Groupon as strategy to open a hotel

Groupon is a service that in the last two years has grown exponentially as a novel system to obtain unbeatable promotions, although hides a corrosive drip on intangible attributes of any brand that strives to communicate and to differentiate from their competitors.

Due to massive interest this system that captured many business owners, managers and marketing managers chose to include it in its business strategy to increase sales or, in the specific case of the hotel, increasing occupation.
It is a highly effective tool that helps to fill available rooms for specific dates or improve the occupancy rate in high season. It also generates a boost to hotels in low season.

But when a new hotel opens and wants to get noticed, to generate positioning, Groupon becomes one of the key weapons for launch. In fact, the blog Hotel Marketing Argentina comments that this service helps you to get noticed and that you will see rapidly a change in your occupation index.

I think that the use of this tool damages the brand image, because, for example, if a hotel wants to differentiate itself from its competition to have a unique positioning. Therefore it focuses on its intangible attributes that embodies the brand personality, touching the emotional side of people which is strongly bonded to feelings. This means that if a hotel strives to give the image of modernism and quality, the aim is that guests associate it with those attributes and when they return to their country and are asked about their stay they respond it had a very striking architecture but of excellent taste, for example.

This brand attributes are always surpassed when the strongest variable of the marketing mix comes into play: the price. It’s the rational aspect par excellence which has directly repercussions on the people´s pocket. Above this plinth erects Groupon its spine. Everything spins around promotions and heavy discounts which provokes a drastic price drop.

This mechanism can damage the brand image of selective products, since the price is the natural barrier between the massive and the exclusive. For example, if a Rolex was sold for half its original price, the target wouldn´t like it, because when the watch is reachable for more people makes the product´s privilege descent.

Therefore, when a hotel is launched with low prices via Groupon, generates, on one hand the brand attributes are overshadowed or relegated due the degraded rates and on the other to attract people who don´t belong to the target. This audience sees an opportunity to be hosted on a hotel that isn´t usually affordable for them.
Conclusion: people see promotions as an opportunity. Even though people are aware of the hotel´s existence they won´t come back. Why? Because the brand was associated with a low price and not with the intangible attributes which are so difficult to elaborate.
Solution: work on an organic positioning and avoid an artificial option (in the next article I will write about this subject).

You are all invited to participate with comments and share your experience with Groupon. The idea is to enrich the debate with different viewpoints about the same tool.