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

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Dev, Chekitan S., Ph.D.; Falk, Laura W., Ph.D., R.D.; Stroock, Laure M.
hotels; online booking; online travel agents (OTAs); discounts; social coupon promotions; Business; Hospitality Administration and Management
article description
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.