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Luxury Flash-Sale Sites Take On the Travel Sector

Why Rue La La, Hautelook, Gilt Groupe, Others Are Expanding Offerings to Include Vacation Deals

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Erin Jo Richey
Erin Jo Richey
Following their rapid success in the luxury apparel market, members-only flash-sale sites like Gilt Groupe, Rue La La, and Hautelook have been expanding out into complementary verticals.

Many of these retailers have supplemented their initial women's fashion offerings with sales for men, children and the home. And now, it seems the latest trend in flash sale shopping is travel.

Rue La La added a travel experiences boutique during the summer of 2009 to expand upon its lifestyle offerings. Excursions are selected to appeal to the same personal styles of the 2.2 million members who browse the ever-changing designer deals. Close competitor Gilt released the beta version of its own travel destination site, Jetsetter, in the fall of 2009.

Now, in this increasingly crowded market, sites must set themselves apart with unique offerings and a specific voice in order to be successful. Without differentiation, they risk becoming just another "me too" company.

Jetsetter caters to the emerging class of moderately affluent luxury travelers with discounts on top international spas, resorts, and exotic getaways. Joining the mix are other sites like SniqueAway -- another members-only discount travel site launched by TripAdvisor this past fall -- and Vacationist -- a combined production from Travel & Leisure and Luxury Link.

One reason for this expansion into travel is that the excess inventory which clothing companies are not able to sell, and upon which sites like Gilt rely, often fluctuates widely and is now more heavily sought after by competing businesses. Many of these companies have reached critical mass with their lists of purchase-focused subscribers, and they are seeking out opportunities to sell complementary items.

But even though these group-buying companies are expanding into travel for both members-only sites and group-buying companies, their primary product is their subscriber list, and in a space that is becoming more competitive, it's important to maintain that list.

Companies like Gilt are in the business of marketing and selling the products and services of other brands. In turn, Gilt's own core brand is partially defined by the mix of goods it represents and the way those products are portrayed.

The flash sale travel model works for shoppers because it offers convenience and the opportunity to save money. Some of the sites are distinguishing themselves by consistently offering alluring imagery, in-depth descriptions and extensive reviews of the accommodations and trips. To maintain brand image and foster sales from the target group of shoppers, these travel boutiques carefully select four- and five-star properties from esteemed chains and boutique hotels.

Luxury travel options aren't ideal for all consumers, but they do benefit certain types of shoppers. The demographics of sites like Jetsetter and Vacationist skew toward women, the well-educated and those with above-average incomes. The deals benefit the traveler whom either finds that a discount overlaps with a previously planned trip, was planning to go to a select location but had no set travel arrangements or has the time and income to take an impromptu vacation.

In an industry that is still feeling the pressures of recession, hotels also find advantages to having deals featured on sites like Jetsetter or Vacationist. Often they are offering distressed inventory at times when occupancy rates are low. Due to the bad weather, off-season, or more affordable hotels in the area, many of the rooms were unlikely to sell.

The hotels gain access to premium new customers, they get good marketing by placing their images and reviews in front of many high-end shoppers and their own websites may see a boost in traffic as visitors go to check out the properties online.

As the economy rebuilds itself, the U.S. Travel Association predicts that by 2012, travel expenditures will have increased 1.3 billion dollars from what they were in 2009. The emergence of the new class of moderately priced luxury shoppers and the success of the nascent flash sale travel sites has quickly spurred competition.

Other sites that exist in the area include Voyage Priv´┐Ż, TabletHotels, and Hautelook, which acquired Bonvoyou this past fall to compete with rivals Gilt and Rue La La. On a more moderately priced level, the local-focused daily deals site LivingSocial acquired travel company Urban Escapes and launched LivingSocial Escapes at the end of 2010.

Travel sites like Jetsetter and LivingSocial Escapes may have partial overlap in their customer base, but they can each be competitive by addressing shoppers' different lifestyle needs.

As the market fills, some travel sites are making the necessary steps to distinguish themselves, while focusing on slightly different target demographics and gunning for customer loyalty. For instance, Gilt's Jetsetter often features glamorous destinations, but daily deals site LivingSocial has begun offering excursions for those looking to stay closer to home. Their focus aims less for the starstruck resort goer, and more for the urban staycationist.

With Escapes, LivingSocial brings travel closer to home by catering its selection of deals to include day-trips, "packaged nearcations," and brief weekend adventures that won't require the purchase of airfare. The locations of these travel deals may be more familiar to their customer base, and the trips themselves might seem more realistic. These are "get up and go" offers; no passports, special vaccines, or extensive pre-planning are required.

LivingSocial offers travel that is feasible. With its core foundation as a local deals company, LivingSocial is well suited to provide smaller-scale packages and to target trips to its customers geographically. By putting together complete travel plans that fit nicely into weekends, LivingSocial Escapes is hoping the convenience of the purchase, combined with the discounted price, will be a winning combination for its customers.

Jetsetter, also experimenting with other models, announced at the beginning of 2011 that they now offer non-flash sale discounted travel deals. No longer will shoppers have to beat the crowd to book trips at a special rate. Jetsetter is capitalizing on what they know about their customers to cater trips to shoppers' interests. Customers can choose deals based on countries they'd like to travel to, specific hotel lines they prefer, and the experiences they're looking for. Members select options like "Food & Wine," "Art & Culture," or "Romance" to receive a recommended list of vacation deals.

Gilt has stated that they've always intended as a company to eventually encompass a variety of types of luxury sales, including travel excursions. With a distinct focus on luxury for less, Jetsetter targets trendsetters and tastemakers. Contrasted with the often-sterile purchase process of many online booking agencies, travel deals through Jetsetter appeal because they are enticing excursions to exotic, international, or unique locals. As the cost for many of these vacations is still relatively high, a reasonably priced trip purchased through LivingSocial is still more realistic for many consumers.

While the market seems crowded with private-sale sites offering discounted travel fare (some competing companies have even sold deals for the same hotel on the same day), as travel spending increases, there is still room for more players. However, companies looking to set themselves apart from the spread of travel sites need to differentiate their offerings or increase their value-added benefits.

If companies like Jetsetter and LivingSocial Escapes remain true to their core brand image, they can each succeed in the discount travel market. Travel purchases through LivingSocial may be more obtainable and feasible for many Americans who just need to get away, but a Jetsetter trip represents the fantasy vacation consumers crave. In the next year, to stay successful, these companies should closely align their offerings to fit different travel mindsets and consumer needs.

ABOUT THE AUTHOR
Erin Jo Richey is a digital analyst and user experience consultant. Follow her on Twitter at twitter.com/erinjo.
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