TripAdvisor State of the Union 2019
TripAdvisor launched in 2000 and has since grown to become the world’s most used travel website. The company’s original business plan was to drive leads to hotel websites. Today, TripAdvisor claims approximately 400 million monthly website visitors globally and lists 7 million accommodations, restaurants and attractions.
TripAdvisor is the most visited pre-transaction travel site in the world. It appears on the first page of organic search results for 99% of unbranded search terms for hotels (hotels + destination). In 2017 TripAdvisor reached six out of ten travelers in 12 major markets around the world and influenced 50% of hotel reservations globally.
In more recent times, TripAdvisor has aggressively built and added non-hotel related content to its platform. In 2017, the company’s non-hotel segment (including attractions, vacation rentals and restaurants) grew 24% to $360 million in revenue. Since 2015, TripAdvisor has purchased over a dozen travel experience companies including FlipKey, The Fork, Cruise Critic and Viator.
In 2016, the company rebranded their attractions listings calling them TripAdvisor Experiences in keeping with trends on Airbnb and Booking.com. Experiences offered range from cooking classes and skip-the-line access to famous attractions to multi-day excursions. The number of experiences on offer has doubled to more than 100,000 in the last two years.
In 2017, TripAdvisor reported a modest 5% growth in total revenue, and their adjusted EBITDA dropped 25% in the hotel segment due to the migration of website users from desktop to mobile devices. The company enjoyed a substantial increase in mobile bookings, but mobile reservations are less lucrative than those made on a desktop.
In 2018, TripAdvisor streamlined its user experience to make it more appealing and intuitive for mobile users, but mobile revenue per booking continues to lag behind that of desktop users by 30 percent.
The company is also facing some criticism from operators. Critics bemoan TripAdvisor for giving a disproportionately large and powerful voice to masses of anonymous reviewers, which results in the spreading of unfiltered misinformation and some cases of cultural misunderstandings. They also highlight that TripAdvisor rankings do not adjust for scale. Hotels with the most reviews get higher rankings which benefit larger and non-seasonal properties. Recency of reviews also impacts ranking which favors hotels who ask their customers for TripAdvisor reviews over those that don’t.
Rankings may matter less as TripAdvisor has started using artificial intelligence to personalize results. With a process they call “collaborative filtering,” a machine matches users with specific interests (such as beachfront hotels) to hotels with reviews that include those keywords. As a result, different users will turn up different ranking results.
TripAdvisor Services and Tools
In 2014, TripAdvisor launched a feature called Instant Booking, which was designed to enable users to book hotel stays directly on the platform (without clicking away to another site). TripAdvisor charged commissions on bookings ranging from 12% to 15%. The company quickly signed on Expedia, Hilton and IHG inventory with the rest of the brands and many independents rapidly following suit. However, the new feature encountered many problems, especially with rate parity. As a result, users did not embrace the new feature as expected.
After three years of lackluster conversions, TripAdvisor is de-emphasizing this feature – very aggressively in the last quarter of 2017, first on the desktop and then on mobile. Today, they are only offering the Instant Booking option to customers in limited cases. TripAdvisor’s senior director of corporate communications said: “Instant Booking continues to be an option for users, but it will likely appear more prominently for users who have already demonstrated a propensity for using the service.”
With the de-emphasis of Instant Booking, TripAdvisor switched back to the traditional metasearch model of redirecting users to partner sites (such as Expedia or hotel websites) to confirm their booking, rather than facilitating the booking within TripAdvisor’s platform.
Metasearch was structured so that online travel agencies and hotel partners bid in a pay per click auction to have their room rate and website link appear in the top 3 to 5 listings on TripAdvisor hotel pages.
Consumers, in general, find metasearch websites (such as TripAdvisor, Kayak, Trivago and Google Hotel Finder) confusing. Consumers think they are booking on the metasearch site only to find out they completed their booking on another website. Further, the TripAdvisor metasearch option varies in how it presents from listing to listing. Currently, both Metasearch and Instant Book options are consistently inconsistent in how and when they display.
