TripAdvisor
has recently unveiled their direct booking feature, which offers users the
option to book hotels within its site. Officially called TripConnect
Instant Booking, this function has already created a lot of
buzz in the industry.
I attended a
session at WTM, where TripAdvsior gave a rough sketch on how the model
works. This will allow users to
research, compare, choose and now book hotels, in other words, complete the
buying journey while staying within TripAdvisor user experience.
This is a major
shift in TripAdvisor’s revenue model, which earlier relied on advertising. Only
last year, the travel giant had revealed its meta-search service, where a
supplier uses TripConnect CPC (cost-per-click)
to place bids to appear in the price and availability search results. With the
new model, TripAdvisor has introduced a commission
based ‘bidding model’, where suppliers like OTAs, hotels, GDSs bid on a
commission percentage they are
willing to pay.
The basic
difference between the CPC and Instant Booking model is that for the former,
partners bid via cost-per-click for the top positions, and pay when users click
on that link, whereas in the new model, they pay TripAdvisor a commission once
the user completes their stay. In the
earlier model, suppliers required bid management strategy to be on top
position, and directing traffic would not necessarily lead to conversion. The
Instant Booking gives them 100% return on investment; in addition they will own
the data, can view traveller profile and be the pointof sale collecting the
payments.
If it reminds
you of the traditional OTA model, you are absolutely right. But does that mean
TripAdvisor is aspiring to be an OTA? According to analysts, this is an
extremely smart move by TripAdvisor to improve
monetization of its mobile channel. The site gets around 110 million monthly
unique visitors, about 40% of its total traffic, but accounts for less than 20%
of desktop when it comes to monetization.
With mobile
booking rapidly growing in US, Europe and APAC, Instant Booking,
which allows users to book a hotel room while staying on the TripAdvisor
user-shell will encourage more people to book, and therefore improve conversion
rates. To make it more attractive for partners,
TripAdvisor is using the Top Position of it search result and extending Premium
Certification to enjoy benefits like tradeshow and online promotion to those signing
up for this programme.
For
independent hotels struggling to improve position in a channel where big OTAs
with larger marketing spends typically dominate, this can be a golden
opportunity to get direct bookings at a lower cost per acquisition, and to
increase distribution on distressed inventory or increase direct bookings in
low periods through improved mobile booking experience.
Choice
Hotels International, Best Western, GetaRoom.com, Amoma, Tingo and GDS operator
Travelport have already signed up for this programme. In fact for TripAdvisor, Travelport’s
listings for 580,000 hotels worldwide, including 480,000 non-branded properties
and 150,000 e-commerce enabled listed properties can be the biggest coup for
this program.
Presently
pilot testing on global Mobile and certain US desktop IP addresses, the program
is expected to be globally rolled out early 2015. With Google Hotel Finder also
testing Buy Now in the UK market, does this indicate a new trend to look out
for in 2015? It certainly looks so!
