eNET Internetkutató és Tanácsadó Kft.

Successful accommodation coupon business: HUF 4 billion market

2013. December 02.

The turnover of the online accommodation coupon market in Hungary amounted to HUF 4 billion in 2012. These special offers, usually involving discounts in excess of 50%, remain very popular, and a strong package offer is unquestionably beneficial to the accommodation providers selling the bonus/coupon.

Favourable last minute accommodation offers have always been attractive to people about to go on holiday. Travel offers on bonus/coupon web sites build on the success of the last minute travel business. The discounts are the same but travel coupons usually give more freedom to customers than last minute offers. Bonus/coupon sites are aimed at consumers to whom a low-priced holiday is especially valuable.

Bonus/coupon sites on the accommodation market

Most players on Hungary’s online bonus/coupon market offer a wide range of products and services; experience so far indicates that sites specialising in a certain service or product type cannot attract a large audience. The only exception is the area of discount travels. The success of such portals is attributable to the fact that the travel category is clearly the most sought-after service segment, so its sales volume is also outstanding. Coupon buyers can achieve discounts that no other channel can offer.

Similarly to the overall bonus/coupon service segment, the online travel coupon market is rather saturated. As demand consolidates, the number of bonus/coupon sites decreases, and market concentration grows. Due to their considerable user bases, the largest players are the most attractive to accommodation providers; to them, it is important to conclude a contract with a bonus/coupon site that grants access to the widest user pool possible.

Domestic accommodation sales on the bonus/coupon market

The domestic accommodation area is a segment of the overall bonus/coupon accommodation market. Discount accommodation abroad is also offered to Hungarian customers, and there are travel offers that are not specifically accommodation-related (such as one-day trips). Based on the domestic sales volumes in the domestic accommodation segment, the top 3 intermediaries in this field are Lealkudtuk.hu, NeMaradjLe.hu, and maiUtazás.hu in Hungary. The first place is held by Lealkudtuk.hu, a site owned by Allegro Group HU Kft. The second spot is occupied by NeMaradjLe.hu, a wholly Hungarian-owned business registered in Sopron. The third position goes to maiUtazás.hu, a member of the Utazok.hu group. Two of the top 3 domestic bonus/coupon accommodation sellers (NeMaradjLe.hu and maiUtazás.hu) are specialised in travels only. The fierce competition is indicated by the fact that the domestic accommodation sales figures of Bónusz Brigád, the leader of the overall bonus/coupon market, and Kupon Világ, another general (non-thematic) site, are on the rise.

Coupons as marketing tools

The judgement of travel bonuses/coupons by accommodation providers is rather varied, but it would be hard to dispute that their conscious sale is beneficial to business. Accommodation providers should apply bonus/coupon sales correctly, as one item in the marketing mix. These offers constitute a method of acquiring customers in which the success of a marketing action is accurately measurable because one bonus/coupon sold represents one customer.

Some firms seek increased customer awareness via the preferential offers, while others expect a turnover boost. A bonus/coupon offer is successful from the provider’s perspective if it returns at least the related fixed costs; any further turnover growth should be considered an additional gain.

One significant benefit of bonus/coupon sales is the possibility to sell capacities that have otherwise proven difficult to market. Travel offers usually remain valid for a specific time period. As another frequent limitation, the discounts are available for weekdays only. In some cases, the accommodation provider grants an option to stay over the weekend for a higher price. Selling weekday capacities is definitely a positive result of bonus/coupon offers, because utilising such capacities is problematic to accommodation providers who struggle with sales problems anyway. Discount offers allow for covering low-demand periods resulting from the seasonality of the accommodation market. Promotions in these periods mean that the commissions payable by providers increase, but free capacities can be utilised.

If bonus/coupon offers are regarded as one element in the marketing mix, it should be noted that such a promotion will only be really effective and successful if the offer reaches as many potential customers as possible.

Two nights for two, half board

Most offers are for two persons, two nights, and half board. However, discount holidays for up to four nights are not rare in the summer season. These are mostly domestic travels, whereas demand for foreign holidays is also higher in the summer. Foreign holiday offers are for 4-5 nights. About 70% of bonus/coupon buyers are women, most of whom seek family offers. A stay advertised for two persons can often be complemented with preferential offers for children, albeit for an additional charge.

Travel bonus/coupon offers normally include much more than simple accommodation. Most buyers are impulsive, so an attractive offer should contain more than a low price. Experience indicates that the market has recognised this need, i.e. almost all travel offers are packages containing various additional services over and above the accommodation, such as preferential massage coupons, unlimited wellness facility usage, a welcome drink, a dinner with wine, or tickets to a cultural or leisure program.

18% versus 27%

A characteristic feature of the online accommodation market is related to VAT payment regulations. Commercial accommodation providers must pay 18% VAT in Hungary, but bonus/coupon sites belong to a different taxation category as they pay 27% VAT. Consequently, such sites apply retroactive settlement: they forward the price of the preferential packages to the respective travel service providers, who pay back the amount due to the bonus/coupon site in the form of a commission. In this case, the site acts as an intermediary only, so only 18% VAT is payable instead of 27%.

The future

Within the overall bonus/coupon market, the travel category is clearly one of the most sought-after areas. The largest players will probably safeguard and fortify their positions in the accommodation coupon segment. Accommodation providers will use bonus/coupon sales increasingly consciously, and close partnership with the largest bonus/coupon sites will gain importance in the race for customers.

eNET – Department of Information and Communication of the Corvinus University of Budapest (BCE)

Related posts

  • Hungarian market of online daily deals grew to HUF 16.5 bln
    The aggregate turnover of online daily deals grew to about HUF 16.5 billion last year in Hungary. This market segment, which is now far from negligible, includes general bonus / coupon sites, disco...
  • The online bonus/coupon market soars further
    The Hungarian online bonus/coupon market realised a 6.5 billion HUF return in 2012. While the number of participants is decreasing and the signs of market consolidation are observable, the populari...
  • E-Commerce Trends in 2011
    Hungarian retailers capable of significantly boosting their sales volumes in 2011 were almost exclusively those engaged in selling online. Exact figures will not be available until after the books ...
  • Bónusz Brigád has half of bonus/coupon market
    In the first nine months of 2013, the turnover on Hungary’s bonus/coupon market reached HUF 4 billion. Market leader Bónusz Brigád gained a substantial advantage, distancing itself from competitors...
Bonus/Coupon, e-commerce, e-government, e-finance, e-tourism, Electronic Communications, Frequency, Information Society, Information Security, Internet Subscriptions, Internet Economy, Internet usage, Internet Access, Internet Penetration, Internetbank, Internet Commerce, R&D, Christmas, Social Site, Media, Mobile Payment, Mobile Purse, Mobile Shopping, Mobile Internet, Mobile Games, Mobile Phones, NGN, Smartphone , Online Games, Online Shopping, PC, Tablet, Telecommunication Spending, TV, Video Sharing, VoD