REPORT FROM THE U.S.—TripAdvisor’s Instant Booking platform is the latest of the company’s booking offerings, and its positioning—not quite a metasearch, definitely not an online travel agency—has some eyebrows raised about how it really works. Hoteliers, TripAdvisor executives and consultants weigh in on what you need to know about Instant Booking.
1. Know what it is … and what it isn’t: Heather Leisman, TripAdvisor’s VP of industry marketing, calls Instant Booking, which launched late last year “a very new model—something very different.”
“We’re going through Internet booking engines, so we’re not a merchant model,” she said. “We’re more of an assisted booking model. We send the reservation directly into your property CRS or PMS on a commission model.”
Don’t confuse Instant Booking with metasearch either. TripAdvisor already has that, in the form of TripConnect. So how does Instant Booking work compared to TripConnect? Think of the differences in terms of a cost-per-click model (metasearch) and a bid-based cost-per-action model. Booking on TripAdvisor can be through metasearch or, if the property participates in Instant Booking, the booking might be direct through the hotel.
“Depending on what commission we work with the property at, that determines how much of the traffic goes to your hotel versus an OTA,” Leisman said. “We do two models: If you pay a 12% commission you get the direct booking 25% of the time. If you want it 50% of the time, it’s a 15% commission model.”
2. It’s targeted to independents: The first quarter of 2015 was the first full quarter of Instant Booking beta for independents, according to TripAdvisor President and CEO Stephen Kaufer. On the company’s first-quarter earnings call with analysts he said that the platform has “thousands of independent hotels currently taking bookings.”
Bashar Wali, president of Provenance Hotels, said his company is spending on Instant Booking and so far sees a high return on investment.
“We think TripAdvisor is the most important of the bunch,” he said. Provenance’s Hotel 1000 in Seattle was its first hotel on the platform, and he said all of the company’s 11 independent properties will soon be listed.
3. But brands are playing, too: Brand involvement on Instant Booking hasn’t been the tidal wave that the company perhaps expected when it launched, according to Robert Cole, president of RockCheetah.
Some of that hesitancy comes down to commissions, Cole said. When Instant Booking launched, Priceline and Expedia declined to participate, so the commission bidding war between hotels and OTAs that normally tends to happen in bid-based situations didn’t quite materialize.
Best Western International and Choice Hotels International are two chains that do participate in Instant Booking. Choice President and CEO Stephen Joyce said the company will be “pushing a lot to connect with them.”
“We think TripAdvisor will be positive because the price points will come down as a result of competition,” he said on the company’s first-quarter earnings call with analysts.
So far, competition from other big brands isn’t quite there yet. Kaufer said adoption has been “a bit of an easier decision” for small chains and independents.
“I would characterize it as good and material forward progress in discussions with most of the big chains,” he said. “I remain optimistic that several will sign up and we’ll be able to publicly announce those.”
4. It’ll come down to monetization: Analysts on TripAdvisor’s first-quarter earnings call asked a lot of questions about monetizing the platform, and Kaufer said “it certainly is a challenge for us to forecast that.”
“In terms of monetization, we play the long game so it’s not just a question of getting to (a) revenue-neutral (position) or slightly above or slightly below,” he said. “We’re taking our best guess over the course of the rest of the year as to when we think we will roll out and how much but … we’re not projecting a major financial hit by an Instant Booking rollout.”
He did say the general conversation among larger chains is one of “buy-in and an understanding as to why we’re doing this,” and that “there is ongoing negotiation in terms of how and under what terms they want to participate.”
5. As with all booking platforms, content and experience matter: Leisman admits that the company’s early iterations of booking engines weren’t great. “They worked OK for brands, but independents were at a disadvantage,” she said. “The handoff was clunky; it wasn’t optimized (for all devices) and the conversion rates weren’t strong, frankly.”
What’s more, Cole said, third-party booking platforms often hesitate when it comes to linking directly to hotel websites when the site content isn’t strong.
“If hotels have poor mobile sites themselves, for example, they won’t convert buyers, and in turn those hotel properties won’t want to pay as much (to the third party) because they’re not converting,” Cole said.
So Leisman said Instant Booking was designed to “stay within the TripAdvisor experience,” even if it leads to a direct booking.
Kaufer said the company doesn’t disclose Instant Booking conversion rates, but the goal continues to be to optimize the booking funnel.
“We are making sure the user experience is as good as it can be, whether the partner is an (independent) hotel, a hotel chain or an OTA,” he said.