
"We get conflicting reads from different chains. Some have said, sure, happy to sign up at a 5% commission.
But that wouldn't work for us economically. Their properties are paying an online travel agency (OTA) 15%, so they might be paying 12% for direct via metasearch, and if now they want 5% via instant book, that doesn't work for us.
But somewhere in-between we shall meet.
We're a great source of free branding for the hotels, a great source of traffic as a billboard effect -- even when consumers don't book via TripAdvisor in the end.
Many chains, while they are happy to be partners with Expedia and Booking.com, in order to fill up their rooms, they're looking to lower their distribution costs and lessen their dependence on those particular brands.
Since many of our bookings via metasearch, at the end of the day, our clicks go to Expedia or Booking, which then make the transaction. Instant book is a way of taking the transaction and giving it to the hotel direct instead.
Chains also want to establish a direct relationship with the consumers. We send them information about who is doing the booking, something the OTAs don't.
We can also help them with a hotel's branded app download or some other mechanism by which they could get a more loyal customer. We don't view that as antithetical to our business model.
Again, I think it's more a matter of time than anything in our offering that they don't like.
Hotel chains say, "you're just another distribution channel, and we're trying to get more direct business."
My counter to that is always, but the bookings we're generating are often already going through third-party channels. Instant booking would avoid that.
But it's a tougher one for them to swallow when their core focus is doing direct bookings.
They think, just as we started with Booking.com and the other OTAs at a low percentage commission, and then those ratesgrew over time, we don't want that to happen to you guys, too, because you're already pretty big TripAdvisor.
And my counter is that, if you think about it logically, we're helping to reduce your dependency on a couple of big players which is a good thing from your perspective.
Would I take a lower commission to get them in the store and deliver that direct experience, sure. But not at 5%. But it doesn't have to be exactly as much as what someone else is paying.
Ultimately Instant Book will evolve to a bidding environment in which the supplier will likely have the advantage because they get to tag their brand on their, and that will, we believe, carry a higher conversion rate.
If I were a US based hotel chain, I would be much more concerned about OTA dominance now that Travelocity and perhaps Orbitz are on their way to being absorbed. We haven't heard a lot of that directly from suppliers, perhaps because we're in the midst of various negotiations with them and they may not want to share that concern.
As for the major OTAs, they have a strategic reason for sitting on the sidelines for now. If they change their minds and decide to join, that's great.
If not, to be perfect clear, the OTAs are phenomenal partners with us but I don't need them to participate in instant book in order to deliver the benefit for the consumer that we're looking for.
The footprint of the big OTAs we can get through other partners, and we've started our march on connecting the independent supply. So having those players in the instant book auction will achieve our user objectives at the end of the day.
Trivago has come on very strong. Kudos to both Kayak and Trivago for getting the level of consumer adoption they have on a global basis.
We compete with them in meta, but that hasn't affected our other business relationships with their parent companies.
Priceline, Booking.com, Agoda, Expedia Inc, would all tell you that TripAdvisor is a valuable source of high-quality leads.