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Private Sale Websites Are Growing Fast

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How many private sale websites can the market absorb? So far the answer is 10 and counting. At my last tally, I have 10 private sale websites logged on my “favorites” list that either specialize in travel or feature travel along with merchandise. What I can’t tell yet is whether you can expect even more players in the future or a shakeout among those already playing.

All 10 follow the same basic business model: You sign up or enroll in the program—usually with no fee or payment required—and receive regular email notices about time-limited discount offers and promotions:

Several sites make an ostensible fuss that you have to be recommended for membership, but getting into the system is the least of your worries: They all want your money.

With the exception of Groupon, virtually all of the travel deals are for high-end hotels and resorts, worldwide, and the non-travel offers are for high-end clothing, household items, and other goods. Typically, each posting includes several currently open deals, plus teasers about offers coming up in the near future. Discounts from advertised rates are usually around 30 percent, but occasionally go much higher. The purchase window is usually no longer than a week and sometimes even shorter, but the travel offers give you several months to make your visit.

I’ve seen a few non-hotel deals—notably a cruise or two, but not much else. Certainly no airfare deals and I didn’t see any rental cars. Groupon, however, does list some local sightseeing excursions.

Although all of these sites work in about the same way, two are a bit different:

  • Spire, which just went online last week, claims to be a “second generation” private sale site in that it promises the lowest price, pledges to deliver at least 30 percent off the lowest comparable offer found anywhere else, and allows easy cancellations for up to 72 hours after a trip is booked, minus a $29 fee.
  • TripAlertz follows the group-buying model that the discount increases as more of you sign up for it.

Why no airfares? Basically, the airlines want to do their own price manipulations and run their own promotions, thank you. In the future, however, I wouldn’t be surprised to see some discounts on business- or first-class flights on private sale sites—with all sorts of advance-purchase and length-of-stay restrictions. But I doubt you’ll ever see much in coach/economy class. Similarly, with rental cars, you might see some deals on premium luxury car and sports car rentals, but probably nothing on mainstream rentals.

At this point, it’s far too early to predict how this market niche will develop. Usually, when a market matures, you wind up with only three or four major players. For now, among the all-travel sites, the biggest players seem to be Jetsetter, SniqueAway, and Vacationist. I wouldn’t be a bit surprised to see a few more outfits try the private sale model, either, but at some point you have to wonder if they’ll all get enough good product to survive.

One of the pitches to hotels and resorts is that the big discounts they give through private sale sites result in new impulse-purchase business that they’d never otherwise be able to attract. The few industry analyses I’ve seen tend to confirm this point. For that reason, private sale sites are virtually useless if you’re looking for a good deal in an area you’ve already decided to visit at a time you’ve already planned. But if you’d like sudden inspiration for something different, give them a try—there’s nothing to lose for just looking.

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