Interview: Priceline.com CEO Explains Its Landmark TripAdvisor Deal

Priceline.com CEO Paul Hennessy appeared at the Skift Global Forum in Brooklyn last week and was reluctant to provide details about the Priceline Group’s game-changing deal with TripAdvisor, but it was clear that the Priceline Group is satisfied that consumers will realize they are actually dealing with Booking.com or sister sites Priceline.com and Agoda when booking one of their hotels on TripAdvisor sites.

“I think we’re comfortable that the customer will know exactly where they are, when they are, through the process, and we think that’s really important because obviously we are in the business of building the Priceline Group brands and not anyone else’s brand,” Hennessy said. [See the portion of the Q&A that relates to the Priceline Group-TripAdvisor deal below.]

Hennessy spoke for the Priceline.com brand within the Priceline Group but prior to taking on the Priceline.com CEO post in March, he served as Booking.com’s chief marketing officer for three-and-a-half years.

Book on TripAdvisor enables consumers to book hotels on TripAdvisor sites and apps instead of their having to navigate to third-party websites and possibly getting lost in the switch. Booking.com had refused to participate until last week’s reversal and it was a major development for TripAdvisor, which saw its stock price climb 24.75 percent and tack on some $3 billion to its market cap since the deal announcement.

While this is a landmark deal for TripAdvisor on its road toward becoming a quasi-online travel agency, Priceline Group officials state that they view the pact as a routine distribution deal.

Meanwhile, the next move is up to Expedia Inc., where officials say they will continue to study the data regarding TripAdvisor metasearch and other channels to decide if they want to follow the Priceline Group into Book on TripAdvisor participation.

“This is an interesting development in what is a highly dynamic industry, and is something we will continue to monitor,” says Expedia Inc. spokesperson Sarah Waffle Gavin, referring to the TripAdvisor-Booking.com deal. “As a reminder, TripAdvisor represents a fairly low margin channel to us so while traffic shifting to Instant Book could put pressure on our unit and top line growth, we believe the impact on profitability would be muted.”

“As we’ve noted in the past, when we evaluate traffic acquisition channels we look at a number of things to determine our interest and participation level in the channel,” Waffle Gavin says. “These include the relative economics (including an evaluation of the repeat characteristics and lifetime value of the customer), branding, the overall customer experience and potential for customer confusion, as well as competitive dynamics. We’ve been pretty clear about our stance regarding participation in TripAdvisor’s instant booking platform and we have no changes to note today. We will continue to look at new data as we make decisions about potential new channels.”

The Skift interview with Priceline.com CEO Paul Hennessy follows:

Skift: For the last year or year-and-a-half I’ve heard Priceline Group officials say that TripAdvisor Instant Booking is not for us. Perhaps there wasn’t enough branding for you or the economics weren’t right. What happened?

Paul Hennessy: As you know, I can’t get into particulars of the deal. What I can say is that I think we thought that time was right to really start an experimentation around the product. I think we called out in particular the branding is right. We obviously want a great experience coming off of the TripAdvisor website, coming onto one of the Priceline Group websites and we think it is the right time to do it.

Our relationship with TripAdvisor is a long storied relationship. We’ve been partners for years and whether it is TripAdvisor as a meta or Google or Kayak or any of the other kinds of partners that we have, we see this as a logical evolution in this space.

Skift: Aren’t you concerned about building up TripAdvisor as a more formidable competitor than they are?

Hennessy: As I’ve said, we have been a large partner and TripAdvisor and the other metas are constructive in giving us qualified leads and as long as that business continues to be qualified leads and a great customer experience, obviously well-branded, I think we will continue to experiment with that.

Skift: You’ve mentioned a couple of times that it is well-branded. Is TripAdvisor changing the way they are branding this product for you or are they doing it the same way they are doing it for Marriott or some of the other hotel companies?

Hennessy: Again I can’t get into the particulars of the deal but here’s what I’d say: I think we’re comfortable that the customer will know exactly where they are, when they are, through the process, and we think that’s really important because obviously we are in the business of building the Priceline Group brands and not anyone else’s brand.

Skift: You say you can’t get into the particulars of the product but I remember back in the day before Kayak was acquired by the Priceline Group that Kayak had an online travel agency deal with Orbitz and there was some kind of exclusivity to it. Is that the same today [with the Priceline Group and TripAdvisor]?

Hennessy: I think that’s still a direct question. Again, I can’t get into the particulars of the deal but stay tuned. I think it’s going to be exciting to watch.

[After answering questions about his views about digital marketing and conversion, TV advertising, website design trends, and how mobile and the sharing economy have shaped Priceline.com’s strategy, the conversation drifted back to the Priceline Group-TripAdvisor deal on Instant Booking.]

Skift: Back on that TripAdvisor Instant Booking question, do you expect higher conversion through booking on TripAdvisor versus participating in their metasearch or how do you view that?

Hennessy: I’m not sure; that’s why we are going to experiment with it. Depending on where the customer is within the process, where they are coming within the funnel, the level of qualified leads that TripAdvisor is able to aggregate to get into that process, we know we’ve got a converting machine in any of our participating brands so I think we’ve got a good shot once the lead comes over. I’m not sure how it will compare to meta. We’ll see. You would think that it might be a higher qualified lead. We’ll see.