Online travel companies, which grew rapidly on the back of discounts over the last few years, realise that it cannot be a long-term strategy. So, what now?
Online travel aggregators started offering deep discounts to acquire more users and grow the hotel business. However, it soon became instrumental in increasing their market share
By mid-2016, on margins of 10-15%, they were offering discounts up to 30-50%. They not only let go of their margins but also funded the discounts from their pockets
Still, only 15% of the gross bookings for hotels in 2016 were made online
Over the years, discounting tactics have evolved from promotional offers and tie-ups with banks for cashback to instant discounts, cashback in wallets, coupon codes and referrals
Let me tell you a little story on discounts. From the point of view of a company, which, fair to say, got consumed by it. Part, its own. Part, the cut-throat business environment it was in.
In 2015, Stayzilla ran two experiments with discounts. In September that year, it offered discounts for two weeks on almost all the properties listed on the website. “Our booking went up by 80-90% and would have almost doubled had we not closed the programme before the two weeks got over,” says Yogendra Vasupal, co-founder of Stayzilla. “We realised…
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