A great deal for customers and Alpharooms?

Alpharooms Groupon

A great deal from Alpharooms?

 

It was an exciting week for fans of great travel deals last week as independent OTA Alpharooms put on an almost-too-good-to-be-true hotel voucher offer onto Groupon, the local & national group deal provider.

A £20 for a £50 Voucher to spend on any hotel accommodation at alpharooms.com really is a great deal – we’re certainly not trolling the deal here at Skoosh HQ – in fact we’re really impressed, especially as there doesn’t appear to be any catches that you wouldn’t expect in this case. In fact, with such a great offer you would expect, for example, a minimum spend clause or a limitation on the destinations you can book for. But no – it appears it’s for any hotel booking, anywhere, at any price. That is a great deal, no doubt.

The question we’ve been asking ourselves (with of course an eye on delving into this world ourselves) is how big were the marketing costs of this offer and will it all be worth it in the long term? As you can see to the right, by the time the deal ended 11870 vouchers were bought. Let’s do a few (admittedly very rough) sums:

  • That means £593500 worth of hotel vouchers were bought by UK Grouponers.
  • Those Grouponers spent £237400 on those hotel vouchers.
  • Given that Groupon apparently take around 50% commission on deal promos, that leaves Alpharooms 20% back, or £118700 if  (and it is of course a huge if) all coupons are redeemed.

So – is this a great deal for Alpharooms? It’s hard to say really. If the revenue from actual bookings – especially return bookings – that they generate cover their marketing costs then of course this will be a stroke a genius. Alpharooms aren’t small but even a larger OTA would feel the hit if, for example, all vouchers were used on low value bookings, as at that point the marketing costs become unmanageable.

Of course like all these things it’ll probably fall somewhere between the 2, and I’m sure Alpharooms are loving all the attention they are getting at least!

At Skoosh this is certainly the type of deal we’d like to do, especially to promote our new Hotel Gift Vouchers that are now available to buy through our site. To get the balance between making an interesting and valuable offer to customers and not bankrupting the business at the same time is the key challenge here and one we’re hoping to crack very soon.

Any thoughts from customers, competitors and ‘gurus’ please do let us know!

Matt

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