Expedia Questions the Lifetime Value of the Groupon Customer
Expedia sold 15,000 travel deals in the first three days of launching a partnership with Groupon.
But three months later, the Bellevue, Wash.-based online travel agency is questioning the long-term value of those bargain shoppers.
In Expedia’s conference call yesterday discussing its third quarter results, CEO Dara Khosrowshahi admitted sales from the Groupon Getaways partnership were impressive, but questioned the incremental value to the business and whether they were returning to Expedia to book other trips.
“Are they coming back and using Expedia for their other travel needs?” asked Khosrowshahi, according to the Seeking Alpha transcript. “Groupon has been a strong partner for us. And I think over time and especially into next year, we’re going to figure out what the best approach is going to be.”
In addition, he said, Expedia is trying out a number of other discounted options. A product called ASAP deals offers good prices on Expedia; there are 48-hour sales on Hotels.com; and on Hotwire, various deals are aggregated in a travel ticker. He also is looking into mobile as a specific channel for deals.
This is not the first time that Groupon has faced questions about the loyalty of its customers. Merchants and restaurant owners regularly struggle to understand whether one-time heavy discounts create long-term relationships with customers.
Groupon Getaways was announced the same day in June that the daily deals giant filed for an initial public offering, which at the time was aiming to raise $750 million. The partnership didn’t go live until the following month.
Now Groupon is out on the road pitching investors and seeking to raise a more modest $540 million.