Tripadvisor´s Instant Booking – A great new tool to increase RevPar or just another channel?

What is TripAdvisor’s Instant Booking? Instant Booking from Tripadvisor allow hotel chains, independents, and online travel agencies (OTAs) to use an auction bidding tool to fight over the coveted top spots in its metasearch results.  For any given search result, the topmost button of three hotel rates may be large and in gold and say “Book with TripAdvisor.”    Before instant booking, travelers who ran searches for hotels on TripAdvisor’s metasearch tool saw three potential room rates at a time. Each button displayed a price and the label of a third party, like Booking.com. He or she would click to the OTA to complete the transaction. The rollout of TripConnect Instant Booking has been slow across Europe,  but it’s starting to ramp up.

tripadvisor-instant-bookings--impact-of-priceline-expedia-boycott_640

Changing from Cost per Click (CPC) to Cost per Action (CPA) The CPA (Cost per Action) model is similar to what OTAs charge hotels: a % commission per reservation. For a hotel owner, this model can have some advantages. The CPA fee can be tracked to an actual stay, so the hotel owner is paying for real revenue.  Hotels, in general, do not have the budgets to compete in the CPC (Cost per Click) model with the big OTAs, but they are more than willing to pay for actual bookings, even at a slightly higher commission rates.  Unlike most other travel websites “instant booking” options, TripAdvisor’s auction model is making it affordable for independent properties and small chains to compete against other travel websites.

BoTAGroup

Large OTAs are sitting on the fence The two major OTA´s Expedia and Priceline according to analysts, spend around 12% of their total advertising budgets on TripAdvisor. Yet it seems they have steered clear of participating in the company’s new Instant Booking in a direct relationship.  Perhaps they will do at some point in the near future,  Even if a hotel may bid for only a third-place position in TripAdvisor’s ordinary CPC metasearch ads and even if they may manage that to a really low commission rate on an effective basis, the instant booking option could seem an attractive option.  While hoteliers would like to pay less commission than they do with an OTA, they also don’t want to overpay for something that was supposed to be a bid-based product. It’s not the hotel´s fault if the newly created marketplace is inefficient from a revenue optimization perspective.  If the CPAs are too high,  the model may not work and what could have been a quality, and more cost-effective source of reservations for hotels will wind up being grossly underutilized.

2014-10-23_1028

What do you think? How do you view Tripadvisor?  Do you see it becoming a major source of reservations over the next 12 months?  Is your hotel connected to Tripconnect?  We will be launching a survey soon to find out what you think………..with a chance to win an Apple Iwatch or Ipad PLUS An Guest App for your Hotel. If you would like to take part, email info@hotelient.net with “Tripadvisor” in the subject line. or contact us via www.hotelient.net

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s