Untitled Document

Watch out, there's a stray in the neighbourhood: A story of Groupon and hoteliers

Posted on 01 Sep 2011 at 09:56 am by Yeoh Siew Hoon

I live in what you might call a curated neighbourhood. It’s one of those integrated residential developments and about the only thing we don’t have is a casino although I am told next year we will be able to walk across a bridge and a park to get to the gaming tables. I can’t wait.

It’s built on reclaimed land so technically I sleep on an ocean bed. Its residents are young (and old) urban professionals, and expatriates favour the area. Each apartment block is prettily manicured with own swimming pool, gym, tennis and squash courts and each has its own security guardhouse.

It sits right next to what in Singapore is called the “heartland” – the Tanjong Rhu Housing Development Board (HDB) estate, one of the oldest on the island. Here is a local neighbourhood where the accents and flavours are distinctly different, and its residents are mainly Singaporeans who, last weekend, went to vote for their new President in what was the most hotly contested elections in history for this largely ceremonial post.

The one thing these two neighbourhoods have in common are the domestic helpers – mainly Filipinos and Indonesians who look after the young, nurse the elderly and walk the dogs. These helpers are comfortable in both precincts which really wouldn’t be able to function without them. In fact, the whole of Singapore would come to a standstill without them.

Residents from the two estates rarely mix. It’s quite interesting walking from one neighbourhood to the other and observing the differences. It’s a bit like crossing the Causeway from Singapore to Malaysia – the differences are subtle, but discernible.

The dogs in particular are different. Because there’s a rule that big dogs are not allowed in HBD estates, canines in the local precinct are the small breeds while those from the manicured side of the fence range from the pedigree retrievers to huskies to Samoyeds.

Every now and then, a stray dog from the local estate or a nearby construction site will wander into the manicured precinct.

And for days while the stray is roaming around, my fellow residents are suspicious and hostile. They will alert everyone that there’s a stray around and when they see me going near it, they will tell me, “Don’t let your dog play with it, it may be diseased.”

Someone will then report the stray to the authorities and soon, the stray canine will disappear and calm will return to the neighbourhood.

I tell this story because at the Asia Connect event last Friday, a delegate who does not come from the travel industry asked me, “Why are they treating the Groupon guy with such hostility?”

He couldn’t understand why Groupon’s regional sales director Kelvin Teo, after his speech at the HSMAI-organised event, was being grilled with such ferocity by the audience of mainly chain hoteliers.

One questioned why his brand was being used in the presentation as to his recollection, his company was not working with Groupon. Another said the Groupon business model was damaging to hotels’ pricing strategy and yields. A journalist asked him if Groupon had travel agency licences and Teo’s response was, “yes in markets where we are required to”.

In his presentation, Teo shared a few success stories – how Groupon helped Virgin Atlantic sell 2,900 Groupons in 30 minutes when it launched a new route and how AirAsia cash vouchers sold out in three hours. And when it did a weekend one-night deal with Royal Plaza on Scotts, Singapore, it helped the hotel generate S$42,000 in 24 hours.

He shared a few more examples of mainly independent resorts in Thailand to demonstrate the power of Groupon to turn “projected losses into nett profit”.

It is clear hoteliers are very uncomfortable with the Groupon model – the 50% share of the discounted rate you must give them – yet it is also clear some properties are choosing to work with them.

So you see, Groupon’s like the stray that’s entered the well-manicured precinct of hotel-dom. Most of the residents remain suspicious and hostile. They don’t quite know what to do with it and they fear it will bring mayhem into their rate-paritied worlds.

“But customers want it, don’t they?” asked this non-travel industry innocent, as though that was the answer to everything.

Isn't it? 

Tags: Groupon , Asia Connect , rate parity , hotel sales