Insights March 2010
IN A FLASH
One of the more controversial marketing techniques to emerge from the challenging business climate that prevailed last year is "flash selling," or the blasting of time-dated offers to targeted prospects via email. The technique started in the airline business as a way in which to liquidate unsold inventory on selected routes. Hotel companies trying to pump up occupancy on otherwise slow dates were quick to follow. Even meta search engines now flash sell complete vacation packages.
What is a flash sale?
The answer is a time dated offer that arrives unexpectedly and requires an immediate response to book the featured promotional fare or rate. For example, the email may announce a "12- hour" fare sale on selected routes flown by an airline. Alternatively, it might announce 50% off the entire room inventory at a featured hotel or resort over a forthcoming weekend. In either event, the offer is: 1) generally restricted to individuals with whom the travel service supplier has an established relationship (e.g., member of a frequent flyer or frequent guest program), 2) one that features a compelling discount and/or premium, and 3) one that may only be booked if acted upon within the stated time frame.
Flash selling emerged as a low-cost alternative to other forms of business development used by a growing number of travel service suppliers during the depth of the Great Recession. Not surprisingly, the technique is controversial because it may compromise rate integrity, not to mention raising the ire of meeting planners and/or clients who may be bound contractually to pay higher fares/rates. Nevertheless, the decision about whether or not to launch a flash sale frequently boils down to the expected incremental income, even if the calculation contemplates the cost of alienating some existing customers/clients along the way.
Do flash sales work?
According to the results of our soon-to-be released 2010 Portrait Of American TravelersSM:
- Almost three out of ten (27%) active travelers took at least one "last minute" leisure trip last year;
- One out seven (14%) purchased a travel service as a result of receiving an unexpected email from a travel service supplier;
- Almost half (47%) of those who purchased a travel service as a result of receiving an unexpected email booked an airfare and/or lodging, while fully four out of ten (38%) purchased a complete vacation package, and one out of five booked either a cruise or car rental.
Millennials and GenXers appear to be more responsive to these unexpected offers than their older counterparts. And it is interesting to note that affluent travelers (annual HHI >$125K) appear to be more responsive to such offers than households with more modest incomes as revealed below:
|
|
AGE
|
INCOME
|
|||||
|
All
|
18-30
|
31-44
|
45-63
|
64+
|
$50-$124k
|
>$125k
|
|
|
Ever purchased a travel service as a result of receiving an unexpected email from a travel service supplier that required an immediate response to book the featured price or offer.
|
14%
|
17%
|
18%
|
13%
|
7%
|
14%
|
21%
|
|
|
AGE
|
INCOME
|
|||||
|
All
|
18-30
|
31-44
|
45-63
|
64+
|
$50-$124k
|
>$125k
|
|
|
Travel service purchased as a result of receiving the unexpected email:
|
|||||||
|
Airline Ticket
|
47%
|
52%
|
42%
|
50%
|
33%
|
46%
|
50%
|
|
Hotel/Lodging
|
47%
|
57%
|
57%
|
38%
|
30%
|
47%
|
47%
|
|
Vacation Package
|
38%
|
50%
|
39%
|
34%
|
16%
|
37%
|
41%
|
|
Cruise
|
21%
|
29%
|
17%
|
21%
|
37%
|
20%
|
29%
|
|
Car Rental
|
20%
|
25%
|
24%
|
16%
|
0%
|
19%
|
20%
|
Whether or not "flash selling" will become a standard component of future travel service marketing programs remains the source of considerable speculation, particularly as demand for travel services continues to improve. Nevertheless, the appeal of the technique in the current market environment is evident.
For more information on the new Ypartnership/Harrison Group 2010 Portrait Of American TravelersSM please visit the Publications section of www.ypartnership.com.
March 31st, 2010 at 1:13 pm
[...] ypartnership blog � Blog Archive � Insights March 2010 March 31, 2010 by theslynch ypartnership blog � Blog Archive � Insights March 2010. [...]
March 31st, 2010 at 1:53 pm
I have never purchased as a result of an offer in the past, however I strangely this year, I started looking at the offers to determine my next family holiday. And the easier the offer, the more appealing.
March 31st, 2010 at 11:19 pm
Interesting, I am sure it will grow and become a part of evry day practice for dificult times and last minute yeild management tool here to stay, and selected frequent clients on the upsacle products for the future to come.
April 1st, 2010 at 6:39 am
I think your assessment is correct!
April 1st, 2010 at 1:26 pm
Flash Sales are here to stay. This is an effective arrow in the quiver of revenue managers and marketing staff. Since travel industry services are highly perishable and their consumption is time-limited, in makes sense to make timing of the sale itself - and not just the timing of the consumption - an additional aspect of the pricing.
April 1st, 2010 at 1:45 pm
Agreed, and this will undoubtedly necessitate a re-calibration of the algorithms supporting many yield management programs!
April 2nd, 2010 at 12:56 pm
I’ve purchased lodging at the last minute using sites like Jetsetter.com and Packlate.com. Seems like the deals are better than if you had booked months earlier…
April 2nd, 2010 at 9:06 pm
In our busy lives, it seems like travel getaway opportunities present themselves shorter term, making us more likely to be responsive to flash sales offers. This year, I’ve taken a family cruise and a girlfriend’s getaway from flash offers — and am now more likely to look to this sales method in making travel decisions in the future. Always loving these trends!! Best regards,
April 3rd, 2010 at 7:08 am
Yet another living example of the appeal of this technique!
April 20th, 2010 at 6:41 pm
Just curious as to whether you have any data as to the effectiveness of flash sales for travel attractions. I work for a ski resort and we haven’t seen anything that convinces us that discounting our product - outside of a package - would be effective in a flash selling situation.
Thanks for the great information!
April 20th, 2010 at 9:14 pm
Unfortunately, no, but I suspect the results would be very similar.
April 21st, 2010 at 12:10 pm
Thanks Peter!
April 21st, 2010 at 12:51 pm
With pleasure.
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June 19th, 2010 at 3:03 am
Searching for this for some time now – i guess luck is more advanced than search engines
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