Flash sales may be all the rage, but Priceline CEO Jeffery Boyd questions the wisdom of Expedia’s flash-sales alliance with Groupon.
In July, Expedia began participating in Groupon Getaways with Expedia.
Answering questions at the Citi Technology Conference in New York City today, Boyd said he can’t understand why Expedia would want to tell its customers they can find a compelling hotel offer at another brand, namely Groupon.
“From an Expedia standpoint, they are sending customers to another brand” and telling them they can get a better deal there, Boyd said.
Boyd added that Expedia’s margins with Groupon must be lower than when it sells hotels on its own on Expedia.com.
It isn’t commonplace for Boyd to openly criticize another OTA’s strategy, and he usually has good things to say about Expedia, especially about its hotel business.
Boyd wasn’t dismissing flash sales per se, but merely was wondering aloud about Expedia’s strategy in teaming with Groupon.
He didn’t address some of the obvious advantages of the alliance — namely Groupon’s popularity with consumers and the added distribution reach that Expedia gains with the partnership.
Expedia didn’t immediately respond to a request for comment about Boyd’s statements.
Boyd said, however, if the flash sales trend gets greater traction, then even more travel industry players will jump in even though he doesn’t see it as a great model for suppliers.
Priceline, too, has been dabbling in the voucher and flash-sales arena, although using a different tack than Expedia
Priceline is testing local deals through a private label partner, Group Commerce. The deals are sold under the Priceline brand, although Group Commerce sources them.
And, Priceline’s Booking.com is offering Flash Deals on its website and through an email newsletter with discounts said to be 50%.
In other news, if you are trying to figure out Google’s intentions in travel, Boyd argues that Google itself may not be “100% sure.”
Boyd said there is “an enormous legal cloud” hanging over any new Google ventures in vertical markets because of regulatory probes in the U.S. and Europe.
Google’s statements about new initiatives are very circumspect and difficult to fathom because they are vetted by legal counsel, Boyd said.
At any rate, Google is customer-focused and may proceed with services that take off with consumers and then abandon projects which don’t find an audience, Boyd said.
Google did just that last week, announcing it is shutting down Google Sidewiki and several other services, including Google Maps API with Flash and Google Security.
Regarding the new hotel metasearch service, Google Hotel Finder, Boyd said online travel agencies such as Priceline will be significant players in it and will probably be more successful than hotel participants because OTAs are more skilled at converting consumers than hotels are.
Boyd said Priceline will participate in Google Hotel Finder and is now tasked with figuring out how to do so most effectively.
The Priceline CEO also addressed a question about what new businesses the company may enter over the next five years.
Boyd said it is highly unlikely the OTA would get involved in selling airline tickets at points of sale outside the U.S., pointing out that the margins are too low and the prospect of building an air business country by country would be “daunting.”
Priceline.com sells domestic and international air from the U.S., but the Priceline Group’s other businesses don’t.
With air out of the question internationally, vacation packages wouldn’t make sense either, Boyd said.
However, Priceline could get into the media and advertising business, with its attractive margins, sometime over the next five years, Boyd said.
He added that Priceline probably runs fewer advertisements on its pages than any of its peers so getting into the media business “might be” a possibility.
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It does seem strange and Expedia must be selling to Groupon at a lower price.
Not sure partnering with Groupon could be a great advantage either since the constant speculation over Groupon’s demise.
I wouldn’t read too much into it — Expedia is probably simply hoping to ride Groupon’s popular wave while it lasts. Like most Groupon clients they are probably not turning a profit (and possibly taking a loss) on this — to them it’s advertising. Notice they didn’t call it “Groupon Getaways”, but “Groupon Getaways with Expedia”.
It’s likely a marketing attempt to associate “Expedia” with “deals”.
Here are my thoughts. Groupon is leveraging Expedia’s already existing sales force to ramp up the Getaway’s product, so what’s in it for Expedia? Especially since they have their own, granted more exclusive flash site, SniqueAway.
Brian: I don’t have the numbers, but I suspect Groupon gets a lot more traffic than Sniqueaway. Still, Boyd raises an interesting point….why direct customers to Groupon for a deal?
Yeah, I can definitely see Boyd’s point here, no doubt. Maybe Expedia is looking at is as, you’re the expert, let’s be partners and we’ll get more out of flash sales than if we tried to do it on our own.
In the long run, they probably aren’t going to lose the customer, because if you are looking for a sale in any given city and it’s not on Getaways, their customer will probably just go back to Expedia. If they do book the Getaway, they are still getting a commission.
Plus, the deals on Getaways, sometimes aren’t even that big of a deal.
Will the UK managing director at Expedia comment on why his UK online support staff do not provide the managing director’s details when requested quoting ‘data protection’ as a reason. Is the head office address a secret? Is he in hiding? does he not want to know about consumer problems and thier difficulties? The most recent story is Expedia staff advising female travellers to turn up at the destination hotel overseas, when the hotel is not even open. Is this really the quality of customer care we can expect from Expedia or is he going to do something about it? Is this really his understanding of duty of care to those who have booked in advance and have paid upfront? Groupons and croutons and how many millions are being made is hardly a worry compared to this..