Guest Blog: Sally Taylor, Torcroft Hotel
‘Why did we decide to sign up with Groupon? To be perfectly honest, we decided that we had nothing to lose and everything to gain. One of the problems facing the owners of small hotels and B & Bs is how to attract customers during these difficult economic times. Faced with the ongoing costs of running a business – mortgages, rates, utility bills and ongoing repairs, it’s not an option to sit the recession out and hope things will get better. The obvious option is to make your customer an offer they can’t refuse, but how does the small guesthouse compete with the big boys such as Premier Inn? The real challenge is how to get your offer out to potential guests when you don’t have a huge marketing budget that allows for primetime TV ads and pay for clicks campaigns to ensure you stay on the front page of Google. Once upon a time, B & B owners could put their property on a few internet holiday sites and sit and wait for the bookings to come in. No longer. The internet has changed beyond recognition in recent years, and marketing is now a highly sophisticated operation. Most owners of small hotels have to juggle cooking breakfast and making beds, with the business side of things. The Marketing Director is also the on-call plumber and bottle-washer.’
‘Once we had decided to take the plunge with Groupon, we spent a long time chatting to one of their sales negotiators before going ahead. She allayed many of our fears about over committing ourselves, and making sure it was manageable for a small business like ours. I had read about the woman who hadn’t put a limit on her cupcake offer and finished up taking on extra staff and losing money. We were given help with building the offer, so that there were various add-ons to allow customers to spend more than the basic offer, and these add-ons are not subject to Groupon’s percentage’. The hotel or guesthouse has to formulate an offer that is 50% off their rack rate, but most small hotels and B & Bs price their rates competitively anyway, and this is a real discount, not just a reduction in mark-up as it would be on a factory product. Then Groupon negotiate the period of the offer, which is where the hotel owner needs to be careful, so as not to be too busy to be able to accommodate their regular guests or full-paying guests. Groupon negotiate their percentage, which has VAT added on top, leaving the hotelier with roughly 25% of a regular booking. This makes the fees charged by booking companies seem charitable in comparison. Groupon handle all the payments, as the guests purchase the vouchers from them, but book with the hotel direct, and the hotel claims back the money from Groupon once the guest has stayed.’
‘The day the offer went live was unbelievable. The phone didn’t stop ringing from first thing in the morning to late at night for a week, and the emails just kept on coming in. We struggled to keep up and had to put the phone onto answerphone so we could go to bed! It took a week to enter all the bookings onto the electronic booking systems and send out confirmations’.
‘Unlike product offers where they have thousands of identical, some people are very specific about when they want to stay, and they don’t always read the small print about when the offer period ends. It worked best when they called and to check availability first, then bought the voucher, and called back to confirm with their code numbers. This involved a lot of paperwork, and some people made tentative reservations and never confirmed, but on the whole it worked and we were almost completely sold out.’
‘We were completely full for April and May, months that were really disappointing for us in 2011. The offer also included October to December, but as we expected people are reluctant to plan that far ahead so there are only a few in October, which we are happy with as October is usually a busy month for us anyway.’
‘We have had some lovely people come to stay, and our hope is that having been once, they will come again. Hardly any of them had ever visited Torquay, or Devon before. They came because it was a special offer and the location was not really important to them. Most of them seemed surprised by how lovely the area is and how much there is to do. Even though we didn’t make a lot of money from the venture ourselves, all the guests were happy to go and spend money at local restaurants and pubs, so it must be a boost for the local economy, even on a small scale it all adds up.’
‘Quite a lot of our Groupon customers had come as a result of gift breaks given to them by family members to celebrate birthdays and anniversaries, and we had quite a few requests for cakes and flowers.’
‘As hoteliers we never cease to be surprised by our guests. One thing that surprised us with a few of the Groupon guests was that, having bought a holiday offer, they were determined to make the absolute maximum use of it. Some didn’t want to pay an extra £5 for a full English cooked breakfast (the offer was £87 for a double en-suite room for two nights with fruit, cereal, yoghurt, toast and tea and coffee included for breakfast and a complimentary bottle of wine included). They would load up their bowls with enough freshly prepared fruit and cereal to feed a family and then keep coming back for more until it ran out, and eat so much toast that we didn’t know how they could manage it.’
‘Having said all that, we wouldn’t consider going with Groupon again. They delivered exactly what they promised: 100% take-up of the offer, I don’t think any small hotel can afford to discount that much for more than a short period without de-valuing the product. If we needed to do it again, then we would have failed in what we set out to do. It was an offer for a limited period. If we were to offer such a big discount again it would completely undermine the product. We pride ourselves on offering better customer service than the high street chain hotels – taking a personal interest in our guests, offering advice on places to visit, meeting any special dietary needs and making them feel like house guests. The main reason for doing it was generate cash flow and attract new ‘loyal’ customers, who would be happy to pay the full price next time. Only time will tell if a healthy percentage decide to come back. We are also a little uncomfortable about having guests paying the standard rate staying at the same time as discounted guests, as they might feel they were paying too much.’
‘Groupon is a fantastic way of bringing in business in the ‘shoulder’ seasons, when you might otherwise be sitting in an empty hotel that costs a fortune to run, but would be financial suicide over the summer months.’
‘A holiday offer at a small hotel is very different from a discounted computer package or pot plant offer. There are only a finite number of rooms and Saturday nights, and every guest should expect to receive the same level of care and attention, however busy the hotel or guesthouse is. Every booking has to be negotiated to suit the guest and hotel alike -unlike products, where the buyer pays online and the manufacturer posts the product out. Like most B&Bs, our hotel is staffed by a team of two, assisted by part-timers in busy periods.’
‘In an ideal world we would reach our target audience by just putting our own offers on our own website, but it is very hard for small businesses to be seen. Groupon has a massive client-base to showcase the offers. We can have all the offers in the world on our website, but if no one sees them it’s like singing in the bathroom. If you type in any question concerning a location or holiday destination Google will always come up with the big booking companies such as Booking.com or LateRooms, and the big hotel chains like Travel Lodge and Premier Inn, who are actually more expensive than small independent hotels and guesthouses. There is little democracy on the web. TripAdvisor is the only big company that will still list you without taking a percentage (although they encourage you to sign up for a paid business listing), and nearly all our guests say they check TripAdvisor before booking. We know that all our reviews are genuine, but despite the vast majority being very good, we never rise above the halfway point for Torquay, but don’t get me started on that one – that’s another story!’
Visit the Torcroft Hotel’s website: http://www.torcrofthotel.co.uk/
Read Part 2 of this article here.