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Posted by Henry Harteveldt on June 1, 2011
On June 1, 2011 at All Things Digital’s D9 conference, Expedia, the world’s largest online travel company, announced it and Groupon would launch a new travel deals product, “Groupon GetawaysTM With Expedia” (forgive us if we shorten that mouthful to just Groupon Getaways). Both Groupon and Expedia already offer their own assortment of travel deals. Expedia’s TripAdvisor unit has its own “flash sale” offering, SniqueAway. Thanks to the clout of both Expedia and Groupon, Groupon Getaways will pose a significant challenge to Groupon competitor LivingSocial, which offers LivingSocial Escapes, as well as other “daily deal” and “flash sale” sites like Plum District and RueLaLa.
Several factors work in Groupon GetawaysTM with Expedia favor, including:
The current uneven economic environment and travelers’ constant thirst for value means this partnership will likely find a receptive audience. From Forrester’s North American Technographics® Travel Online Survey, Q1 2011 (US), we know that nearly half of all US online leisure travelers allow their budgets to dictate where they go on a vacation. We also know that 8% of leisure travelers have used “deal of the day” sites like Groupon in the 12 months preceding the study to research their leisure travel.
So...we have two grade-A companies partnering to launch a new discount travel marketplace which, in all probablility, will be well received by travelers. Will travel sellers like hotels, airlines, and other operators welcome Groupon Getaways with open arms? Probably not -- at least not among mainstream brands. Sure, there will be some interest, but Forrester expects travel sellers to be concerned about Groupon Getaways':
Forrester expects that this partnership will be good for both Expedia and Groupon, and will help generate incremental sales for both firms. This partnership will force competitors to take notice – this isn’t a good day at LivingSocial, or any of Expedia’s online travel agency competitors. Forrester won’t be surprised if we see any reactionary pair-ups occur in response. Travel sellers, though, need to be careful. Forrester’s analysis suggests that Groupon deals rarely produce profits for participating merchants – indeed, a key selling point to merchants about Groupon is its breakage rate. Travel sellers should do thorough analysis before agreeing to participate.