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Can you imagine if Google were mimicking the way Tripadvisor is handling its new subscription program, Tripadvisor Plus? Pundits would be screaming that Google is becoming an online travel agency.
Tripadvisor’s new subscription program, Tripadvisor Plus, which is still in beta and slated to be rolled out to all U.S. users by the end of June, has Tripadvisor collecting credit card details on subscriber hotel bookings, and Tripadvisor is the contact point for customer service issues, although the hotel or online travel agency supplier is officially the merchant of record.
Tripadvisor is already the merchant of record when users book its tours and activities so Tripadvisor has already dipped in, and some might say, is creeping toward online travel agency status.
Like Tripadvisor in the past, Google has dabbled with handling hotel bookings through its own platform, but it hasn’t been the merchant of record and hotels take on the customer service responsibilities for these bookings. The travel industry at large has been fearful that Google, with all its market power, might throw its weight around wily nilly, and become the next big online travel agency, crushing competitors in its exhaust fumes, but that hasn’t happened to date.
Prior to Tripadvisor acquiring tours and activities provider Viator for $200 million in 2014, Tripadvisor was purely an advertising/media site, merely sending customers to online travel agencies or hotel websites to complete their bookings. But today Tripadvisor is more of a hybrid entity, part advertising site, and part booking facilitator.
With Tripadvisor Plus, subscribers complete their bookings on Tripadvisor, which handles customer service. The customer service aspect differentiates Tripadvisor Plus from the years when Tripadvisor tried and failed to make a business out of Instant Booking on Tripadvisor. At that time, the bookings took place on Tripadvisor, but the hotels or online travel agency suppliers took on the customer service, not Tripadvisor.
Instant Booking, or the practice of Tripadvisor carrying out bookings on Tripadvisor without sending users off to online travel agency or hotel sites to book their stays, got little traction, and Tripadvisor mostly abandoned it.
But now Instant Booking is back — with a twist.
With Tripadvisor Plus, Tripadvisor gathers the credit card details, completes the booking on Tripadvisor, and takes on customer service issues.
However, unlike when traditional online travel agencies take bookings for hotels, and essentially own the customer information, which is a sore point for hotels, Tripadvisor Plus gives hotels access to customers’ data so the hotels can retarget them with advertising across the web.
Tripadvisor on Monday officially unveiled its new subscription program to hotels, which can connect directly to Tripadvisor, and touted the fact that they have “no upfront costs” and pay “zero commission rates.”
The zero commissions is debatable since hotels have to agree to provide Tripadvisor with discounts or perks, such as room upgrades or bottles of wine, which Tripadvisor passes along to the consumer. In addition, some of the third-party inventory that Tripadvisor uses in the new program is coming from Amadeus and Sabre, and hotels often have to pay these global distribution systems a booking fee.
So although Tripadvisor Plus may not charge hotels commission, this distribution isn’t without costs.
Hotels, especially independent properties participating in Tripadvisor Plus, though, certainly wouldn’t have to pay the relatively high commissions that online travel agencies such as Booking.com or Expedia might charge.
In exchange for providing Tripadvisor with these discounts and amenities, often at wholesale rates, Tripadvisor pledges that participating properties will get badges and would appear higher than normal in the Best Value sort on Tripadvisor — both for subscription program bookings and even for those not going through the Tripadvisor discount program. This wouldn’t impact hotel placement in Tripadvisor’s Popularity Index, which is based on user reviews.
In other words, if a Hilton property participates in Tripadvisor Plus, then its listing would appear higher on the page or screen in Tripadvisor regardless whether it is providing discounts to Tripadvisor Plus members behind a paywall or offering regular retail rates to any site visitors.
A Choppy Experience In Its Very Early Days
Since Skift broke the story that Tripadvisor Plus is scaling up with wholesale inventory from 100,000 hotels through aggregators such as Travel Leaders Group, now known as Internova Travel Group, we learned a big chunk of the inventory is coming from Getaroom, founded by the ex-CEO and president of Hotels.com, David Litman and Bob Diener, respectively.
Hotel inventory, such as The Chatwell New York City, in Tripadvisor Plus that’s sourced from Travel Leaders, comes with rich content, including boxed descriptions of spa credits, upgrades, and late checkouts.
However, hotel inventory brought to Tripadvisor through Getaroom, such as Fairfield Inn & Suites by Marriott Key West at The Keys Collection, mostly displays rate and availability information along with succinct amenity descriptions. This kind of listing information is standard fare around the web.
These are early days for Tripadvisor Plus, but the divergent nature of property displays, namely rich content versus routine listings, could lead to unease or confusion among subscription program members.
Marriott Wholesale Inventory Could Be an Issue
The screenshot above includes a listing from a Marriott International-affiliated Fairfield Inn & Suites property in Key West, Florida, and its use in Tripadvisor Plus, along with those of other hotels in the Marriott family, could become an issue.
In recent years, Marriott has sought to tighten any unauthorized distribution of its wholesale rates, and even struck an agreement with Expedia Group to help it police any unauthorized use.
Asked about the use in Tripadvisor Plus of that Fairfield Inn property in Key West, Marriott spokeswoman Connie Kim didn’t comment directly about that hotel but said: “We monitor wholesale distribution very carefully and address the rare inconsistencies as they arise.”
Boom or Bust?
Researchers say Tripadvisor Plus, if it gets traction, could bring the company an annual revenue stream of billions of dollars.
That, of course, depends on how the hotel industry gauges whether it is worth participating in Tripadvisor Plus for its low distribution costs versus the potentially adverse impact it may play on their own direct-booking programs. In recent years, pre-pandemic, many big hotel chains mounted protracted advertising campaigns to entice customers to join their loyalty programs and book member-only rates directly on their own websites.
So how will the hotel industry weigh Tripadvisor Plus?
“Negative, certainly,” said one hotel industry veteran at a big chain. “but it all depends on how things evolve. What launches initially almost never stays in the same state after it makes contact with the market.”
The hotel industry source said it isn’t unusual for companies to try to exploit hotel weaknesses emerging from an economic crisis, such as the pandemic. “I don’t think anyone thought it would be Tripadvisor until this started trickling out a few weeks back.”
However, hospitality consultant Max Stafkov, has a different take, arguing that hotels will sign up with Tripadvisor Plus in droves because of current market conditions.
“Hoteliers will flock to join the Trip Plus program and you cannot blame them,” Starkov said. “It is a far cheaper alternative to the OTAs (online travel agencies), plus the hotel gets the full guest reservation data.”
He said hotels gutted their marketing budgets by half during the pandemic, and Tripadvisor, with its half-billion users, is one of the few players that can generate demand in huge quantities.
“Tripadvisor is one of the few travel entities out there that can generate travel demand today and hoteliers know that,” Starkov said. “Here comes Trip Plus as a far better alternative to OTAs like Expedia and Booking or bedbanks like Hotelbeds. Why? Hotels do not pay any commission to Tripadvisor, and the latter passes the full guest reservation data to the hotel.”
Tripadvisor is encouraging hotels participating in its new $99 subscription program for consumers, to provide it with rich property descriptions and photos. Tripadvisor said there are no required annual commitments, no last-room availability requirements, and “participating hotels can opt-in and out of discounting at any time as occupancy levels change.”
Whether hotels choose to opt in or decline participation in Tripadvisor Plus, viewing it as a threat, is a multi-billion dollar question for everyone involved.