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June 22, 2011

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Hotels harness group buying power

WHILE the online group-buying phenomenon has taken retail and service industries by storm, it has not been until recently that it began to flourish in hotel's room booking and dining sector.

It feels like an overnight enlightenment for hotels to join in the group-buying craze, which is all about convenience and saving money.

Leading group-buying websites have allocated particular sections catering to this new customer trend - attempting to book hotel services by binding together for group purchase at bargain prices.

Business hotels with a three- or four-star rating and economy hotels are the main force offering group discount rates. On their cooperation list are popular grouppurchasing websites such as, and

On, a one-night stay in a Korean-style room at Highton International Hotel Shanghai in Gubei, with brunch for two, a Korean-style sauna for two and two spa discount coupons are priced for 360 yuan (US$55.55). The standard price is 1,320 yuan for all these services.

A standard room at GreenTree Inns at Jinqiao Jialin in Pudong, a VIP card valued at 88 yuan and a coupon worth 160 yuan are also offered at a special rate of 125 yuan on

"Different from traditional sales promotions such as discount coupons, membership cards and gifts, group buying is a new marketing measure in which the price-slashing tactic helps promote deals," says Elise Lim, public relations and marketing manager at Hotel Pravo.

"The charm of group buying lies in its low price, time limits and regularly updated characteristics. It creates demand and consumption on a sudden impulse. A win-win outcome is achieved among vendors, buyers and group-buying websites."

The hotel that Lim serves cooperated with at the end of May, promoting its dinner buffet with a group-buying rate of 128 yuan. The standard price is 260 yuan and an extra tip of 15 percent is needed.

"We will pick different group buying websites to do promotion on our products irregularly," Lim says. "The service we provide for group members will be the same as those who buy it at standard prices. We will continue to enhance the interaction with the buyers."

The prices for hotel rooms sold in the form of group buying are usually 30 to 80 percent lower than usual. For shoppers, they benefit by paying less, and for hotels, they benefit most either during slack seasons or opening periods.

"It is believed to lift occupancy rates and cope with the traditional off season," says Karen Yu, a local hotel PR professional. "Many five-star hotels are much interested in the field. But they are more willing to take a wait-and-see attitude."

Hotels do have all the reasons to be picky.

Cooperating with any financially weak website or those of uncompetitive service can make hotels face the risk of business disputes, which can ruin the hotels' reputation and image. Another concern is that accepting customers with lower spending power could also harm the hotel image.

"Personally, I'd like to find a groupbuying website that can cater to top hospitality services at five-star hotels, and share similar high-end target consumers," Yu says. "While some websites set a low entry standard for hotels, I do wait for one website to stand out with a luxury touch."

Yu adds that hotels are much more interested in promoting dining products than promoting hotel rooms to a local market.

Chen Tianyi is a young man with a strict budget. To meet his new girlfriend's high lifestyle demands and keep giving her surprise gifts, he buys movie tickets, perfumes, T-shirts and bags for her via group buying websites.

When considering to spend a holiday with his girlfriend in Sanya, Hainan Province, he found that he could also save more money by group buying hotel services.

"Before embarking on a holiday, I used to do online hotel booking first. But now I prefer the group buying system as the deals are less expensive," Chen says.

"But my girlfriend would worry about the possibility that the service might not be able to meet demand. Getting a great discount sometimes may lead to unknown circumstances only for the sake of being cheap," he says.

As a bundle of group-buying websites have dived into the industry, those without sufficient financial support are predicted to be unable to survive for long amid fierce competition. Consumers are advised to pay close attention to the credibility of group purchasing websites before making orders., the one-stop China travel service which offers discount hotel reservations, cheap airline tickets and package tours, has recently jumped into the fray with its own group buying service for special hotel deals.

Tang Lan, vice president of, points out that there are three problems existing in today's group buying market - setting standard prices high to reach an illusion of great discount, setting difficulty in redeeming the coupon, and attracting consumers by suggesting a false number of group members.

"I believe honesty is the key to success," Tang says. "We need to bring creative ideas to make group buying of hotel services a sustainable growth."


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