TripAdvisor’s CEO Says That Apps Are the Key to Future Success

TripAdvisor votes for apps over the mobile Web.

The hotel booking and review site aims to handle users regardless whether they visit through its apps, the mobile Web, tablets or desktop but despite a monetization a gap on phones (just 30 percent of desktop monetization), TripAdvisor CEO Steve Kaufer sees apps as the future.

“We believe it will be an app world,” Kaufer said during the companies second quarter earnings call August 4, adding it already is in many corners of the globe.

The biggest factor in narrowing that monetization gap is to build consumer habits and expectations that they will find the hotels or attractions they are looking for at the right price when using the app, Kaufer said.

It’s all about those repeat bookers, who often save their credit card details, in TripAdvisor apps, Kaufer said.

“We are most pleased with our growth on our app, where hotel shoppers and TripAdvisor-branded click-based and transaction revenue each grew by approximately 50 percent in the second quarter,” TripAdvisor stated in prepared remarks about the second quarter. “Looking again at the U.S., we are pleased to see our most engaged shoppers on our app, as users are more likely to convert in our instant booking flow than if we were to send a user off to a metasearch partner.

“High repeat usage rates on app exhibits our brand strength and engagement potential. On the monetization side, this year we have seen that repeat revenue from U.S. mobile app bookers is approximately double the repeat revenue from other devices.
Helping more users book on TripAdvisor, particularly on the phone, achieves our key strategic objectives of driving more user engagement, building the repeat booking habit, and plugging the monetization leak. This is true not only in our Hotel business, but also in our Non-Hotel business.”

A Different Marketing Strategy in 2016 Versus 2015

To build that brand awareness and to get customers used to the idea that they’ll find the right hotel at the best price in TripAdvisor’s apps, the company decided it won’t do TV advertising in 2016. In late 2014 and 2015, TripAdvisor was on TV in several global markets.

But Kaufer said during the earnings call that TripAdvisor already has millions of people on its sites so it can more efficiently engage them through promotions such as sweepstakes, Amazon gift cards and discounts on attractions after they’ve completed a hotel booking.

If TripAdvisor can drive customers into its apps, the company is finding that it builds its ranks of repeat users.

One challenge so far this year is that TripAdvisor’s falloff in revenue per hotel shopper — a key metric — means that it has diminished resources to apply to digital marketing efforts. Saying the trend reduces how much TripAdvisor can bid, Kaufer added: The company has “a lower ability to spend in those channels.”

Expedia and Priceline

Speaking of marketing spend, Expedia reported last week that it downsized its spend on TripAdvisor during the second quarter because of its own conversion weakness and the proliferation of TripAdvisor’s booking product, Instant Booking, which Expedia has been barred from for now, means Expedia is losing share on TripAdvisor.

One analyst, though, Michael Olson of Piper Jaffray, tells Skift: “We continue to believe Expedia will be on Instant Book by end of calendar year 2016.”

Kaufer said today that its marketing partners have regularly varied their spend on TripAdvisor from quarter to quarter so Expedia’s pullback in the second quarter isn’t alarming. “I wouldn’t view it as the most relevant thing in our model,” Kaufer said, referring to the drop-off.

Kaufer said what drives conversion is great photos and descriptions but most of all price.

He said Priceline Group brands, including Booking.com, Priceline.com, and Agoda, have been great Instant Booking partners for TripAdvisor because of their content and the number of hotels that they provide to the platform.

TripAdvisor can offer users 500,000 hotels, he said, adding, “Checkmark: We’ve got all that matter.”

But Kaufer said Booking.com, Priceline.com, and Agoda don’t always have the best prices for hotels. TripAdvisor has an advantage, he said, in that in addition to online travel agencies’ hotel pricing, TripAdvisor accesses hotel pricing from hotel chains and independents, too.

Kaufer said TripAdvisor can access cheap rates from hotels when the Priceline Group doesn’t have it.

On the other hand, direct-booking campaigns from major chains, which have offered discounts to loyalty program members, means TripAdvisor doesn’t always have the lowest rates, either.

So that’s a challenge for TripAdvisor, as well as Booking.com and Expedia.

When discussing the importance of rich content, including photos and hotel descriptions, in getting its site visitors to book, Kaufer knows what’s the most vital piece.

“What matters the most? I want to be clear: price,” Kaufer said. “Consumers prefer the cheapest price, simply put.”