Hospitality Leadership Through Learning

To Groupon or Not To Groupon: A Tour Operator’s Dilemma


Vol 11 No 19
By: Chekitan S. Dev Ph.D. , Laura Winter Falk Ph.D., R.D., and Laure Mougeot Stroock


Executive Summary:

The case of a tour operator in New York’s Finger Lakes region highlights the remarkable potential benefits of participating in a social coupon promotion, as well as the possible pitfalls that require a carefully crafted arrangement. The benefits include participation in an attention-grabbing website (in this case, Groupon) and having many new customers exposed to the business. Possible disadvantages include cannibalizing existing customers, attracting deal seekers who will not become repeat customers, and failing to make up for the revenue forgone when discount purchasers occupy spaces that could have held full-price customers. For the tour operator, Experience!The Finger Lakes (E!FL), an additional challenge was to create a discount package that did not lose money. To alleviate potential issues, the tour operator used a creative approach that involved working with Groupon and participating wineries to add value to the core tour product. By creating a special package, E!FL was able to cover costs, add value for all parties, and offer a different product that was not directly comparable to its core menu of tours.

View more details of the case and commentary with the owners Alan Falk and Laura Winter Falk here.

Professor Chekitan Dev discusses the value and challenges for hospitality businesses that use social coupons, view video here.

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