Jetsetter Outsources Hotel Flash Sales to Secret Escapes

U.S.-based Jetsetter, which TripAdvisor acquired from Gilt Groupe in 2013, agreed to outsource its flash sales to a competitor, the UK’s Secret Escapes.

In what Secret Escapes calls a “strategic partnership,” Secret Escapes will now handle Jetsetter’s “flash sales” business, including sales accounts, bookings, and customer service, and will share revenue with Jetsetter.

Update: A spokesperson for Jetsetter said the partnership means it will downsize the team by 28 employees, about one-third of staff, and provided the following statement.

“With our new strategy, Jetsetter will reduce the size of its team, a total of 28 team members, mainly across our supply and member services. It’s important to note that this decision is not a reflection on the individuals or their performance, but is purely an outcome of a strategic business decision that we needed to make to continue to grow and set Jetsetter up for the future. We are actively working with the impacted team members to help them find their next opportunity, whether it is within the TAMG family or outside of the company, prior to switching to our new supply model. They will also being offered transition packages and outplacement assistance to help them find employment outside of TAMG if need be.”

Hotels can list their properties on either or both sites under the terms of the deal.

For Jetsetter, which offers customers limited-time flash sales at up to 40 percent off and also hotels at market rates, it gets to expand its inventory and customer base, and off-load the heavy-lifting in a business segment that parent company TripAdvisor likely doesn’t view as core to its offerings.

For example, during the first nine months of 2015, TripAdvisor’s subscription, transaction and “other” revenue increased 76 percent to $290 million primarily due to attractions, restaurants, Business Listings, and vacation rentals, TripAdvisor states. Jetsetter, which is part of TripAdvisor’s transactions’ segment, along with TripAdvisor’s Tingo business, doesn’t get a mention as a growth driver.

For Secret Escapes, the partnership could be significant.

“I think it will be a sizable partnership for us,” says Tom Valentine, COO of Secret Escapes, and he expects the company will be able to significantly ramp up its business in the U.S. as one of the advantages.

“Marketplaces benefit from scale so this is a big opportunity for us,” says Valentine, adding that Secret Escapes has a customer database of 20 million people.

Asked whether TripAdvisor invested in Secret Escapes as part of the deal, Valentine said it is “a commercial partnership at this stage.”

In July, Secret Escapes attracted $60 million in funding in a Series C round led by Google Ventures, and in October Secret Escapes acquired a rival in Germany, Travista.

Secret Escapes launched in the U.S. in late 2014 and is focusing on building it U.S. business. The funding it got from Google Ventures help with such expansion and Secret Escapes is considering entering markets in Asia in 2016.

By their nature, flash sales are more popular during economic downturns when hoteliers are motivated to offer rooms at greatly discounted rates to fill them. Flash sales sites such as Groupon and LivingSocial have seen their businesses suffer over the last couple of years.

Jetsetter offers a mix of flash sales and hotels that can be booked at competitive rates on an ongoing basis. Flash sales are still displayed prominently on Jetsetter’s homepage. Secret Escapes’ offerings are all flash sales.

Asked if Jetsetter has soured on flash sales, spokesperson Toby Streett didn’t answer the question directly but said: “Jetsetter is focused on helping our members get inspired and to find and book the right trip at the right price. We are confident that Secret Escapes is the Flash sale inventory supply partner to help us provide our members with the greatest selection of sales that match their needs.”