Skift Take

While investors and observers are rightfully focused on how TripAdvisor's transition to a hotel booking site will work out, the company has some meaningful hedges in the form of vacation rentals, tours and activities, and restaurants. Collecting monthly and annual fees is a very material part of the overall business and will likely become even more so.

The global restaurant business is getting professionalized and wired-up in terms of its digital acumen and TripAdvisor is making a big move to further monetize its 4.2 million restaurant listings by launching a subscription service with added features for dining establishments.

In so doing, TripAdvisor is taking a shot at what Yelp and Google, among others, are doing in their own efforts to wrangle advertising dollars out of restaurateurs. TripAdvisor already attracts plenty of restaurant advertising, which plays off free listings and 100 million reviews, but its latest foray, as distinguished from Yelp’s and Google’s, goes beyond a pay-per-click business model and offers restaurants extra services for a monthly or annual fee.

TripAdvisor’s new restaurant subscription business, which was soft-launched in the U.S. and Spain in the fall but now goes global, supplements the dining reservation services provided by TripAdvisor’s The Fork and the Priceline Group’s OpenTable.

At the same time, as reported 10 days ago, TripAdvisor added a new tier to its fee-based hotel Business Listings, launched in 2010, called TripAdvisor Business Advantage. The new service, with fees that are property-specific and based on volumes and market, is aimed at independent hotels.

Restaurant and Hotel Consumers Have Different Shopping Behaviors

Although there are differences between the features and tools in the new subscription services for restaurants and hotels, both enable subscribers to pin the establishment’s favorite customer review of relatively recent vintage below the listing, and offer analytics about customers and trends.

Business Advantage for hotels, available for an additional fee beyond the current annual charge, also enables properties to add a cover photo to their listing and gives added prominence on TripAdvisor to other management-provided photos.

Restaurants will also soon get the ability to publish dynamic “storyboards” on TripAdvisor, a feature that could be especially useful on mobile, according to TripAdvisor officials.

The Locals Did It

Heather Leisman, vice president of industry marketing at TripAdvisor, says changing consumer behavior drove TripAdvisor to further monetize its restaurant listings, which will still be available for free, and also informs differences between the new subscription features for restaurants and hotels.

“Restaurants snuck up on us,” Leisman says, as TripAdvisor saw engagement on its sites from both locals and travelers.

Leisman says many consumers who search restaurants on TripAdvisor are ready to select an establishment or make a reservation so its subscription services have to foster rapid engagement and differentiation.

“It has to happen in a much faster time in restaurants [compared with hotels],” she says. “On the mobile side, it is even more important.”

That’s why the introduction of storyboards, which TripAdvisor characterizes as “a dynamic visual presentation that showcases a restaurant’s best features and delivers a powerful first impression,” will be coming soon, the company states.

These features that TripAdvisor is rolling out globally don’t necessarily have much to do directly to do with TripAdvisor’s quest to become a hotel booking site because the company engages users at a variety of entry points, whether it is hotel or restaurant listings, destinations pages or metasearch.

TripAdvisor has the ability to capture consumers at various junctures in their trip-planning and travel processes, from research to during-the-trip experience sharing, Leisman says.

Incremental Changes

The various features in the new subscription services, as rolled out so far, aren’t game-changing but appear as incremental changes — and they seem especially suited to mobile.

These include pinned reviews and cover photos for hotel listings that emphasize what management wants to show consumers as a first impression in the restaurant or hotels’ appearance on TripAdvisor. These might provide improved marketing capabilities for restaurants and hotels but it is hard to see how these services improve anything for TripAdvisor’s consumers.

Examples of restaurants that are new subscribers include Burger Shot Beer in Manhattan, Agust Gastrobar in Barcelona, and Fork and Flask at Nage in Rehoboth Beach, Delaware in the U.S.

Hotel subscribers of the Business Advantage service range from Hotel Las Americas Torre del Mar in Cartagena, Colombia to Hotel Weber Ambassador Capri in Capri, Italy, and Amertha Bali Villas in Indonesia.

TripAdvisor Subscription Business Will Get Even Bigger

Subscriptions are already a big business for TripAdvisor. In its financial results, TripAdvisor lumps TripAdvisor-branded display advertising with subscriptions and together they are a $200 million annual business. In the third quarter of 2016, this business line accounted for $73 million in revenue, or around 17.3 percent of the company’s total revenue.

That $73 million in the third quarter isn’t far behind TripAdvisor’s non-hotel category, including restaurant advertising and reservations (but not subscriptions), vacation rentals, and tours and activities. TripAdvisor’s LaFourchette, or The Fork, currently has about 38,000 bookable restaurants in 12 countries, mostly in Europe. TripAdvisor also uses OpenTable for restaurant reservations and this gives TripAdvisor a lot more coverage.

TripAdvisor officials say its restaurant business, which counts 4.2 million listings and some 100 million reviews, is bigger than Yelp’s overall.

With the addition of restaurant subscriptions, plus a premium service for hotel subscriptions, you can expect TripAdvisor’s subscription business to grow. How much remains to be seen.

Leisman concedes that the analytics feature that TripAdvisor provided to hotel subscribers in the past didn’t necessarily meet their needs. The analytics and data for hotel subscribers couldn’t be downloaded, were static and and was “like hooking them up to a firehose and expecting them to be able to drink,” she says.

The enhanced analytics suite that comes with the premium hotel subscription is more dynamic and includes “trending data,” Leisman says.

TripAdvisor is making the argument to restaurant and hotel marketers that scale begets scale when using TripAdvisor’s services.

“In simple terms, a network effect occurs when a product or a service becomes more beneficial to its users as more people use it. In other words, it is a virtuous circle of growth: supply drives demand, which creates more supply and so on, and all the while the product or service becomes increasingly beneficial and integral to the lives of its users,” TripAdvisor states.

These new subscription services for restaurants and hotels are geared toward smaller companies, many of whom are often cash-strapped and don’t have big marketing budgets. They’ll have to determine whether they have the bandwidth and find the services useful enough to hop on board.

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Tags: listings, loyalty, restaurants, subscriptions, tripadvisor, yelp

Photo credit: TripAdvisor launched a new business line, services for restaurants by subscription. Agust Gastrobar in Barcelona has signed up and pinned a 'simply wonderful' review from a Taiwanese customer.

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