We have a problem in the tourism industry. There is a mentality that discounting is a solution to filling seats, beds and tickets. While it has its place for last minute deals, it’s not a financially sustainable strategy for tourism operators on a day to day basis and travel discounting websites are the root of this problem.
Yet there are deal websites in New Zealand that are driving sales by featuring operators that discount more. The higher the discount the higher your listing is featured. The expectation of large discounts COMBINED with a commission to the third-party website is simply driving operators into very low margins or even loss situations. Getting into a rut of continuously discounting is poor business strategy and often just converts customers that would pay normal retail to a discounted deal.
Yes, deals are attractive to travellers, and at times a useful tool for operators but to gouge profits from operators does not help our industry. Tourism operators that make healthy profit margins are much better placed to further invest in environmentally sustainable business practises, maintain or increase staff levels, business growth strategies, health and safety, and all they other costs of running a business.
We need to see a change in business model for these deal websites that provide more margins for operators with little or no commission fees. COVID-19 may be a reason to discount to attract the domestic market for last minute bookings, BUT more importantly it’s definitely a reason to have sales models that support profitable offers for tourism businesses to participate sustainably.