Skift Take

TripAdvisor has been struggling but it is a testament to its continued power as a marketing vehicle that Expedia Inc. felt compelled to participate in TripAdvisor Instant Booking even though Expedia controls its own TripAdvisor wannabe. It's called Trivago. A newly anointed public company, Trivago's growth could one day be an Expedia hedge against TripAdvisor's clout, although Trivago isn't there yet.

More than a year after Expedia Inc. CEO Dara Khosrowshahi complained that rival’s agreement to participate in TripAdvisor Instant Booking appeared to have exclusivity provisions, Expedia is finally getting in on the action as a TripAdvisor booking partner, as well.

TripAdvisor and Expedia Inc. announced Tuesday that certain Expedia Inc. brands — possibly,, or others — would be available to participate in the TripAdvisor booking feature on its U.S. desktop site as they begin to test the feature together.

TripAdvisor has been struggling to transition from metasearch, or click-based revenue only, to a combination of clicks plus booking and commission revenue, and the company’s stock has been trading near 52-week lows as it tries to get consumers used to the changes. Consumers can book the hotel on TripAdvisor and the partner, whether it be, or now, processes the transaction and is responsible for customer service.

In this way, TripAdvisor doesn’t lose credit for bookings when consumers navigate to partner sites and disappear along the way.

TripAdvisor’s revenue per hotel shopper has been decelerating because of the switch to Instant Booking and the proliferation of usage on mobile devices, where conversion of lookers into bookers tends to lag desktop conversion.

Among TripAdvisor, Expedia and the Priceline Group, TripAdvisor is the biggest winner in drawing Expedia into the booking fold. The agreement makes TripAdvisor’s Instant Booking more competitive as and Expedia, along with hotels and other online travel agencies, may battle by property or geography to be TripAdvisor’s booking partner at any given moment.

How does Instant Booking Work for Partners?

While advertisers bid for placements in TripAdvisor’s metasearch auction, Instant Booking is more of a hybrid, big players such as the Priceline Group, Expedia Inc. and possibly brands such as Marriott and Hilton can negotiate commission rates and share commitments with the auction.

So part of the Instant Booking auction would be reserved for such a partner, and the rest would be open for bidding.

In addition to generating a more competitive Instant Booking commission structure  through the addition of Expedia as a booking partner, TripAdvisor presumably would be able to improve consumer conversion because in some markets Expedia or some of its sister brands might have rates that other partners don’t. More choice and comprehensiveness tend to produce positive behavior from consumers.

PiperJaffray states it expects TripAdvisor’s revenue per hotel shopper to improve because of the agreement.

Speaking during TripAdvisor’s third quarter earnings call November 9, CEO Kaufer said: “I do believe the more partners that we have globally on the platform enables us to offer, if the partner has better pricing some of the time, then allows us to offer better pricing to our travelers. When we have better pricing, we have a higher conversion rate. So in that sense, a partner the size of Expedia is likely to have better pricing some of the time. So that would help our conversion rate and therefore help us financially.”

In an announcement statement today, another TripAdvisor official put it differently: “Adding Expedia to the Instant Booking platform nicely complements TripAdvisor’s existing hotel inventory and helps users shop for a great deal on a hotel,” said Robin Ingle, TripAdvisor’s senior vice president for global sales.

It should be noted that Expedia already participates heavily in TripAdvisor metasearch, paying for clicks when TripAdvisor users comparison-shop for hotels and link off to Expedia.

With the new agreement Expedia would be both a TripAdvisor metasearch advertiser and a booking partner. Expedia had reported in recent quarters that as TripAdvisor ramped up its booking features without Expedia as a participant, Expedia’s metrics in TripAdvisor were positive but growing less advantageous.

“With this new agreement, we are interested to see how we can drive additional customer acquisition given the product and customer experience enhancements Instant Booking has made,” said Aaron Price, Expedia Inc.’s senior vice president of global marketing.

So Expedia should gain some advantage from participating in TripAdvisor Instant Booking.

The Priceline Group, including its, Agoda, and brands, are the losers in this new agreement between TripAdvisor and Expedia — but only marginally. The Priceline Group has the resources to keep a heavy presence in TripAdvisor Instant Booking and even if Expedia gains ground in TripAdvisor Instant Booking to the detriment of the Priceline-owned brands, the Priceline Group’s business is so large that TripAdvisor Instant Booking isn’t material to its results.

Chain hotels and independents likely aren’t welcoming Expedia’s entry into TripAdvisor Instant Booking, either, because it adds another strong competitor that they’ll have to deal with as online travel agencies and the hospitality industry confront one another in TripAdvisor.

“In addition to showing increased industry support for IB, the inclusion of Expedia inventory will add more suppliers per hotel, which should result in more competition for the IB booking path and result in a higher potential for IB to match or beat the lowest price offered on other sites,” wrote Michael Olsen of Piper Jaffray in an investor note after the announcement. “The roll-out of Instant Book (IB) has clearly not been seamless for the company (or investors), but the trajectory of IB is improving and we continue to believe it will lead to higher hotel long-term economics for the company (TripAdvisor.”

It is interesting that Expedia’s initial tests as a TripAdvisor Instant Booking participant begin in the U.S. and on desktop. TripAdvisor isn’t stating whether Expedia would participate in Instant Booking in markets outside the U.S.

Since introducing Instant Booking in the U.S. on mobile devices in June 2014, the booking feature has been the most successful in the U.S. as other geographies were added later. Desktop has been the strongest device and converts the best — and this is where Expedia will begin.

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Tags:, expedia, hotels, instant booking, priceline, tripadvisor

Photo credit: Consumers will now be able to book hotels through Expedia but on TripAdvisor without having to leave the TripAdvisor site. The agreement should be a jolt in the arm for TripAdvisor in its quest to become a viable booking site. TripAdvisor

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