Despite the stock hit that TripAdvisor took after its Q1 earnings came out, the company is really on a roll. TripAdvisor increased its full-year revenue guidance for 2014 -- and that doesn't even count the lift it is expected to get from a renewed TV advertising campaign and Instant Booking.
TripAdvisor achieved one of its main priorities of 2014 — launching the direct booking of hotels in its mobile apps and mobile site — but so far it hasn’t attracted the partner lineup that it was seeking.
In the company’s first quarter earnings call, TripAdvisor CEO Steve Kaufer said about 150,000 properties, or about one-third of those e-commerce-enabled, are now available for direct booking, or Instant Booking, as TripAdvisor calls it, on its mobile site, and in its iPhone and Android hotel apps.
The solution, however, which enables travelers to book a hotel without leaving the app or mobile site, is currently only visible to about 10% of U.S. users.
The introduction of Instant Booking in TripAdvisor’s hotel-metasearch product on mobile is extremely important as TripAdvisor believes it will greatly increase monetisation. That’s because users won’t find themselves lost in the handoff to third-party hotel or online travel agency sites in order to book the stay.
Although Instant Booking has the advantage of enabling users to enter their personal and credit card details within the app or mobile site, the fulfilment and customer service is actually handled by an online travel agency or hotel partner, and that is visible as users go through the booking process.
A cursory look at Instant Booking on TripAdvisor’s mobile site found Getaroom.com, the site created by Hotelsl.com co-founders Bob Diener and David Litman, as a TripAdvisor Instant Booking partner.
And, Kaufer mentioned that Choice Hotels is an Instant Booking partner, as well. A lot of hotel metasearch sites now offer direct booking, and most use online travel agencies as partners, so TripAdvisor’s having a hotel partner sign up is notable.
Although there may be other partners beyond Getaroom and Choice, at first glance TripAdvisor doesn’t appear to have yet attracted high-profile partners such as Expedia, Priceline or Orbitz, for example.
Why is it important which, or how many, OTAs participate in TripAdvisor Instant Booking? It mostly comes down to economics: If there are fewer suppliers/OTAs competing to be partners, TripAdvisor in theory would have to pay more for their involvement.
“The OTAs are looking carefully at participating in the Instant Booking process,” Kaufer said, noting that Instant Booking on TripAdvisor must clearly state that the consumer is booking on TripAdvisor, but the room is being offered by an online travel agency or hotel.
The lack of take-up by bigger online travel agencies means TripAdvisor’s major rivals at this point are reluctant to further empower an already formidable competitor in TripAdvisor.
Kaufer said he expects additional partners to sign on as Instant Booking ramps up.
He added that revenue gains from Instant Booking on smartphones will initially be modest, although versions for tablets and the desktop will be forthcoming. Instant Booking would have more of a material impact on TripAdvisor’s financial results when it is implemented on the desktop, Kaufer said.
Some in the travel industry fear that the introduction of direct booking on TripAdvisor is a step toward turning TripAdvisor into a full-fledged online travel agency, although there are no signals that this is TripAdvisor’s intent.
After all, the media model is a much more lucrative business than becoming a transaction-processor.
Free Daily Newsletter
Sign up for the most popular Skift daily download of news, happening, and headlines in the travel world
Photo credit: TripAdvisor CEO Stephen Kaufer believes direct booking of hotels within the company's apps and on its mobile site will eventually turn into a big revenue generator. Pictured, Kaufer in Nov. 2010 at the PhocusWright. PhoCusWright / Flickr.com