK?

Groupon has partnered with Expedia in the US to create ‘Getaways’. With flash sales growing in popularity, how would a move to the UK affect the travel trade? Matthew Parsons reports

Earlier this month, Chicago-based daily deals website Groupon teamed up with Expedia in the US to set up Getaways, to offer “unbeatable travel destinations around the world”.

Getaways has not launched in the UK, but Groupon is already making inroads into the travel industry here following a tie-up with Club Med that offered the general public a £250 discount off several resorts. It has also worked with British Midland International, Thistle hotels, and Expedia (for a voucher worth £45).

Collective power
So how does Groupon work? The company offers a daily deal – with savings of up to 90% – in different cities, and takes a cut in any money the business makes. It encourages users to share the deals, as a certain number of coupons must be sold in order for the deal to be applicable.

It has 83 million subscribers worldwide, and to date claims to have sold 30 million coupons.

Accessing large subscriber databases has recently been a key focus for travel companies looking
to break into the UK market.

In February, Easyvoyage bought Dealchecker to boost its subscriber numbers in Europe, and added four million to the UK with the purchase of FSI. Travelzoo sends its deals out to 4.5 million people in the UK.

Flight Centre, meanwhile, has already begun flash-selling. Over the past few months it has offered deals to Sydney and Las Vegas for £1 plus taxes and fees. The promotions last 24 hours, and sell out. David Forder, Flight Centre’s head of marketing, said this type of sale was “just a part of its strategy as discounted air fare experts to offer exciting deals”.

Deja vu?
While Groupon may be seen as a future threat by agents, Kevin O’Sullivan, chief executive of software solution provider Open Destinations, has questioned if it is actually offering anything new.

“There is no doubt Groupon is a phenomenon, that flash-sales work and that the deal with Expedia is a big one. But I do question if the rates are there for 50% discounts,” he said.

“We have had ‘deep discounts’ on hotel rooms in the UK for a long time and while half price rates are less common, it is possible to find them.

“Consumers must trust the brands they work with. If the deals are not as good as promised, and I question if Getaways’ ‘deep discounting’ is different enough, or the voucher cannot be redeemed as promised, consumers will quickly go elsewhere.

“I don’t think the industry needs to be quaking in its boots just yet; we have faced this beast before and no doubt we will do so again.”

With current plans to raise $750 million in an IPO in the US, Groupon is being coy about its plans for the UK. In a statement to TTG, Groupon said: “Unfortunately we cannot publicly talk about our plans for the future or strategy at the moment, as this contravenes some of the regulations around our upcoming floatation on the stock market”.

For now, operators that choose to work with Groupon may anger some agents with deals they can’t compete with – but Groupon can at least offer agents another channel if they are looking to grow their databases, especially high street agents looking to tap into the local area.

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