Your Thoughts: Groupon vs. Living Social. Who's Better?

Never spoke to Groupon, with only 6 rooms we may have been too small for them as they never returned our calls. Spoke several times to Living Social. They can limit the offers, for example once 100 coupons are sold the deal is expired. I was hoping to use this for weeknights but they required we offer weekends as well. The customer buying gets 50% off so for a $150 room that is $75.00. Then Living Social takes an additional 40% of the $75 leaving $45.00 for the innkeeper. If 100 are sold that is $4,500 but you will probably loose regular weekend traffic. You can add a romance package such as wine & chocolates or flowers and charge an additional $75.00 for that. You then earn $22.50 on that package so if you can keep the cost to $10.00 you will net an additional $12.50.

I heard from someone in the restaurant business that Groupon takes half. I think unless you are very large that it is better to see what advertizing you can get for free and run with that. That way you can do your own specials and change them as you would like. We have weeknights discounted if a weekend is also added. Or a stay with us for your honeymoon night and get your one year anniversary night free. We can change these and make money with out being stuck with a Groupon, Living Social or the like.

Our rates are fair, and we don’t discount. I’d rather have a vacancy, than rent a unit for less than the rest of my guests are happy to pay.. When someone tells me my rates are too high, I suggest they try the other side of the river.

I heard an article about Groupon on National Public Radio around a year and a half ago. Business owners who used them, found that people who bought their goods or service at half price were doing so only because they could get it at half price. They never came back, because they are not the type of person that would pay the going rate to begin with.

Why the hell would I discount my rate by 50% to attract a customer, and then give half of the income to a third party? The only people making out are the customer, and groupon, or living Social.

You want a discount? May I suggest a motel across the river? You’ll probably be happier there anyway, because you can make all the noise you want, and it won’t disturb the hookers and the drug dealers that you’ll have for neighbors.

Although i am not a B and B owner i am a B and B lover and agree with Mr. Merkowitz. In my experience B and B owners are doing everything possible to stay afloat, offer a great experience and still make some money so they can eat. While i love a discount i believe more in fair trade. Now, i can say i have utilized both Groupons and Living Social, usually for something i wanted to try but was not sure of. If i saw one for a B and B i could see myself getting it AND still coming back to the B and B regular rate. The B and B experience is special-as are the people who run them and love them. And there are other similar promotions like Groups/Living that are cropping up like hotcakes, as my grandma would say. one way of looking at this might be folks who would love to visit but finances are tight-maybe if it went well they would remember when things are better. just my thoughts.

This is a great question, Gary. I interviewed a B&B owner last year on this topic. She offered a deal through Living Social, and felt she got good value for her business. You can read her story at the link below, and her answers to some very good questions another owner posed in the comments. (Apology in advance for the lack of formatting in the comments section.)

http://freshbnb.com/2011/02/10/what-if-you-sold-1400-room-nights-in-10-hours/

We offered discount coupons thru another source last year. So far we have not had any referrals or return visits. It was an OK experience, but doubt if we will try it again. Our rates are below the average at this time.
We are offering discounts to Kid’s Club of Alabama Members (15%) and Christian Hospitality Network (25%). We understand from other B&B owners that this is a good source and quality people.

Wow! Such negative comments from innkeepers who haven’t used either service. Well, naysayers, I’m all for it! I’ve just run both Living Social and Groupon offers for my off season. Our first quarter revenue goal has been exceeded by 30%–and it’s still January! I haven’t had to cut hours for my staff, my variable overhead costs are covered, with some left over for fixed overhead. Our occ. rate is higher in March than it was in our high season! I’m thrilled with the results and found both companies to be professional, and well versed in creating packages that are attractive to consumers.

Yes, they take a big bite of your room rate, but no one mentioned that you will also receive hundreds of phone calls that come to you directly, and which you may book without a commission cut. This increases your gross margins overall. My overall off season ADR is running around $100, and that’s nothing to scoff about.

There’s no way any of our small businesses can compete with the marketing muscle of these powerhouses. Running a special with either of these companies allows you the opportunity to turn a first time guest into a lifelong friend if you treat these value oriented off season travelers like you would any other. Don’t forget that your inventory expires every day. Isn’t it better to put heads in beds that would otherwise be empty?

I believe that Living Social and Groupon can be considered the big guns – you only break them out in time of a significant conflict. I also think that it’s like a super powered marketing program that might not be the right tool for some innkeepers, especially those that don’t want to work.

We have run two offers through Living Social so far at our nine-room bed and breakfast. In both cases the response was almost overwhelming necessitating us to add a position to the staff and purchase additional laundry equipment.

