I really don't like Groupon

[Moirae]

As someone running a business...

Sure, they're great if you're a consumer, but businesses get totally and utterly screwed.

1. The margin plus discount is wayyyyy too high.
2. They're a hot date booker resulting in alot of money being lost during those times. No, I don't mean 25%, I mean much much much more.
3. They have no extranet. The only thing I can get on a reservations from Groupon after the date it has been originally sent to us is the name of the guest, nothing more. No bed type, no room rates, no dates of stay, nothing. The only other way to get it is to email the contact and hope they get back to you at some point.
4. We can't shut down dates once Groupon has been given a certain number of rooms. Let's say they were originally told that they could book 8 rooms. With a regular hotel website (like expedia), once we get close to sold out, we can remove the inventory so we aren't oversold. With groupon, you give them inventory and they get that inventory, so you have to walk reservations that are paying way more money to another hotel if groupon oversells you which means you are effectively losing money.

This has resulted in oversell, and angry guests. But the owner thinks this is a great idea because he sold lots of rooms. Yeah, he sold lots of rooms. At a third of the original price that we are getting paid for other reservations during that time.

So frustrated.

[wolfie]

A couple questions:

- What do you mean by a "hot date booker"?
- With "can't shut down dates", do you mean:

- You tell Groupon that they can book 8 rooms on a certain date.
- As of when you tell them this, you have 30 rooms not yet booked on that date.
- You have a total of 50 rooms.
- If Groupon books 35 of the 8 rooms you allotted them, you have to "walk" 5 people who had already booked rooms?
- If Groupon books 100 of the 8 rooms you allotted them, you're up shit creek without a paddle?

[ADeMartino]

This has resulted in oversell, and angry guests. But the owner thinks this is a great idea because he sold lots of rooms. Yeah, he sold lots of rooms. At a third of the original price that we are getting paid for other reservations during that time.
So frustrated.

More proof that the ones in charge generally can't, or WON'T, think. It's this mentality that caused the economic downturn of the past few years. I've heard nothing but misery from the businesses that Groupon deals with.

To the OP:
I would consider moving on. Next, the mantra will be 'we need to cut expenses because we're not making enough money!" and you know know where THAT road goes.

[Moirae]

- Hot dates are busy times that aren't a special event. Like a major convention. Normally, this pushes the rates up due to supply and demand. So, while rates are typically say $179 during a time period like this, with a Groupon, the hotel is effectively making much much less than that due to the discount they insist and the insane margin (profit) that Groupon makes. What that means is that regular reservations would be paying $179 while we would actually be making less than half of that. And groupon are guaranteed rooms, so we'd have to walk (send to other hotels) the higher rates and keep theirs and, because we had to walk them, the hotel would likely be paying the new hotel MORE than a $179 rate.

Think of third party sites like Expedia, Orbitz, Bookit, Travelocity, etc as though they are travel agents. But they take their commission off the top rather than have it sent to them after the fact that a normal travel agent. That's why hotels can't give you the rate when you ask if you booked through a third party website. Because the third party sites have an agreement that they won't. This commission is called a margin and normally runs anywhere from 15-30% of the total cost of the booking. Let's say that a third party site shows a rate of $59 and has a margin of 25%. That means that $14.75 is going to the booking site with the hotel gaining the remainder. This is normally fairly acceptable depending on the time of year, and certain sites have more power than other sites (like Expedia... they are often nicknamed the hotel mafia because they command a high margin, and in north america you really have no choice but to use them if you want to compete with other hotels because they have such a well known name, but they are also power bookers so the amount of rooms they book makes up for the high margin). Groupon is a higher margin than Expedia, and they insist on a deep discount give to their members too if you want to take part.

- Groupon is guaranteed a certain number of rooms. With Expedia, you can remove inventory from their site if you become sold out so they can't sell anymore rooms. Not so with Groupon. With Groupon, you either set those rooms aside for them or you have the potential for oversell which can result in "walked" rooms. So, if Expedia originally had 6 rooms, but they sold 3, and in the meantime you sold out so you actually don't have another 3 rooms to give to Expedia, you can remove those extra three rooms from sale on Expedia. You can't do that with Groupon. You give them 8 rooms, they get 8 rooms, regardless of whether you are sold out or not. With Groupon, you can't "shut off the faucet" for lack of a better term.

[raudf]

The only thing I can suggest is to work up the numbers and make a pretty chart showing exactly how much of a "profit" your owner is making through Groupon and how much more he/she could make without Groupon. It's easier to show them than to tell them stuff like this.

[EricKei]

I have often heard of shops who were on Groupon for a time, jumping ship. No I know why.

If it's possible -- a pair of comparative profit reports might drive the point home. One for Groupon rooms and one for other rooms. Same actual "normal" rates per room, same period of time. With the margins as high as what Groupon takes, it could open the owner's eyes to see that HE is making so much less money off of the Groupon rooms. Keeping track of how many custys you had to walk because of Groupon could be worth doing, as well.

[Tash]

Thank god my hotel doesn't do that. We also block out Expedia and all other 3rd party sites 5-6 days a week as we don't know their business. Expedia literally makes me want to punch myself in the face. Over and over and over again.

[HiddenMica]

One of my friends is a masseuse who used groupon once.

