Daily deals provider Groupon Inc. (GRPN) recently increased its Getaways offerings by adding 20K new hotels around the world. The expanded marketplace that offers up to 60% off in flash deals is currently available in the U.S. and Canada.
Groupon users can book any of these hotels from their mobile app or through the web. On booking they will receive 5.0% back in the form of Groupon Bucks (also known as Credits) which can be used later. Moreover, most of these hotels provide a booking calendar, which reduces the necessity of a voucher.
The availability of booking calendar makes it easier for users to book room to suit their date choices. Groupon expects to launch the expanded Getaways marketplace globally in 2014. This will not only solidify the company’s footprint in some of the under penetrated international markets, but also boost subscriber growth and billings in 2014.
Groupon’s policy of launching new products on a regular basis and the growing popularity of its mobile app continues to attract consumers. The company reported a strong holiday season sales with billings up 30.0% from the year-ago period.
Groupon noted that more than 50% transactions (55.0% of North America) were carried out through mobile devices. The company’s offering of more than $100.0 million in Groupon Credits and the launch of freebies just prior to Thanksgiving also attracted holiday customers.
Freebies include digital coupons, promotion codes, sales, giveaways and samples, from more than 5,500 brands in the United States. The company plans to expand the offering to some key international markets in 2014.
The new category reflects Groupon’s strategy of diversifying its business in addition to the core daily deals segment. We believe Groupon is well positioned to gain from the rising e-Commerce spending on mobile devices, a profitable domestic market and an expanding international market.
Groupon’s latest acquisition of TicketMonster will help it to strengthen its position in the mobile commerce market. At the same time it will provide significant traction to Groupon in the Korean market, one of the fastest growing e-Commerce markets in the World.
However, we believe that the market is becoming more competitive due to the growing interest of technology stalwarts such as eBay (EBAY), Amazon (AMZN) and Google (GOOG). Moreover, a volatile macroeconomic environment and continued investments to expand its merchant base are expected to impact near-term results.
Currently, Groupon carries a Zacks Rank #3 (Hold).
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