Leading travel brands should not rule out deals-based websites, but should be careful how they use them.
That is the view of lastminute.com president Matthew Crummack, who told a Travel Weekly Business Breakfast in London: “The discussion [about brand and discount promotions] is quite binary – should you or shouldn’t you? They do not need to be mutually exclusive.
“Go back to the 1990s and there was a huge debate about promotion in retail. The retailer that won then was Tesco. It had a strategy of ‘and and’: Tesco promoted [through discounting] and drove a strong brand. It did both.”
Crummack sat alongside leading figures from Thomas Cook, British Airways, InterContinental Hotels Group (IHG) and Groupon on a panel to discuss the challenge of maintaining brand value across multiple channels. He warned of the danger of an ‘either or’ mentality towards discounting, rather than adopting a more targeted, strategic approach.
Richard Tams, British Airways head of UK sales and marketing, said the airline did not compete on price like some rivals, but did not rule out the need for discount sales. However, he said deals sites such as Groupon were not appropriate for BA.
“Like any supplier in the travel industry, we rely on sales,” he said. “But we are trying to break out of that cycle and become cleverer at selling non-lead-in fares year round to stop the huge troughs and peaks in bookings. We are doing it by using our knowledge of our customers more intelligently.”
Maria Raga, Groupon vice-president of travel, rejected criticism of the site and the suggestion that daily deals sites could trash a brand. She argued they offer benefits other than to discount distressed stock.
“We offer deals our subscribers would otherwise not think about buying,” she said.
“It’s up to revenue managers to decide which brands this works best for: whether it is about visibility or about getting rid of inventory or testing specific offers quickly.
“We have a huge subscriber base. So we know within four hours how successful a campaign is going to be. We try to adapt to the way brands work. I would not recommend a brand discount all the time. It has to be strategic, with thought behind it.”
Raga said the fact that 50% of Groupon customers are repeat clients suggests the concept works. However, asked about “deal fatigue”, she admitted: “We do send an email a day, sometimes two.”
However, Mark Reakes, IHG director of web and interactive marketing, said: “We’re a brand-centric company and the issue with discounting is it undermines brand value.
“Customers interested in those types of offers are not necessarily loyal to a brand, whereas we’re trying to drive a long-term relationship with the customer.
“There is a market for discount offers and we run some discounts, but primarily we are looking to upsell. We don’t want to work with partners who are cannibalising sales we were going to get anyway.”
Mike Hoban, Thomas Cook director of sales, marketing and e-commerce, said
“bad marketing” trashed brands, adding: “No one is a helpless victim. It’s important to let the consumer decide which channel
to book through.”
Hoban argued social media “is not the big commercial channel some people make it out to be”. He said the behaviour of some established brands on social media was akin to a dad at an 18th birthday party: “You are allowed to pay for the alcohol, you are allowed to pay for the party, but you are not allowed to take part.
“It’s right to monitor it, it’s right to provide value, but don’t try to get too involved – it’s never good to see a dad trying to dance at their child’s party.”
He added: “A lot of brands make the mistake of gatecrashing social media. It’s not the big commercial channel some people make out.”
Tams agreed, saying: “Some brands do appear like a grandad at the disco.” But he said social media played a role in sifting deals. He used the example of Flyertalk.com, which he said “ruthlessly assesses” whether a BA offer is a good deal.
Crummack said: “You need to be there with a relevant message that does not look out of place, and make sure what you communicate is authentic.
“If you try to be something you are not, social networks expose you. Being true to yourself is fundamental.”Tams said BA’s ‘Don’t Fly’ campaign ahead of the London Olympics had featured heavily on social networks and helped engage a younger audience. The online campaign allowed customers to watch an aircraft taxi down their street if they entered their postcode.
However, Tams said linking social media to “hard sales” was more difficult.
“The campaign created a huge halo effect. It increased our relevancy. That has got to be right for the brand,” he said.
Panellists confirmed seeing signs of a recovery in leisure travel since the turn of the year. However, they disagreed about whether this signalled a return to former levels of demand.
Crummack agreed January sales in the UK had begun well, but said elsewhere in Europe remained soft. “There certainly seems to have been transactional growth in the UK, but that does not mean prices are even close to where they were a couple of years ago.”
Hoban warned against assuming consumer behaviour would return to pre-recession levels. He said: “The suggestion of a return to a debt-fuelled boom is a generational thing. In future, people will talk about the boom as something that happened at the end of the last century.
“It’s nice to see some improvement, but I don’t think we’ll go back to where we were. That is why it’s important your brand can deliver on your promise at a fair price.”
However, Tams suggested holidays are the last thing most people will go without, arguing: “People will pay on a credit card if they have to.” He said: “I don’t think people have moved away from debt-fuelled consumption. They want a bargain, but they prioritise travel.”