The first 10 hour long massages she gave she made NO money on.

None of them were repeat customers, knew what kind of massages they liked, nor became repeat customers.

All of them came across as a little rude.

The rest of the massages that she sold she ended up making only 20 dollars a massage for an hours worth of her time.

Yea she won't do groupon anymore. >_>

[Irving Patrick Freleigh]

Not familiar with Groupon, but it does sound like little more than something that makes it easy for entitled people to act even more entitled.

Certainly there are non-sucky people who use Groupon and do become repeat customers of business who accept them, but the sucky ones just make it not worth it to continue accepting Groupon.

[Skittles88]

Not familiar with Groupon, but it does sound like little more than something that makes it easy for entitled people to act even more entitled.

Certainly there are non-sucky people who use Groupon and do become repeat customers of business who accept them, but the sucky ones just make it not worth it to continue accepting Groupon.

No regular guest that I know of repeatedly books through a 3rd party site. They always book direct, because regular awesome guests are always given awesome rates thru the hotel (we always override prices for our regs) and any semi-frequent hotel traveller knows that 3rd party websites are unreliable and are a pain to deal with. Maybe once in awhile we turn 3rd party guests into regulars... But very rarely. These people are usually looking for the cheapest price for the best room, and don't care what hotel they are staying at.
Those are my experiences tho... Can't speak for every hotel
Judging by this thread I am glad we don't deal thru Groupon.

[Antares]

Moirae (or any other room wranglers),

What would happen if someone called and said "I see a rate of X on expedia and x+y on your site. I'd rather you get all the money. Can you match it?"

[ADeMartino]

Moirae (or any other room wranglers),

What would happen if someone called and said "I see a rate of X on expedia and x+y on your site. I'd rather you get all the money. Can you match it?"

I'm not in the accommodations industry, but I'm familiar with how companies like Groupon work. Buried deep in the contract there is probably an article forbidding the hotel from engaging in price-match tactics against the third-party service. Probably worded and/or justified as a 'conflict of interest'.

Probably irrelevant anyway. I seriously doubt anyone would make a call like you described. People that use services like Groupon are only interested in the lowest possible bottom dollar price - and generally don't give a crap about who actually gets the money. They might also (incorrectly) assume that Groupon pays a fair rate for the product or service.

[Moirae]

Antares, we will meet or beat any rate you see on the net (except for Groupon because they made us agree to that when we signed the contract. Thankfully, the Groupon sale is over). Because the third party sites all command anywhere from 15-30% commission, if we meet or beat the rate online, we don't have to pay that commission so we make more money.

We don't advertise that, of course. Because then it can cause us trouble if the third parties find out. But if you ask directly, that's our policy.

Well, with the exception of a massive boo boo on the hotels part. My husband worked for a hotel once that accidentally entered the rates over Mardi Gras for $5 a night (it was supposed to be $500.00). The people that booked it were under the mistaken belief that the hotel MUST take that rate because it's online. They don't understand that we are free to refuse ANY reservation, for any reason (except for Groupon because of their stupid contract. The only way we can refuse a Groupon is if the guest does something illegal while on the hotel premesis).

My hotels rates during Mardi Gras currently start at $359 a night because we are on the main parade route (you can step out the door and the parades are passing right in front of you. On Mardi Gras day, you would see 6 parades. It would also be insanely loud the whole day). So a $5 rate would be immediately canceled wherever it was booked, and the guest informed.

Most third parties are much more flexible than Groupon, as you can see.

ADeMartino, actually we get calls like that all the time. It's a much better idea to book directly with the hotel. We have much less flexibility with the third parties and we can't refund you if something goes wrong. Instead, you need to speak with the third party and see if they will agree to refund you. Sometimes they will and sometimes they won't. Plus, if you pay more money directly to us, I try to give those reservations priority on the best rooms for that reason. Though it doesn't always work out with the room priority of course, sometimes we upgrade anyway due to availability. For example... we have one room in house that is ALWAYS "sell last" because it's a very small and out of the way kind of room and the bathroom isn't in great condition. I will ALWAYS upgrade whoever is in that room to another room unless there is no other possible way to do it, even if it means a free upgrade to a king or more than one bed.

[ADeMartino]

ADeMartino, actually we get calls like that all the time. It's a much better idea to book directly with the hotel. We have much less flexibility with the third parties and we can't refund you if something goes wrong. Instead, you need to speak with the third party and see if they will agree to refund you. Sometimes they will and sometimes they won't.

Well, I learned something, then. I never guessed that people would actually think ahead enough to do that. But I did know how difficult it often is to get a refund when things don't turn out well. I avoid third-party services where I can for this very reason.

[Antares]

Thanks Moirae,

I've always wondered about that, and figured it would make more sense to meet it and get all the money, but wondered if the person on the phone would take offense if I did that. I don't want to pay any more than I have to and don't want to come off as a EW, but would like the provider to get as much of the money as possible.

So if anyone ever tells me no, I can tell them "But Moirae told me you would!" I'll make sure I use my most whiny voice and screw up my face to the proper end of a cat. I might even stop my feet and sigh a lot while repeating that "Moirae said you'd do it." If they claim they don't know you, I'll call them liars.


But seriously, thanks. I'll keep that in mind the next time I'm looking at spending the night away from home.