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Tripadvisor is in the midst of a huge transition, making it a priority to “reinvent” its revenue sources with a tilt toward a direct-to-consumer business model.

The uninitiated may be very confused about that effort, which was emphasized in a confidential Tripadvisor pitch deck to hotels obtained by Skift. The deck was about the review site’s new Tripadvisor Plus subscription program.

Doesn’t Tripadvisor already operate the most-visited travel and tourism website in the world with 95.4 million consumers visiting in February, when paid marketing was largely tamped down, according to SimilarWeb?

Yes, but apart from being the merchant of record for tours and activities’ bookings, Tripadvisor has made most of its money over the last two decades on being a business-to-business marketing channel for online travel agencies, hotels and restaurants. That included its price-comparison, or metasearch, business, pop-under and display advertisements, as well as other sponsored placements and text links.

The following are key takeaways from Tripadvisor’s pitch deck to hotels about Tripadvisor Plus.

  1. Tripadvisor Plus Could Generate a Multibillion Dollar Revenue Stream

The pitch deck we saw, which may be one of several circulating to hotels to entice them to offer discounts and perks to Tripadvisor Plus subscribers behind a $99 a year paywall, makes it clear that the new program, in Tripadvisor’s view, has “multibillion dollar revenue potential,” and is Tripadvisor’s chief priority as it transforms itself into a direct-to-consumer business.

A couple of points flow from those goals:

1) Some people believe that Tripadvisor would be hard-pressed to get consumers to plunk down $99 in a lump sum to get them to subscribe.

2) The counter-argument is that travelers would quickly see that they could make back that subscription amount fairly quickly, perhaps in the first booking if it is for a weeklong stay, for example. Travelers who belong to Tripadvisor Plus can make an unlimited number of bookings.

3) Tripadvisor is seeking to transition from a marketing channel toward a direct-to-consumer play, and it’s no shock that this is the company’s answer to Google making severe inroads into Tripadvisor’s hotel metasearch, or price comparison, business. Metasearch, though, will clearly be an important component of Tripadvisor’s business for the foreseeable future.

2. The Target Audience Is Relatively Big Spenders 

In early tests of Tripadvisor Plus, which is still in limited beta and is slated to be rolled out across the United States in 2021, subscribers notched gross bookings worth $1,449 on average compared with $502 for vacationers who were not part of Tripadvisor Plus. The length of stay was 4.8 nights versus 2.4.

The ideal Tripadvisor Plus candidate, according to the pitch deck, would be “high-intent travelers” who book earlier than non-subscribers, stay more days, and shell out more on their vacations.

3. Tripadvisor Plus Takes Hotels Higher in Some Tripadvisor Search Results and Sponsored Placements

When hotels — or online travel agencies —offer the Tripadvisor Plus program steep discounts and substantial perks, they’ll move higher in Tripadvisor’s Best Value search results even outside the paywalled subscription program. Placement in Tripadvisor’s Popularity Index is unaffected. Oh, their listings get special badges, too, to stand out.

“The more value you offer, the higher you place in our organic search results and marketing channels,” the Tripadvisor pitch deck stated.

Properties that participate in Tripadvisor Plus “will place higher in search results when they surface a discount that is better than the other Meta players and offer compelling perks,” the pitch deck said.

4. To Participate in Plus Hotels Should Offer Discounts, Perks, Welcome Gifts, and Tripadvisor Plus Greetings

Hoteliers may balk at some of the pitch deck’s recommendations for acceptance to the Tripadvisor Plus program. For example, Tripadvisor recommends that Plus bookers get custom greetings about being Tripadvisor Plus members when they arrive at the hotel.

Can you envision a Hilton front desk manager saying to a guest, “We are so happy to have you here as a Tripadvisor Plus member.” Although, I recall arriving at an independent hotel in Lisbon, and being acknowledged as an Expedia VIP program member.

In the pitch deck, Tripadvisor recommends that participating hotels provide at least 15 percent discounts below the best available rate, and provide a perk such as a welcome gift worth more than $20 to the guest, which could be early check-in/late checkout or room upgrades when available. The full discount gets passed along to the guest, Tripadvisor said. Separately, a Tripadvisor source said the discounts could be as low as 10 percent.

5. Hey, This Is Way Better Than the Online Travel Agency Model

Unlike when hotels distribute their rooms through online travel agencies like Expedia, with commissions of 10-25 percent required, for example, properties selling through Tripadvisor Plus pay no commission (other than indirectly through the discounts they are providing). They also own the customer data, including credit card details, name, email, address and phone numbers of remarking purposes.

6. Woah, the Global Distribution Systems Are Heavily Involved

Sabre and Amadeus are heavily involved in Tripadvisor Plus while there’s no mention in the pitch desk of Travelport, the third in the troika, which appears to be the odd global distribution system out.

Participating hotels would load their rate codes through Amadeus and Sabre, which would pass along credit card details from bookings that take place on Tripadvisor to the hotels.

“Our CS (Customer Service) team will be the first line of support for all booking modifications and cancellations (just like an offline travel agent making a booking at one of your properties via Sabre or
Amadeus),” the Tripadvisor pitch deck said.

7. Hotels That Don’t Participate In Plus Will Have That Sinking Feeling

If hotels participating in Tripadvisor Plus will see their stock rise across Tripadvisor search results, then guess what? Non-participants would see their search results get less exposure on Tripadvisor.

“We’re offering Trip Plus to top hotels all over the world,” the pitch deck said. “So your [property] owners that don’t participate in Plus will inevitably drop in the sort order, as we present the better deals higher in the list. This is similar to the OTA (online travel agency) boost programs with one overarching difference that benefits you and the — we pass along the discount to the traveler, instead of taking it for ourselves as a commission.”

In other words, in Tripadvisor’s view, at least, you have to be in it to win it.

Corrections: Tripadvisor sees a multi-billion dollar revenue potential in Tripadvisor Plus, not multi-million as we initially reported. We also clarified that participating hotels would move higher in Tripadvisor’s Best Value sort, and not in its Popularity Index.

Photo Credit: Tripadvisor is pitching hotels to participate in its new subscription plan, TripAdvisor Plus. Pictured is a Tripadvisor video, 'There's Good in New York.' Tripadvisor