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If hotels once scoffed at TripAdvisor’s user reviews and later embraced them, then they should prepare to welcome a newly transformed TripAdvisor that seeks a more “holistic” relationship with hotels — and wants to sell them bundles of services and solutions.
That was the word that emerged from TripAdvisor’s fourth quarter and full-year 2014 earnings call yesterday as TripAdvisor detailed a plan to transform itself over the next three to five years.
Just as Booking.com is looking to dig deeper into the business-to-business side of the hotel business, TripAdvisor intends to “move towards more holistic partner relationships” with hotels, said CFO Julie Bradley, that may include selling them solutions and “bundling our cpc (cost-per click), Instant Booking and Business Listings” services.
How Much Instant Booking Costs
Regarding Instant Booking, which is TripAdvisor’s program to partner with hotels and online travel agencies to offer direct bookings on TripAdvisor websites and within its apps, TripAdvisor announced publicly for the first time that it is offering independent hotels two programs of 12 percent and 15 percent commissions, respectively, to participate.
“… When a hotelier picks a higher commission, we guarantee that they will be shown more frequently than anyone else in The Instant Book auction,” TripAdvisor CEO Steve Kaufer said.
These initiatives come as TripAdvisor announced it plans to double its spending on TV advertising in 2015 to $60 million with an extended brand message of touting TripAdvisor as a site where travelers can “plan, compare and book.”
In other words, the new TripAdvisor isn’t merely about planning trips, but is a place where travelers can compare prices and book hotels, a process that ensures that consumers will come to view TripAdvisor as an online travel agency like Priceline, Expedia, and Orbitz.
On Instant Booking, Kaufer revealed that some hotel chains express hesitations about participation in Instant Booking because they want to drive direct traffic to their own websites, don’t like the pricing or are reluctant to view Instant Booking as a priority.
In fact, Skift reveals that InterContiinental Hotels Group, the largest hotel group in the world, is rethinking its whole approach to metasearch because of the rush of companies to adopt such direct bookings online travel agency-style, although Accor hotels became an Instant Booking partner. You can read about it here (subscription).
Still, Kaufer said, TripAdvisor is making steady progress in signing up Instant Booking partners, with 12 now live and 31 being implemented.
Restaurants, Attractions and Vacation Rentals
In other changes, TripAdvisor began reporting its financials in two business segments instead of the prior one segment, and this reflects the evolution and expansion of the TripAdvisor business.
One segment, called “hotels,” includes TripAdvisor’s hotel, air and cruise business, as well as its operations in China, and the second segment, called “other,” includes tours and attractions, restaurants and vacation rentals.
The latter group of businesses is in investment mode, officials said, and the segment is not profitable as the businesses focus is on scaling the companies globally.
Acquisiton Tally: $331 Million
As part of that expansion, TripAdvisor allocation $331 million for acquisitions in 2014 net of cash acquired. The biggest one was for Viator, the tours and activities provider, for around $200 million.
In 2014, TripAdvisor acquired four restaurant reservations platforms, including Lafourchette, My Table, Restopolis, and Iens, and now considers itself the leading restaurant reservations platform in Europe.
Said Kaufer: “While our past, present and future remain deeply rooted in the hotel category, over the next 3 to 5 years, we want to help more users find and book attractions, restaurants and vacation rentals and establish our leadership position in these categories.”