Here's what we received:
We are writing with important information about changes to the
BedandBreakfast.com Gift Card Program,
effective October 1, 2008.
Here's the information in a nutshell -- for complete details, please see below.
- BedandBreakfast.com Gift Cards will no longer be sold in Costco warehouses.
- If you sell BedandBreakfast.com Gift Cards at your inn, the commission you earn will increase from 15% to 20%.
- If you welcome BedandBreakfast.com Gift Cards at your inn, the commission retained by BedandBreakfast.com will increase from 15% to a scale of 15%-20%, depending on the volume of redemptions.
- Gift cards will continue to be sold on a test basis at Costco.com with restrictions on their use.
1. BedandBreakfast.com Gift Cards will no longer be sold in Costco warehouses. Allowing Costco to sell gift cards at a discount accomplished two important goals: it gave the B&B industry national exposure to affluent consumers, and it enabled us to get cards into 20,000 other retail outlets on a non-discounted basis. Unfortunately, many consumers started using them as a travel discount card, not as a gift card. This did not achieve the goal of getting new heads in beds and increased the average sale size, thereby increasing the effective commission innkeepers paid. Since Costco customers will no longer be gaming the system and redeeming five or more $100 cards to pay for an entire reservation, you won't be hit with high dollars on redemption as in the past. The effective commission rate should truly average in the upper single digits (8%-9%).
2. If you sell BedandBreakfast.com Gift Cards at your inn, the commission you earn will increase from 15% to 20%. For every dollar in gift cards you sell, you keep 20 cents, with absolutely no risk or upfront costs of any kind. Your guests will be looking to buy holiday gifts for their loved ones - why not encourage them to skip a trip to the mall and purchase the gift of a getaway from you? Your income from selling the cards will easily offset the cost of the commission owed to us on redeemed cards. If you're not yet participating in our resellers program,
log in to your Home Base and sign up today!
3. If you welcome BedandBreakfast.com Gift Cards at your inn, the commission retained by BedandBreakfast.com will increase from 15% to a 15%-20% scale. During the past two years, we have significantly increased the quality and distribution of our gift cards, with the result that exposure for the B&B industry is significantly enhanced along with reservations for our member innkeepers, but our expenses have escalated significantly as well:
- Paper certificates have been replaced by plastic cards, with a choice of over two dozen styles.
- Free photo uploads allow consumers to customize gift cards with photos of their loved ones.
- Internet mail orders are sent with a free 64-page inn directory.
- Shipping is free on all orders, with free FedEx on orders of $100 and up.
- An outside firm is paid to ensure full legal compliance with the labyrinth of state escheatment laws.
- Cards (and card hangers) are printed and shipped to 20,000 retail locations.
- A full-time sales person works to sell gift cards to corporate, premium and incentive distribution channels (Coca-Cola, IBM, Dell, etc.)
- Advertising and PR programs include press releases and national advertising, including our second full-page ad in SkyMall magazine, with five million copies read by 155 million affluent passengers, in planes through December 2008.
- We've had countless customers tell us how much they love this gift, and how they made their choice of where to stay based on which properties are in the program. (Click here to read customer reviews.)
New commission schedule: Starting October 1, 2008, the commission on the first $1,500 in redemptions in a calendar year will be 20%; on the next $3,500 it will be 17.5%; and on everything over $5,000 it will be 15%. The full 20% commission will be charged on all transactions, and a rebate check will be sent to innkeepers after the end of every calendar year for any amount due. The new commission structure will cost an average of $42 annually per property. Since the average gift card sale is $150 dollars and the average B&B stay is close to $350,
the effective commission rate for the program is still under 10%. For the initial change in pricing, the term will run from October 1 through December 31, 2009 (15 months), so more properties will qualify for the lower rates.
4. Gift cards will continue to be sold on a test basis at Costco.com with the following restriction on their use:
- Special Costco.com/BedandBreakfast.com Gift Cards will be created, and only two cards will be allowed to be redeemed per stay (total value of $200), thereby capping your cost and ensuring that travelers do not show up and try to pay for an entire $600 stay with discounted cards.
- Costco.com cards will be clearly labeled to differentiate them from regular BedandBreakfast.com Gift Cards.
- Gift cards cannot be used to pay for group functions. (This applies to all BedandBreakfast.com Gift Cards.)
Selling gift cards on
Costco.com is quite different from selling in Costco warehouses. When you factor in the shipping price, the impact of the discount is minimal. Consumers are unlikely to purchase gift cards just for the discount, and the use restrictions provide additional protection. This should position these cards as a great "gift", not as a "discounted travel card".
In conclusion, we feel the results speak for themselves. This program generates tremendous exposure and new business for the entire B&B industry. A program with over 4,000 participating properties makes us competitive with giant chains like Marriott, Hyatt and Hilton. In addition, in terms of the consumer experience, having a high quality state-of-the-art gift card program that compares favorably with the gift cards of major bank and retail chains gives potential guests the confidence that their first B&B experience will be equally first-rate.
A high-end, professional gift card program with online and retail distribution, custom cards, free directories, free shipping, national full-page ads to drive sales, plus the staff to make it happen costs plenty, but we are confident that it's an excellent way for you to get new guests at no risk. Last but not least, please remember that in this currently shaky economy, paying a 20% commission on a portion of the revenue generated by a guest's stay is better than not having a reservation at all. In other words, similar to what we've long said about online reservations, it's better to have 80% of something than 100% of nothing.
We very much hope you'll continue to participate in welcoming and selling
BedandBreakfast.com Gift Cards.
The directory of participating inns is going to press on
October 10. If you feel that this optional program no longer works for you, please call our support team at 1-800-GO-B-AND-B as soon as possible, so we can omit your property from the next printed directory and so you won't get calls from folks wanting to use their gift card at your property.
We look forward to continuing to promote the B&B industry through the gift card program, and we thank you for your business.