Groupon Getaways has quickly become a core part of the Groupon business, with North America billings last year increasing 46% to $264 million.
This growth accelerated into the fourth quarter, with the company claiming $66 million in billings – a 38% YoY increase. Globally, Groupon Getaways billed $696 million throughout all of 2013, coming off the strength of 70 million cumulative downloads of its mobile app.
With travel now representing more than a half of a billion dollars in revenue for the brand, the product is gaining more focus on both the consumer and supplier side. The brand wants to be both the single source for things to do and places to stay in cities across the globe, and also a profitable cog in the revenue management machine of hotels and other travel suppliers.
The company has also completed several high-profile acquisitions, starting with UpTake two years ago. This brought a heavy search/SEO and data capability to the team as they began to ramp up into travel. Most recently, Groupon locked down last-minute hotel startup Blink, followed by tours and activities startup SideTour.
These purchases brought essential knowledge in the last-minute and tours/activities space, forging a clearer path to compete on the “anything, anywhere” value proposition.
The key to Groupon’s strategy is incrementality – the idea that many of their customers are not using Groupon as a replacement for other trip planning and purchasing activities, rather as an additional trip they wouldn’t have taken otherwise.
Here’s a shot from the group’s own research – again, this is internal research, but shows how the company is positioning itself as a value-add and not net-detractor from regular sales channels for travel suppliers:
Tnooz spoke with Simon Goodall, VP and GM of Groupon Getaways, about the growth in revenue and current focus of the Getaways product.
Travel now represents more than $250 million in annual revenue for Groupon North America. How important is travel to Groupon’s business? Would you say that it’s now a core part of the business?
Getaways is the fastest growing business within Groupon. We breakout publicly with three core segments, Local, Goods and Getways, so this is core to what Groupon is.
We are all about, from a consumer perspective, helping customers find the inspiration for travel. Through our email list and our push business and our 70 million global mobile app downloads, we have an amazingly scaled customer base that is engaged and looking for inspiration. Customers wake up in the morning and check their mobile app for the latest thing to do and place to go.
Getaways billings increased 46% to $264 million in North America alone. What’s driving this increase?
80% of people who purchase a getaway are incremental to the destination. For our hotel partners, we’re about being an incremental part of their strategy to build awareness and stimulating demand when they need it.
There are numerous factors here. More and more travel and hotel supplier partners are working with us so the number of deals we have on the site is growing at a tremendous pace and new travel suppliers are coming on board and seeing the power of the platform. And those that see the platform are coming back to us.
The massive shift towards mobile is also contributing to this. Mobile has grown as a percentage of our global transaction volumes. Half of our transactions for Groupon occur through the mobile device. Travel is a natural fit for that.
We’ve also launched a number of new products in the last few months, which are Market Picks, which allow consumers to pick a date and location and search for a hotel. Market Picks are where we provide the best in industry pricing, which we pull from our partnership with Expedia.
We also reward customers with 5% for any purchase of a Market Picks hotel. Thats the key driver: better inventory, more customers, and more hotel partners seeing the value that we’re providing, and the scale of Groupon’s customer base with 9 million in the last quarter alone. More consumers means more ability to offer customers to our hotel partners.
You recently dropped the co-branding with Expedia. How’s the partnership going?
Expedia is a great partner. We launched the program in the US with Expedia in 2011, and that partnership continues to evolve.
We use their inventory for all of our flash inventory. The Market Picks inventory is sourced through the EAN team, which we also have a great partnership with.
We asked, Whats the best thing for both organizations? And we came to a mutual agreement for both organizations that this is the best way for both of us to continue to evolve the partnership. We provide a different set of products to consumers than they do and so the partnership works well.
What travel product is the most popular on Groupon?
Right now, the core is the flash hotel deals. That’s the biggest component of our business. Contrary to popular perception, we are booking an average of 47 days in advance. Which is a lot different than other distribution channels. This may be because consumers are taking more incremental trips and taking some time to plan those trips.
People fall in love with Groupon and because we offer such a great range of products for them, they come to us first when they are looking to do, buy or stay anywhere. We see great engagement from our customers that way.
Uptake, Blink and SideTour were all acquired to bring Groupon’s travel vision to fruition. Updates there?
These are three very different companies. Uptake was a phenomenal search engine optimization organization that focused on the travel space, and many people on that team were core to building out Groupon’s SEO. The GM from that division works with travel and is on our team here at travel. There are many core Uptake people that are core throughout the Groupon organization.
Blink had a great team that built a phenomenal product and they are passionate about mobile and travel. That’s such a huge area of growth around the company so they are core to drive our mobile strategy and product development across Groupon mobile.
SideTour is great complementary business, which falls into our Groupon Live business. This complements our Live Nation partnership. The SideTour team is still with Groupon, and they are part of the complementary business to Getaways. They don’t contribute to our own revenue numbers, but it is a great product for our customers to buy anything anywhere in a city. We rigorously cross-promote their offerings on our channel.
Given the different types of inventory available, what efforts does Groupon make to cross-merchandise?
Customer are organically merchandising their own trips, as they can go onto the mobile app to search for things to do in San Francisco – from concerts to restaurants to spas to activities. All of that is available, and because of the rate of utilization of our app they are buying those things real time.
And with iOS 7, it became battery efficient to introduce a geo-fencing capability to allow a seamless GPS change for available deals.
What’s up next in 2014? What are you prioritizing as an organization?
We’re about developing tools for both our consumers and our hotel partners.
Last minute is something that we said we will launch in the US, alongside better integration into our mobile app. The Blink team is coming in and adding their expertise to our Groupon mobile app, and thats the most exciting thing we have going on.
We continue to evolve the scale offering for our customers while offering more tools to hotel partners. We strive to be an integral part of their revenue management strategies.
The incrementality piece is the most interesting for us. 97% of our business is incremental to hotels – that is huge.
If you are a hotel or a travel supplier and think about how you leverage your asset and marketing capabilities, that is the most fundamental thing that they struggle with. How do I drive incremental business to increase occupancy without diluting existing customers?
Given our massive scale, that is the power of Groupon. Compare that to other travel companies, and there’s no comparison there. It’s a fun industry, and the dynamic of moving to mobile is a massive industry trend that gets us excited to be where consumers are coming for inspiration and travel.
NB: Global growth image courtesy Shutterstock.