For all of these reasons, convincing consumers that TripAdvisor is an ideal platform to complete a hotel booking, not just a place to check reviews, will not happen overnight. TripAdvisor plans to spend $80 million this year on TV advertising to facilitate a consumer perception change in this regard. The company is doubling its TV advertising budget while reducing their online and performance marketing on channels such as Google and Facebook.
In the meantime, TripAdvisor sales teams are urging partners to place themselves outside the bidding environment via a brand new service called Sponsored Placements.
Hotels jostling for visibility can now buy their way to the top via a brand new TripAdvisor product called Sponsored Placements. Until now, the only way to influence TripAdvisor search rankings was to maintain a consistently large number of good reviews. Now, with Sponsored Placements, comparatively low-ranking hotels can now pay to appear at the top of the TripAdvisor listings.
The paid listings are labeled ‘sponsored,’ but not all consumers will be savvy enough to notice this (at least not initially). The new ads are only differentiated from the rest of TripAdvisor’s listings by a grey ‘Sponsored’ label next to the name of the hotel. Aside from the grey label, the ads look the same as the organic listings beneath.
Hotel marketers can set a monthly budget in the TripAdvisor ad platform and then target consumers searching for hotels in their destinations. Advertisers then pay per click as users click on the ads.
On the face of it, Sponsored Placements present an excellent opportunity for hotels to increase their visibility on this hugely influential website. The new ads offer hoteliers the chance to get in front of potential guests that, crucially, haven’t chosen a purchasing channel yet. However, hoteliers will have to weigh up the benefit of this visibility against the likelihood of guests then going on to book their rooms on an Online Travel Agency.
When users click on a sponsored ad, they may choose websites listed on TripAdvisor metasearch to complete their booking. The majority of the websites listed on TripAdvisor metasearch are Online Travel Agencies because many hotels do not choose to spend ample ad dollars to bid on metasearch ads, believing it is more economical to allow the Online Travel Agencies to pick up these incremental bookings.
However, if hotels pay for Sponsored Placements and don’t bid on a metasearch listing, any booking made as a result of the sponsorship will almost certainly go to an OTA. Further, to participate in Sponsored Placements, hotels must first sign up for a Business Advantage listing for many thousands of dollars a year.
It is not surprising that Sponsored Listings is where TripAdvisor is putting all their focus as the program strongly incentivizes hotel operators to invest heavily in metasearch and Business Advantage listings.
Business Advantage Listings
TripAdvisor launched Business Advantage listings in 2010. Via this program, hotel owners pay yearly fees for the ability to optimize their property profile page by adding a phone number, website link and email address. It also enables properties to post a special offer and announcement. Recently, the company has enhanced this program by allowing hotels to chose and pin a favorite review to the top of the listings, offset user-generated photos with ones provided by the hotel and install a slideshow of handpicked images to showcase your property’s best aspects. Further, they have enabled Business Advantage users to access and download user data.
Hilton, IHG and Marriott pay for and control the content on the TripAdvisor Business Advantage listings for all properties. Content or special offer updates must be approved and implemented by the brand e-commerce team. Hyatt and Best Western do not support Business Advantage listings, so hotel owners must pay and optimize the listings for these brands. Hoteliers, of course, must also pay for and optimize the business advantage accounts for our independents.
Note that TripAdvisor quotes wildly different fees for Business Advantage listings with an astounding lack of transparency on what factors they base their pricing. Last round, we negotiated a reduction of $10,000/year in fees for one of our independents, so there is lots of wiggle room for deal-making.
When we asked why a forty room independent pays more than much larger Business Advantage fee that much bigger properties, our representative claimed it is because this property gets triple the referral traffic from TripAdvisor than most of our other hotels. In short, we are being penalized for exceptional results? What?
Review Express and Surveys
TripAdvisor Review Express functionality enables hoteliers to use their platform to email guests and remind them to submit a TripAdvisor review shortly after their stay. Users can customize the copy of these emails. The company claims Review Express users see an uplift of 28% in the amount of TripAdvisor reviews for their property. Also, hotels can use Review Express Surveys to solicit private feedback from guests.