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Operators warned about dangers of buying turnover with daily deals

Operators warned about dangers of buying turnover with daily deals

Operators have been warned that unless deal a day offers are managed closely there is a danger that they will negatively affect the balance sheets they are designed to boost.

Though they are tempting means of driving footfall, delegates at Caterer and Hotelkeeper’s Innovative Marketing in Hospitality conference heard that the there were considerable pitfalls to consider before embarking on an online deal.

Rudding Park managing director Peter Banks said that the “genie is out of the bottle” but that it was possible to increase footfall and profit.

He added: “They raise awareness. If you’re in trouble with footfall they will drive it. But you need to work out whether yours is a space driven business model, like a hotel or golf course, or cost based, like a restaurant.

“Deal a day websites tend to work better for space driven models which then have an ad on for retail. It costs nothing for me to put someone off the first tee at 10am and all of them should have a pint afterwards.”

But Banks warned that these weren’t going to be regulars. They would be loyal to the website they bought the deal from, not the operator.

“If your business is seasonal then these people are like rent a crowd. They will come in and make your place look popular,” he said.

The Hempel general manager Gareth Banner, said operators needed to ask themselves how much they need the business.

“The promotions we ran were focussed on driving incremental revenue at a time when I knew we had chefs downstairs with an amount of food that was perishable,” he added.

Both hoteliers agreed that the offers had to be time focussed and had to be managed extremely carefully. “Accept that sometimes you are just buying turnover,” Banks said. “But the visitors are more IT savvy. Many of them will write positive things online. So you get that spin off.”

Banner added that this means you must maintain standards. “There are ways to encourage upselling, but don’t mismanage expectations by offering a different menu,” he said. “They will be sitting in your restaurant, posting a review before they’ve even finished their meal.”

When The Hempel offers a deal Banner said he talked to his suppliers to see if they could contribute. “There is clearly a correlation between when we need the business and when they’d like to see bigger orders,” he added. “I’m constantly surprised with the amount of products offered in lieu or barter, for example offering a meeting or conference space in return for products.”

The hoteliers said that deals do work but that all variables, such as the site’s commission and VAT, as well as a spike in interest, had to be factored into the equation. Also, while some companies were fair about unredeemed vouchers, others kept the revenue.

“When you sup with the devil use a long spoon,” advised Banks.

For more marketing tips and advice from Caterer and Hotelkeeper’s conference pick up this week’s issue.

Call 020 7881 4829 for your nearest stockist, subscribe today or call 0845 077 7755.

Boost your business – Innovative Marketing in Hospitality Conference 2011 >>

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