Discount frenzy undermining industry

Discount frenzy undermining industry
By admin

Australia’s obsession with discounting is undermining brand integrity, destroying customer loyalty and robbing poor destinations and communities of money, the founder and chief executive of GAdventures has declared.

Bruce Poon Tip said operators who offer 30% discounts and two-for-one deals are fuelled by desperation in a fiercely competitive market that has more travel companies than many other countries. Such price cuts “disrupt the market”, he added.
But he also said the dominance of retailers in Australia was partly to blame. His own company, which he said has resisted discounting since November, is coming under pressure from agency chains to throw more deals into the market.
“Australia has these dominant retailers that have thousands of branches. That doesn’t exist anywhere else in the world,” he told Travel Today. “Our agency partners are coming to us asking for deals because it’s just common practice in Australia. They say if you want to be pushed and recommended you have to keep up the Joneses.
“People are calling us as if we’re in a Moroccan craft market. They say I want this tour but I’d like 25% off or I want to take a companion for nothing. We’ve never seen anything like that anywhere else.
“I don’t mind offering a sale price here and there and we all need that last minute market to fill those last seats. But I won’t become a discount brand. It damages your brand.”
Those who indulge in mass discounting have no loyal customer base and have “failed to champion their product”, Poon Tip said.
In addition, the savings must come from somewhere – usually local communities who can ill afford it. “Savings are being pushed down the line and local communities are being stretched and pushed,” he said.
Furthermore, such high discounts are damaging the sustainable tourism market.
While some consumers will pay a 5% premium for a sustainable, responsible for ethical product, they will not turn their back on a two-for-one deal, Poon Tip conceded.
“When you can get 25%, 35% or 50% off, any kind of concept of what sustainable stood for is out the window.”
But he remained confident that increasing numbers of people will soon begin to identify with brands who genuinely adopt a sustainable approach to product.
“I don’t think that tipping point is so far away,” he said. “There will be a natural culling. The good companies will survive.” 

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