The customers who came could be best described as “our customers” – in other words, within the income and age demographic that we seek as our “ideal” patrons. I would describe the entire experience as mostly positive and about equal to dealing with the general public for the most part. The majority of the guests were terrific, a few were not, but nothing out of the ordinary.

What was the upside of these deals is that Living Social sent out an e-mail to thousands and thousands of people who had never heard of our unique establishment. This was, flat out, the most effective marketing program I have ever been involved with and I used to work for a big computer company with a piece of fruit as its namesake logo.

Some folks have made reservations outside of the LS system at a higher price, some have extended their stays and one even reserved the whole property for a surprise birthday. Would I do another, third, offer? Likely not but in the 24 years this place has existed we’ve never had a waiting list on week DAYS in the middle of the first-quarter/winter period. So thank you, Living Social, I appreciate the ability to stay in business.

I really appreciate the comments people have to share. I am a B&B lover and I work for a company called TroopSwap who does something slightly similar, but we are a military only community so our “deals” are not open to the general public. We also offer all of our advertisers the opportunity to run an ad on our Proud Supporters page for up to 2 years at no additional charge. Plus, we allow you a discounted commission if you re-run your deal. (If you are running a deal with Groupon, Living Social, or any other company, be sure to ask them what is in it for you after your deal. You may be able to negotiate something great for your company.)

I know with TroopSwap you can put in any fine print you would like. for instance not valid on holidays, must be a 3 day minimum stay, discount value is only good for 3 months (so you can use it during the slow season, but they can use what they actually paid for it similar to a gift certificate after that expiration), etc… Something else you can do is look at pairing it with a Massage, Wine Tour, Romance Package, Golfing, or a Keepsake (robes, bottle of wine, framed photo.) You can add value to the package so the inn itself would not have to discount the room so deep.

I have been working with some B&B’s and plan to share this page with them so they can see how others experiences have worked out. This is a great resource! I agree this may not be for everyone, but if you are wanting to fill a room this is a great way to advertise to the masses.

If you are interested in working out a deal on a smaller scale that is exclusive to military and veterans, feel free to send me an email at rae@troopswap.com . Good Luck!

We have had great results with Living Social. The amount of added income at the end of the year has been significant. Additionally, the marketing exposure has been awesome. Many of our guests have “purchased up” by adding a second night stay at the regular rate, added and in-room massage & Dinner at the Inn which helps with the pain of the 50% discount on the nightly rate. Also, we’ve had couples who have purchased the voucher that bring a second couple to join and I give them a 10% discount just as a courtesy, I call that a double whammy. In the end, it has brought my average daily rate down from $158 to $133.50 but my occupancy rate has gone up 45%. We work harder, spend more time washing & folding, but that’s why we’re in business.

As far as GroupOn, they spent allot of my time trying to get me on their site, but they would never negotiate the commission and had too many restrictions. I have noticed that they have take a direction towards marketing large hotel chains and Living Social is specializing in B&B’s and non-traditional lodging. I wish the Social Media Marketing creators had come along in 2008 when the economy dropped and nearly closed our doors. But never the less, we held on and we’re still here, doing really well thanks to their help.

We have a 13-guest room historic inn, and we did a Groupon last May; on the whole we were quite pleased; we are a very rural “destinatlon inn”, and Groupon promoted us for a week on two lists & opened us up to tens of thousands of people in several states at no charge to us, and that kind of advertising is great! I was able to negotiate with them so they paid us in full almost immediately; I was VERY proactive: answered every question immediately, manned the phones constantly, & promoted it on Twitter/Facebook & our blog. We sold 63 1 & 2 night packages (guest room w/Continental Breakfast); most sold were 2 night packages; we were paid a little less than $4000. We were then able to upsell dinners at the inn to approx 1/3 of them, and some added on additional nights as well. We also made it available to our best repeat customers, as a treat, and several bought packages. We were flexible & allowed several buyers to use 2 Groupons simultaneously so they could bring family/friends. Yes, I know most Groupon users are one-shot wonders (several actually told us that they don’t go away UNLESS they get a Groupon), but I’m a Groupon/Social Living user, too, so I can relate! As they’ve all been pleased, we’re hoping for return guests, and we are considering another (on G or SL’s “escapes”) before the holidays, as a gift idea – remember: not all gift-card buyers actually use them! If you only have 2 or 3 rooms it may not work for you, but if you can create a package where you are truly not losing money (we have no staff, which helps), it can be a great thing.