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Challenges in Travel Booking 2016: TripAdvisor Isn’t Afraid of Google’s New Products

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Skift Take

This likely will be a year of building out what TripAdvisor already has in hotel Instant Booking, vacation rentals and tours and activities. One big challenge will be how to focus effectively in so many huge areas simultaneously without some getting short shrift.

— Dennis Schaal

As TripAdvisor fine-tunes its Instant Booking moves in 2016, now that it has Booking.com, Starwood and most of the globe’s major hotel chains signed up, a TripAdvisor official says the company isn’t particularly concerned about Google’s product rollouts, including Book on Google.

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In this first article in a three-part series, Challenges in Travel Booking 2016, Skift examines company-specific issues confronting three major online travel players, TripAdvisor, the Priceline Group and Expedia, in the coming year. To find the stories in the series click here

“Google is always going to be a competitive threat,” says Adam Medros, senior vice president, global product at TripAdvisor.

Medros says, however, that while Google’s travel products aren’t the “best,” TripAdvisor continues to be concerned about Google’s “near monopoly in search,” which he says is harmful for consumers and the competition.

“It’s critical that consumers aren’t diverted” from the information they are seeking and instead get misdirected toward Google’s own products because of Google’s grip on search, he adds.

In November 2015, TripAdvisor and Yelp, which have been persistent critics of Google’s practices over the years, found their search results knocked way down on the page, and Google attributed it all to a coding glitch. TripAdvisor CEO Stephen Kaufer tweeted at the time, “Gimme a break, @google. Search for ‘tripadvisor hilton’ puts the tripadvisor links so far down you can’t see it.”

Medros says TripAdvisor continues to talk to the European Union about Google’s search dominance and related antitrust issues.

Transitional Year

In many ways, 2016 shapes up as a year of transition for TripAdvisor and Expedia, too.

In TripAdvisor’s case, the company is poised to dig deeper and scale several key initiatives: TripAdvisor Instant Booking, vacation rentals and alternative lodging, China, and tours and activities. [On Expedia’s transition, in particular, stay tuned for forthcoming parts of this series.]

On the booking front, Medros says the focus this year will be on tapping into the full potential of TripAdvisor Instant Booking, which has consumers booking hotels on TripAdvisor sites instead of having to navigate to online travel agency or hotel partner sites for bookings as the only option. TripAdvisor introduced Instant Booking on mobile in June 2014 and today it has been rolled out on mobile and desktop in the U.S. and UK.

TripAdvisor’s challenge in 2016 is to expand Instant Booking into additional markets and to optimize it as TripAdvisor integrates Booking.com  and major hotel chains into the product, which has generated lower revenue per hotel shopper than its classic metasearch feature does.

Instant Booking “will take longer than we are typically used to” in reaching its full potential, Medros says, but implementation is “no longer just a theoretical conversation,” as it was in its early days.

“We are not there yet but I think we are on a really nice trajectory,” Medros says.

TripAdvisor’s market cap skyrocketed 25.5 percent on October 14, the day TripAdvisor and Priceline announced their Instant Booking partnership, and Expedia’s stock price fell 4.8 percent.

TripAdvisor officials have been extremely tight-lipped about the terms of its Priceline Group Instant Booking partnership even after Expedia CEO Dara Khosrowshahi said he believed that Expedia would be shut out of TripAdvisor Instant Booking for at least a short period of time. At least one analyst says Khosrowshahi has backed away from those comments about Booking.com’s online travel agency exclusivity in TripAdvisor Instant Booking and the analyst believes Expedia will join the program within six months.

Medros last week offered “no comment” when asked about the prospect of Expedia participating in TripAdvisor Instant Booking.

New Model for Vacation Rentals

Over at TripAdvisor, Expedia and Airbnb, the vacation rental market is a turning point in 2016.

Following Expedia’s acquisition of HomeAway last year and the latter’s intention to introduce a traveler booking fee in 2016, as well as Airbnb’s moves to ramp up professionally managed vacation rentals, TripAdvisor expanded the traveler fees it charges. Its total rake — the amount it charges travelers and owners — likely would be in the Airbnb ballpark of around 15 or 16 percent.

TripAdvisor, HomeAway and Airbnb will all have to gauge what resistance they meet from travelers and owners/hosts when it comes to the fees.

Although TripAdvisor offers vacation rentals in 190 countries, HomeAway CEO Brian Sharples said last year that HomeAway hasn’t really felt TripAdvisor’s vacation rental impact in the market. Sharples argues that it is one thing to stockpile vacation rental inventory and quite another to generate demand.

Medros scoffs at the lack of demand argument, saying TripAdvisor’s vacation rentals, which have transitioned toward a transactional business over the last couple of years, “have lots of demand.”

“We are seeing consumers who are contemplating hotels also thinking about vacation rentals as part of that mix,” Medros says.

Medros concedes, however, that TripAdvisor’s “biggest hurdle in vacation rentals is growing that mind-share,” namely consumer awareness.

Like Booking.com, TripAdvisor is striving to make its vacation rental properties instantly bookable. Wondering whether the property is actually available is “not a great consumer experience,” he says.

TV Advertising Blackout

TripAdvisor intends to make progress in spreading awareness about its planning and booking prowess without TV advertising for at least the bulk of 2016.

Television advertising “is a noisy space” and an expensive one, Medros says. “We don’t have an awareness problem. Everyone knows TripAdvisor; they have all used it.”

Instead, TripAdvisor intends to focus on marketing in more targeted and direct ways, including using its customer relationship management system to market to its 90 million members and will use on-site messaging, too.

A Changing China Strategy

While Expedia took a step back by selling eLong in 2015 and Priceline continues to up its stake in Ctrip, TripAdvisor sold a money-losing site in China and rebranded its offering in the country.

China and other emerging markets is an important focus for TripAdvisor in 2016, Medros says, and in China that emphasis has shifted from in-bound China travel to tapping into the demand of outbound Chinese travelers.

Consolidation in China, with Ctrip all but gobbling up Qunar, “is just part of the market and you have to stick with your strengths,” Medros says.

Medros says TripAdvisor is delivering travel guides in Chinese through messaging app WeChat and TripAdvisor’s apps are growing in China as the company focuses on outbound travel.

With all of TripAdvisor’s content, Medros says, the company is “excited” about its opportunities in outbound Chinese travel.

Tours and Activities

Without providing much detail, Medros says expanding its attractions’ offering will be a big focus in 2016.

TripAdvisor acquired tours and activities leader Viator in 2014, and has bought up a series of restaurant-reservations sites, predominantly in Europe, but also in Australia and Latin America.

All of this comes as Expedia has been building up its tours and activities offerings, predominantly organically, while Booking.com runs tests in the sector with GetYourGuide and others.

The challenge for all the players in the tours and activities arena is to make more of the product online and mobile bookable, and to ramp up real-time availability.

Stock Market Downturn

Like companies inside and outside of the travel industry, TripAdvisor’s management has to be concerned about the volatility of global stock markets.

As it invests into expanding into emerging markets, TripAdvisor officials have been more out-front over the years in saying publicly that their development and product plans aren’t going to be driven by stock market ups and downs.

“We are focused on the long term,” Medros says, adding that the company can boast of “an amazing consumer base.”

For the year to date, TripAdvisor’s stock price is down 16.7 percent compared with drops of 13.5 percent and 11.5 percent for Expedia and Priceline, respectively.

Part 2 of this series, Challenges in Travel Booking 2016, will focus on the Priceline Group.

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