Tripadvisor CEO Stephen Kaufer acknowledged that hotels objected to the discounted rates being advertised on the Plus program, but said the change to a points-based wallet will be a hit with consumers. Wall Street wasn't too sure, wiping out $374 million in the day after the news broke.
Tripadvisor CEO Stephen Kaufer defended the company’s overhaul of its Tripadvisor Plus subscription product by arguing that the change actually benefits both consumers and hotel chains.
“Consumers are likely to be getting the same savings, just at a slight different time,” Kaufer said Thursday at the Skift Global Forum in New York. “It’s literally the same to hoteliers,” he said.
Skift reported earlier this week that the $99 subscription model was shifting to a points-based reward program, and Wall Street punished the company’s share price, which fell by 8 percent and wiped out $374 million in the company’s market capitalization in the day after the news broke.
The program offered hotel discounts immediately to consumers but will shift to offering members points in a Tripadvisor wallet. These points can be withdrawn for cash or used for future travel expenses. “It’s real money you’re going to use on this trip or your next trip,” Kaufer said.
Hotels, however, objected to Tripadvisor advertising discounted rates on its public site as a way to drive subscriptions. Some hotel groups were fine with the discounted rates being advertised behind the Plus paywall, but others were not, Kaufer admitted. “Some hoteliers objected to the size of the program,” he said.
Tripadvisor made the change after “doing a lot of research,” Kaufer said. Early reaction to the changes were positive, with some calling the new wallet system “aspirational.” Consumers trust Tripadvisor and know the cash is real, he said. “These vacation funds are real money you can put in your wallet.”
It’s too early to tell if the change will affect renewal rates, Kaufer said, adding that his gut reaction is that renewals will be high. “Customers spend $99 to get way more than that,” he said. “The near universal reaction is that this will be aspirational.”
“Nobody is going on a Zoom vacation,” Kaufer told Skift in August 2020, during the depths of the pandemic. He is “hugely bullish” on travel’s resurgence, especially leisure travel. “The notion that anyone would switch over to virtual travel experience or online cooking classes — that’s utter baloney,” he said on Thursday.
“If anything, [online experiences] will spur demand to get out there,” Kaufer said.
But trends have changed as the pandemic endures. Last year, U.S. travelers flocked to camping sites and national parks for vacation travel, while avoiding cities like New York, Chicago, or San Francisco. “That has flipped,” Kaufer said. Tripadvisor is seeing more interest in travel to the big U.S. cities, especially as restaurants and theaters reopen. “Experiences will be a huge part of [the recovery,” he said. “People care about what they do at the destination.”
Travel in Europe lagged as lockdowns persisted longer in that continent than in the U.S., but now “business has surged,” Kaufer said. But travel remains regional. “The big international trips aren’t happening.”
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