Perhaps the biggest dilemma for hotels this year is whether or not to participate in TripAdvisor's Instant Booking.
NB This is a viewpoint by Pablo Delgado, CEO of Mirai.
On one hand, the first reaction would be to resist. It is far from ideal - the direct sale, whose main objective should be cost reduction and increased independence for the hotel, incurs a cost close to that of the OTAs and depends on yet another industry giant.
It would be better if the hotel and its direct sale did not have to endure this, but since TripAdvisor is becoming a huge showcase and OTAs (Booking.com especially) are taking part in Instant Booking, not connecting your website to it could marginalise your business.
As the lesser of two evils, we recommend taking part.
The reasoning is the following:
Guaranteed profit. With a cost-per-acquisition model, you will not run the risk of costs soaring, as can happen in cost-per-click investments, especially in hotels with lower-mid costs and short-mid stays).
It does not demand a lot of control and monitoring. Due to the guaranteed cost effectiveness highlighted above, you will not have to monitor it regularly, which results in not having to waste time. Similarly, the hotel does not need to manage it as a new channel because it uses the existing rates.
If you do not put your “direct sale” onto Instant Booking, an OTA such as Booking.com will do it instead. Simple as that. To make the most of this showcase (and TripAdvisor is one of the most powerful ones), you have two options: either you pay TripAdvisor directly, or you pay via Booking.com commissions.
Where will the client click when he sees this result?
By taking part, you make certain users book through Instant Booking rather than through other existing options, and some potential cannibalisation scenarios will arise which need to be considered.
Instant Booking instead of Business Listings: A negative effect for you, however. You will have the fixed investment on Business Listings and now you will also have the Instant Booking cost. Will TripAdvisor lower the cost of its Business Listing now that it offers another way hotel direct channel?
Instant booking instead of TripConnect: The effect will be:
▪ Positive if TripConnect was costing you (on percentage) more than Instant Booking would cost now.
▪ Negative otherwise.
Instant Booking instead of OTA: Positive effect and likely it will happen. It is the great advantage of Instant Booking: you will reduce distributions costs, since you will go from OTA sales (20% average commission) to 12% or 15% plus the cost of your direct sale. You can save between 1% and 6% on each booking.
Your total sales will not necessarily increase with Instant Booking rather than OTAs, but rather you will be able to distribute them through more cost effective channels - that's the positive cannibalisation from OTAs to Instant Booking.
Instant Booking instead of direct bookings: Negative effect, although highly unlikely. Certain users used TripAdvisor as a search tool but would end up booking on the hotel website or another OTA Now, Instant Booking offers a more immediate and easier way to make that “direct” booking.
Compatible with TripConnect. TripAdvisor is the biggest showcase in the world and each square inch gained on its green is pure gold. The cost for you will be one or the other (not both) depending on the user’s choice.
Also, remember that Instant Booking guarantees up to 50% of appearances. You must protect the other 50%.
An example of Booking.com on TripConnect and Instant Booking at the same time:
Will taking part affect my position in the TripAdvisor ranking?
Involvement or not in Instant Booking does not influence your ranking which is based on rate and reviews. Altering this approach would impact TripAdvisor's credibility and impartiality in the eyes of the user.
However, more prominent ordering factors are being added to the “traditional” ranking, as shown below. Note “just for you”, which takes into account different criteria.
TripAdvisor now offers more services to the user than just listings and reviews. And the more involved the hotel, the greater the benefits.
Instant Booking is the latest of many changes in of online hotel distribution. As a hotel, you have two options: do nothing and leave OTAs such as Booking.com to make the most of the opportunity for itself, or fully embrace Instant Booking yourself and compete with the OTAs face to face.
NB This is a viewpoint by Pablo Delgado, CEO of Mirai. A version of this article first appeared on the Mirai blog and is republished here with permission.
NB2Image by Shutterstock