Flash sales have a rather controversial reputation in the hotel industry, but they can turn an underperforming hotel into a successful one. Gruppo La Meridiana have investigated several pricing strategies in the hotel industry and we would like to present to you the findings about deal-of-the-day offers today.

Deal-of-the-day (also called flash sales or one deal a day) is an ecommerce business model in which a website offers a single product for sale for a period of 24 to 36 hours. Potential customers register as members of the deal-a-day websites and receive online offers and invitations by email or social networks.

In the hotel industry flash sales have a rather negative reputation. The belief is that commissions of email subscription promotional websites are way too high, discounts required are way too steep and as a hotel to take part in flash sales you shall undercut your own direct price positioning. However, those disadvantages are well grounded if you are a well performing hotel; if, though, your hotel is distressed or under-performing, you should look for opportunities to generate growth and flash sales could be one of them.

We investigated that flash sales, when used smartly, can generate much-needed revenue for a distressed hotel. Take an underperforming hotel, for example, where occupancy is traditionally low during winter or summer (due to the heat). In this case, we understand it is important not to do an aggressive discount on room only or bed and breakfast prices, as you will risk to merely displace existing demand. But think about configuring offers smartly, incorporating extras into a package that have a high face value but low cost, to offset the discount given. Using this smart strategy, the impact on the account development representative could be controlled, and consumers will still get a sense of a deal with a lot of added value.

The benefits of this kind of flash-sale strategy can be significant. You may be able to add as much as 10% to 30% occupancy in the low demand periods in your distressed hotels. Importantly, through these flash sales email campaigns, it can be possible to reach consumers that are out of your reach at the moment, beyond regular distribution channels.

With following up on this task wisely, it may be possible to further leverage the new business into a less costly and higher yield one. The extra revenue streams can allow for more investment in guest service, maintenance and as well internet marketing. Subsequently the popularity of these – previously underperforming hotels – can grow and you shall soon start seeing more demand coming from your ‘traditional’ distribution channels.

Flash sales have a negative reputation, but as this example shows, if used smartly they can significantly change your revenue stream and even turn around an underperforming hotel in the long run. Whether you are a distressed hotel or a well performing one, contact experts from Gruppo La Meridiana and we will carefully select the right pricing strategy for you.