Tripadvisor to Launch Its First Subscription Plan for Travelers

Tripadvisor has long attracted subscription revenue from hotels and restaurants, but it is poised in the next few months to launch its first subscription program for consumers.

During the company’s third quarter earnings call Friday, CEO Steve Kaufer said the subscription plan would offer discounts to travelers for hotels and attractions, and it would also be able to deliver special perks and experiences during the trip.

Although plans aren’t finalized, Kaufer said the program may call for discounted and opaque hotel offerings behind a paywall such as Priceline and Hotwire long have offered.

From Tripadvisor’s Q3 shareholder letter: “Within the next few months we intend to start rolling out a new subscription-based, direct-to-consumer offering that enables us to serve travelers in a whole new way and help them get more value out of their travel experiences. Subscribers will be able to access valuable deals and perks across tens of thousands of top-ranked hotels as well as exclusive savings on our nearly 400,000 bookable experiences and, like other gold standard consumer subscription services, we plan to add more benefits to deliver more value to consumers over time. We are cautious with our expectations in launching any new product in travel right now and the initial launch will be limited in product and geographical scope by design.”

That’s something that its chief competitor Google is not doing, yet.

With its direct relationships with tens of thousands of hotels and aggregregators, as well as 400,000 tours and activities providers, Tripadvisor is in “a wonderful position” to offer special experiences to consumer subscribers, Kaufer said. Tripadvisor, he said, had around 400 million unique monthly visitors pre-Covid, and a substantial portion might be amenable to the subscription product with discounts, upgrades on their hotel rooms, or a special meal when they are planing or booking trips.

Tripadvisor already has more than 100 million “members,” which is currently a free service, he said.

An analyst asked Kaufer if promoting the annual subscription plan would require increased marketing costs. “It becomes a very easy opportunity without, to your question, any incremental marketing costs for us to educate a consumer at the time they’re ready to buy, that this is a great deal,” Kaufer said.

However, if travelers might be planning a trip on Tripadvisor and don’t subscribe to the presented subscription offering, the company might spend monies retargeting them elsewhere, Kaufer said.

In addition to business listings’ subscription plans for hotels and restaurants, Tripadvisor announced recently that it would debut reputation management and business intelligence subscription programs for these sectors.

Kaufer argued that Tripadvisor’s new subscription plan for consumers would be complementary to hotels’ own loyalty programs — a premise that would have to be proved.

In Skift’s 2020 Megatrends, we posited that subscription services would be one of the next big things across the travel industry, and that is indeed turning out to be true. There is indeed increasing emphasis on subscriptions, with many of them offered to consumers

Restaurants and Rentals

Tripadvisor recorded a $48 million net loss in the third quarter compared with a $50 million profit a year earlier. Revenue fell 65 percent to $151 million. The revenue plunge was fairly consistent across the company’s segments, namely Hotels, Media & Platform; Experiences & Dining; and Other, which includes Rentals, Flights & Car, Cruises, and Tripadvisor China business units.

The 65 percent year-over-year decline in total revenue in the quarter ending September 30 represented an improvement compared with the June quarter, which saw revenue fall 86 percent. The improved third quarter was consistent with trends at Booking Holdings and Expedia Group.

“Similar to Q2, in Q3, Restaurants and Rentals showed the fastest relative improvement, followed by Hotels and Experiences,” the company’s shareholder letter said Thursday. “Our transaction-based restaurant business, TheFork, again demonstrated relative strength and, notably, largely rebounded to 2019 revenue levels in the month of September.”

Kaufer said he doubts Tripadvisor will never been known as an alternative accommodations’ brand, but it plans to be active in offering them as a lodging choice. Echoing what Expedia likewise said this week, Kaufer said a major challenge to be taken on is how to mix in alternative accommodations with hotels effectively in search results.

Tripadvisor’s traffic numbers show there is ongoing consumer interest in travel, although visitor numbers are lower than pre-Covid levels. For example, in September Tripadvisor’s monthly unique visitors were 74 percent of the year-earlier figures, the company said.

RELATED: Skift Research’s Report: A Deep Dive into Tripadvisor 2020 Path To Recovery