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What to consider when joining an aggregator

By Andrew Ball

- Last updated on GMT

Joining an aggregator can open up opportunities for hospitality businesses, but it's worth considering the pros and cons before committing, says Andrew Ball
Joining an aggregator can open up opportunities for hospitality businesses, but it's worth considering the pros and cons before committing, says Andrew Ball
Andrew Ball, head of hospitality at chartered accountants Haysmacintyre discusses what hospitality business owners should be considering when joining an aggregator.

Aggregators have revolutionised consumer behaviour in the hospitality sector. The millions of app downloads and booming financial figures of aggregators in the market such as Just Eat and Expedia show that the model is thriving – but how easily can a hospitality business make it work for them? 

Like any potential investment, the decision to join an aggregator should ideally be considered as early as possible in the business life cycle so as the price to participate is not inconsiderable. 

Look carefully at sign-up fees 

Business owners must consider what percentage of their trade will likely come from the aggregator. Those of a certain scale might find that the sign-up fee is simply not worth it if income comes primarily from another arm of their service, such as eating-in rather than taking away.  For example, while Just Eat has a fantastic brand and is fast becoming a household name, it charges an initial sign-up fee plus commission on each order placed, so how much this extra cost will affect the gross profit margin needs to be rigorously assessed.

Operators also need to think about whether the business can cope with the potential extra sales demand: if a 20 per cent increase in sales is forecast through joining an aggregator, the owner must assess whether the company has enough resources in staff, space and machinery to cater for the increase in activity.

Weigh-up the savings it can make 

Although joining an aggregator can seem expensive, it may have an impact on other costs of the business, such as marketing, where operators may be able to decrease spend. Companies that join aggregators often find there is less need to spend money on advertising and website development as the aggregator manages much of this for them. All details of the companies’ offerings, prices and location are available to see on the aggregator site which is included in the price and means that marketing and advertising costs will decrease as the business has a ready-made online presence for its customer base.

Keep monitoring the service 

It is worth remembering that many aggregators like Expedia and Just Eat have rating systems which empower customers to give feedback in the form of a quantitative value as well as qualitative comments. While this has the potential to offer useful information on where to improve on different aspects of the business, it can more importantly be a very persuasive tool for consumers when comparing your service to another provider.

In the case of bad ratings, the aggregators can be open to removing exceptionally negative comments so it is important to monitor this as it can have a significant effect on reputation and sales. With many aggregators, it is also possible to pay to be higher up in the default search results which can be worth considering to increase the chances of being noticed, as customers tend to pick from the first few results they see rather than trawling through several pages, particularly when viewing the site via mobile. 

Think about the relationship with your customers

One aspect that operators tend to overlook when joining an aggregator is that by going through a third party, it is more difficult to get to know your customers and harder to establish and maintain customer loyalty. As all online contact goes through the medium of the aggregator, the company’s brand is lessened so customers are less likely to remember the business name or logo when they use the platform again. 

All businesses are different and whether it works depends on many factors such as location, type of service and size; but with the pressure not to miss out, it is something that all hospitality businesses should consider.

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