LivingSocial Pros and Cons

Guests nowadays have become accustom to looking for deals, discounts and promo codes. And while yes -- a deal can be a great boost to your bottom line, you have to truly understand how the deal is structured, as well as the financial liability (and sweat equity) that's involved.

This month, Bed & Brunch PR talks with Steven Bryant, who has used LivingSocial for more than20 deals (almost 30)! As the managing partner of several inns and restaurants in Vermont, including the Barrows House Inn and Restaurant, Dorset Inn, Mountaintop Inn, The Publyk House and the soon-to-reopen Lakehouse Pub and Grill, Steven knows a good deal, particularly since he's the one who makes it.

Where did the idea to use a deals website like LivingSocial for Barrows House come about?

We've done it before and each time we've learned something and sharpened our thought process. We have sister properties and a restaurant in Vermont and just acquired another property on a lake, so we have a pretty broad perspective on hospitality.

We've done several deals with mixed results but we're generally happy with LivingSocial. Like with any tool, you can't rely only on just that tool. With the Barrows House we have the Dorset Inn closeby (about 350 yards) and each has its own unique personality, so we recently placed both of those properties into a deal together as a package with the option to visit each individually.

Our target market is New York, Connecticut, and all that Northeast hotspot. The village we're in, called Dorset, it's a Norman Rockwell-type village and its within 6-miles of shopping and restaurants, and it's also close to key ski resorts. We're 15-minutes to Bromley and 25-minutes to Stratton.

We've established a good reputation already. If you don’t have a property that’s well established, I don't think these flash sales on sites like LivingSocial, Groupon, and the many others will make a big difference. If you are established and have a good deal, you'll likely get good results.  We use LivingSocial as an insurance policy for softer seasons. If you're going to do it though, you definitely have to negotiate and make it work for you. You also don't want to have the business when you're already full. When you use this kind of deal, you're taking in less than half of what you normally would for a stay, plus they take a commission on top of that. Fortunately, for us, when guests are here they often spend money in our restaurant.

[Trivia: Dorset is home to America's oldest marble quarry. Marble from the East Dorset quarry was used to build the New York Public Library's Main Branch building in Manhattan. The Dorset Theater Festival is one of the area's better known attractions.]

Did you have to apply to get your deal on LivingSocial?

Yes. They have their own methodology and they're good at what they do. Theoretically, we can all develop our own email list and use a program like Constant Contact but they already have a huge following. They can connect with millions of people. It really is a bigger world they connect with and the hope is that you will connect with some people that will become return customers. They're in business like all of us are in business and they choose properties they think will get a good return on their investment.

What types of things do they ask you for? How does it work?

They ask you for a write up and photos. They'll also ask you to package a deal up that's effectively discounted 40-50% from your regular rate. In our case, we tend to package two nights for effectively the price of one night. Furthermore, you're paying them a commission on that.

In theory, nobody wants to go to a place that's not busy. The more vibrant your place is, the more likely you are to get that other person or passerby that's going to connect. In our particular case we tend to make a profit from the restaurant, so the LivingSocial deal adds more people to the restaurant and we aren't discounting that. It's not a magic bullet. LivingSocial is a tool like the many tools we have -- like pay-per-click, Facebook, Google AdWords.

If you didn't have the restaurant would you still do LivingSocial?

I would be less interested if we didn't have therestaurant. The goal is not to need these tools but that's the utopian goal. There's a way to use this tool so that it works for us.

So, you'd say LivingSocial has been successful for you?

It's been successful today but always as you go forward you have to find different ways to compete in whatever you're doing. LivingSocial, on balance, I'm happy with it. I would recommend it as a viable tool. I would caution to make sure it fits for your property. If you're successful it'll make it more successful but if you don't have a product people really want, it won't really matter.

How many times have you done a LivingSocial deal?

Between all of our properties, abut 20-30 times.

Pricing-wise what have you learned?

Each situation is different. LivingSocial will push you to go below your comfort level so you really have to be comfortable with who you are. Your rates become severely discounted but for us it works. It's all about your unique situation, about who you are, what your property is. They like the deals to be $100 or $125 per night and our deal is for two nights. Our thought was that if someone really wants to experience what we have, they really need to be comfortable paying at least $200.

Last month we did a midweek deal for $210 and a weekend deal for $245; we've also allowed both deals to be combined into a four-day deal. It's a really great deal! If you go too low, there seems to be a lot more of a hassle. There's no perfect number. We tend to subscribe to be comfortable with what our product is and to get to the higher end. We're essentially offering a 40% discount and there's pressure to go lower. But still, we've found this to be the best set up for us. If somebody comes in and leaves after one night, you have more relative cost in maintaining that transaction than you would with a two-night stay.

We've also done Groupon and we've done others. We still do Groupons occasionally, actually. In general there's a better result for us with LivingSocial, for whatever reason.

Anything you wish you would've known going into this -- especially the first time?

There is a learning curve and you tend to always second-guess whatever you decide. Just be very clear, that's the most important thing. Be clear in the way that you write things and be clear in the way you communicate things. Ultimately, your business is about your reputation. If you're blacking out dates or limiting availability be very clear with your goals and objectives. Transparency is key. Any grey area and you tend to lose on that.

If you had a fully booked weekend with a previously committed group, for example, and you didn't black out that date, maybe they're on LivingSocial and they call you back that they want to now book that deal through LivingSocial. If that happens, you're losing more than half that revenue. Black out what you already know and be as prude as you can. And be very, very, clear. I can't say that enough.