An interesting debate is going on within the hospitality and travel trade: should they participate in social buying/flash sale sites to supply fresh competitive deals?

The new kids on the block…private online clubs with exclusive hand-picked travel offers and very attractive savings of 60-70% off hotel rack rates and brochure prices….all with a limited time span, typically a few days or as as flash sale. The take up has been incredible. In line with the current love affair with social buying sites such as groupon, kgbdeals and other popular discounting and flash sale sites, they are emerging as a new distribution channel, poised to change the way consumers view their buying decisions.

The hospitality and travel trade are not sure of what to make of them. Some fear they are a reaction of the recessionary buying trends, while others are eager to jump on the band wagon. The emerging picture is that the field is divided. There are hoteliers who think that social buying/flash sites will ultimately lead to price and brand erosion, damaging the long term price integrity and overall online revenues. And there are the hoteliers who are more interested in the immediate results, filling rooms that may otherwise remain empty. Re-active? Certainly, but happy to exploit the here and now approach of this buying phenomena.

The fears being discussed include the fact that there is an oversaturation of players, leading to market share and revenue corrosion, consolidation and failures, together with a significant weakening from industry suppliers which will probably result in a weakening demand from the members of these sites. Loyalty may not even play any part in the decision making process.

According to Hitwise the popularity of flash sale websites with limited time & inventory offerings have grown exponentially over the two years. Online shoppers’ love for the thrill of snagging a bargain, be in experiences, travel, designer clothing, home décor, restaurant visit, beauty and spa treatments and even wine have caused visits to the category to increase 368% in July 2011 as compared to the same month two years ago and 109% one year ago.