Collective buying websites 'devalue' hotel brands

The craze for collective buying websites has swept the Middle East in recent months, but PR experts at some of the most luxurious hotels have warned they could be bad for business.

Across the region, it’s estimated that there are 15 collective buying sites in total, with some of the most well known including Gonabit, Groupon, Cobone and DealGobbler.com.

They offer great discounts — anything from 40% off a night-stay at a hotel to 70% off a spa treatment — as long as a minimum number of people “buy” the deal.

However, luxury hotels should think carefully about incorporate these promotional tools into their marketing strategy, according to hoteliers in Dubai.

“There are a lot of outlets out there, websites or guides that are giving things for free, those ‘one for one’ vouchers etc — but we cannot participate in these,” said Ritz-Carlton regional director of PR, Vivienne Gan.

“You are limited by your brand, because if we were a budget hotel, then basically it’s a great model and we should go for it. For a luxury model it’s just a little bit tough. Everybody, of course, as a consumer loves a good deal, but then after you go for the first one, your perception of that brand after that deal goes down just a little bit. So I always tell [our managers] there’s a little bit of a danger in that.”

Sarah Omolewu, public relations manager at Raffles Dubai, agreed: “We’ve looked at a couple of them but have quite similar views to Vivienne. We listened to some of their radio ads and it was all about ‘go get your deal, go get it now, two-for-one’ and we just didn’t feel it was the right association.

“This was probably about a year ago where we really could have used the F&B help, but that perception in the mind of the consumer, it really kind of devalues the brand,” commented Omolewu.

Shona Mac Sweeney, marketing and communications manager, at The Palace — The Old Town, said “we decided against it for ourselves”.

She said that the limited number of seats at each outlet coupled with the high peak customer return rate, made these sorts of offers — which are essentially designed to drive volume — unsuitable.

Derryn French, director of market communications at The Westin and Le Meridien Mina Seyahi, said that hoteliers needed “to be wary of the consequences and understand what association with those kinds of brands can do to your product”.

“Certainly you do have to weigh up the value it can bring to you and the people it can bring to you, as opposed to the brand values. The people that are going to buy those deals are not necessarily the people that are going to come back and pay AED 500 for a brunch again. They might be prepared to pay AED 250 but are they prepared to pay AED 500?,” said French.

However, she conceded “there are ways of doing it” for certain products.

InterContinental Hotels Group Dubai Festival City director of marketing communications Katerina Dixon agreed and pointed out the need for hoteliers to choose the right collective buying website for a specific outlet or facility — at the right time.

“You obviously have to be very careful at selecting the right partner for your tactical offer,” said Dixon.

“We are using them quite often, but only when we see a big drop in number of confirmed bookings and we would then use them for a particular week.

“So our BBC brunch at Crowne Plaza, for example, we don’t usually discount at all but if we see that there is a particular season or a particular weekend that is not doing so well in terms of bookings, we would obviously go with somebody. It’s better to have the atmosphere and have the brunch full rather than just having it empty and disappointing maybe other clients,” asserted Dixon.

“We had a couple of great tactical campaigns that were working really well with Dealgobbler.com for our Blades picnic brunch,” she revealed. “We’ve just launched it and we couldn’t rely on PR and needed something instant because it’s an outdoor activity and we don’t have that many weeks before the summer hits — we had to really launch in the market very quickly and spread the word.

“Dealgobbler helped us out by reaching out to their audience that wasn’t part of our database and it spread the word really quickly and we are up to end of May with pre-confirmed bookings already.

“I think it does help, you have to evaluate — yes there are some great deals out there, but can you go with a deal without damaging your brand or reputation? We wouldn’t do it with Reflets par Pierre Gagnaire with a three-star Michelin chef, but we can do it with an outdoor picnic brunch at Al Badia lawn,” Dixon concluded.

For a full report on collective buying and other promotional websites, see the May issue of Hotelier.