March 19, 2021 · Stuart Butler
Fuel Hotel Marketing Podcast: Episode 180 – Will TripAdvisor Plus Destroy Your Hotel’s Direct Bookings?
TripAdvisor is sending a ripple of concern, and potentially opportunity, through the hotel industry. Back in December 2020, TripAdvisor Plus launched on a very limited scale in the US but is in the process of being rolled out to the rest of the states as well as international markets. Today we are going to look at the new program, understand what it is, and discuss ways hotels can adapt to ensure this is a positive tool for independent hoteliers.
What Is TripAdvisor Plus & Why are They Doing This To You?
Think of TripAdvisor Plus as a travel membership club. With a $99 annual membership, travelers unlock exclusive pricing on hotels and resorts, as well as other travel benefits. TA Plus rates are not shown to customers unless they are logged-in paying members.
Plus members can unlock pricing that is at a minimum of 10% below the best available rate AND will receive some type of value-added perk for their stay. For example, TripAdvisor suggests a welcome gift, early check-in/late check-out, resort credit, etc. Basically, they are asking for many of the perks savvy hoteliers are giving their guests when booking direct.
This program may become very popular among travelers, simple math suggests it could be a big success. As an example, someone taking a 5-day vacation and staying at a $150/night property will immediately save $75 and get a perk by signing up for the program. Toss in one more trip and the program begins paying for itself.
What is clear is TripAdvisor is going to be putting a full-court press getting Plus adopted for several reasons:
- Google is actively marching into the OTA battlespace, eliminating 3rd party cookies, and overtaking many properties in both total reviews and velocity of new reviews.
- For TripAdvisor to survive in general, they must find a way to better “own” their customer and a paid membership of loyal bookers is a great way to make it happen.
- TripAdvisor has seen its stock double ($26 in December, $59 today) since they began to soft launch the program. While there are many factors, investors are clearly interested in this new revenue stream.
- TripAdvisor lost their way. So much so that they’re not even trying to circle back to their review-based roots. They’re looking for an entirely new model, the travel club…
What Hotels Need To Know To Participate In TripAdvisor Plus
Any hotel can participate and become a Plus partner, however in order to do so, you have to have a rate and special “perk” that is exclusive to the program.
- Minimum 10% discount on your best available rate, though TripAdvisor “recommends” 15%.
- Requirement to offer a value-added perk, such as free breakfast, gift, late check-out, etc.
- Properties can come on and off the program as they like and as their occupancy demands.
- Pricing is “currently” free. Longer term they are heading toward a cost-per-conversion model, similar to InstantBook though with a reduced rate, making it more affordable from a marketing standpoint. However the cost of the commission plus the discounted rate will likely be a greater total investment.
- There is no requirement related to flags, independents, big or small properties.
- As you would expect, you must have a rate interface with TripAdvisor.
- Most importantly, like all bookings made directly on TripAdvisor through a property, hotels will still get all the necessary guest contact information. This is important to note because, unlike other OTAs, the data will not be cloaked to the hotelier.
The Good, Bad, & Ugly of Plus:
- Good: you’re going to only be paying for performance so your ROAS will be guaranteed.
- Bad: Your property will very likely be a “product” of the Plus program. Meaning the guest’s loyalty is to the program, not necessarily your property. Similar to what properties have seen through the use of Groupon and other couponing systems, you may get a guest but can you keep them for subsequent visits?
- Ugly: Like any TripAdvisor booking, you do get the full guest folio for your guest history, triggered sends, and other marketing strategies.
- Good: The program is new which means you have an early-adopter advantage. Like most opportunities that present themselves, it may make great sense early, but have waning performance over time.
- Bad: While you are bringing in new guests, you’re also anchoring them with a lower rate. Would those guests be willing to come back for a return stay at your normal BAR?
- Ugly: You are letting go of your direct control of your booking.
- Good: Because you are able to come on and off the program as needed and only for specific time periods you can use this as an opportunity to fill occupancy holes. Consider Plus in the same way you would consider an OTA and ONLY use it to address specific occupancy issues. Also, like an OTA, use this as a new business tool.
- Bad: Should Plus take off, and it very well may do so, you are going to be nearly required to participate since all the avid travelers will be looking for Plus deals. This may end up meaning the industry as a whole will take a 10% haircut.
- Ugly: While not necessarily “bad” but you want to be careful not to get addicted to third parties to drive your bookings.
- Good: TripAdvisor Plus members have already dropped $99 and will be traveling. Getting access to this group will undoubtedly lead to improved conversion rates.
- Bad: Are you starting to feel like a pawn in the game and seeing your profitability shrink? 10-15% discounts, plus costs of perks, can be a significant stumbling block for many independents.
- Ugly: This puts the OTAs on TripAdvisor in a very tight spot. Will they be able to compete with Plus rates?
So, What Are You Supposed to Do?
First of all, this should be one of the many reminders of why you must be putting your efforts into creating a meaningful book-direct strategy with your guests. By creating loyalty, through great value, guests will continue to book directly. Make sure you’re doing the following:
- Building a strong CRM and communications plan
- Implement your own “perks” for booking directly
- Absolutely, positively, get a mobile app. We’re consistently seeing thousands in revenue booked directly from mobile apps… Bookings by guests who never had to go to the web to make it happen.
- Continue to diversify your marketing mix so you do not become reliant on any one “magic bullet.”
- Be agile and give it a shot, like any tool it’s neither good nor bad, it’s how you use it.
You can learn more about TripAdvisor Plus and sign up for the program at https://www.tripadvisor.com/business/plus.
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