Last July, Tnooz was the first to report that TripAdvisor, the user-reviews giant, planned to let independent hotels and B&Bs participate in its metasearch pricing display.
Today, TripAdvisor launched the international service, dubbed TripConnect. Hoteliers pay for every click they receive, and can cap daily spend.
Change to the online travel eco-system
For the first time, independent hotels and bed and breakfasts worldwide can bid directly in auctions to drive traffic from TripAdvisor to their websites. Owners of small properties can now push users to their own booking engines, sidestepping middlemen like online travel agents (OTAs) and Google search results.
In August, TripAdvisor CEO Steve Kaufer made comments about this product launch at the Canaccord Genuity Growth Conference. He said that, "in the scheme of things" the roll out of TripConnect is "probably pretty small from an OTA perspective."
Accommodation owners can theoretically try to outspend the major online travel agencies for the top positions, though that would be an expensive exercise.
Yet Google may see many hotels shift digital marketing allocations away from its AdWords (and Hotel Finder) toward TripAdvisor TripConnect.
Kaufer said:
"We always compare ourselves to Google because our clients' two biggest channels, in our opinion, are 'I'm spending on Google SEM' or 'I'm spending on TripAdvisor.'"
"With TripConnect, we're making the right steps to bring other players into the auction, including other players who aren't online at all. So I can monetize a higher percentage of all of my traffic. So it's like, very comfortable that the right long-term steps are in place even if quarter to quarter it's going to be bumpier than we thought."
From a hotel owner's perspective, TripAdvisor's leads may turn out to be more qualified -- and have better conversion rates -- than those from Google SEM search engine marketing (SEM). The reason is simple: By the time a traveler is at the point of using TripAdvisor's metasearch tool, they're most likely looking to book rather than merely do research.
TripAdvisor wouldn't reveal any expectation of whether hotels would be lured into increasing their overall digital spend because of the product, or if the money would simply be moved from other channels.
Unclear how fast it will grow
Tnooz asked Jean-Charles Lacoste, a vice president of direct connect solutions, about the company's expectations for TripConnect. He said:
"We haven't put a forecast on this product, because we've never made a product like this and we don't know how to model a prediction."
"We're receiving a lot of inquiries. More than 100 Internet Booking Engines (IBEs) have been certified to participate, and another 100 are in the queue to be certified. They represent about 100,000 hotels."
Currently TripAdvisor has 50,000 hotels subscribing to its Business Listings, which it requires hotels to join to participate in the new TripConnect service. Subscription fees vary, but start at a few hundred dollars a year.
There are 700,000 hotels listed on TripAdvisor, though, and more than 1.1 million accommodations listed -- so the potential market is vast.
How will hotels use TripConnect?
Adds Lacoste:
"From a hotel owner's perspective, I'm expecting that they'll see it as, "the more traffic you buy the more revenue you earn. So it pays for itself."
"My expectation is that hotels will bring back the cost per click on TripConnect to a cost of acquisition percentage that can be compared to the commission equivalent they would pay to the OTAs. So I don't think they'll necessarily allocate a budget to TripConnect. In a sense, it will pay for itself."
"For example, at $1 a click, and if it takes 10 clicks to get a booking, then the cost of acquisition for a room that's at $100 is 10%. I'm assuming hotels will do the same. And because it will be a fairly stable cost of acquisition, if they need the channel to fill unmet demand, they'll let it run as long as it's profitable for them."
Lacoste said he had no sense of what the ultimate mix of participation in TripAdvisor's metasearch product will be, meaning what proportion of its auction revenue will come from OTAs, major hotel chains, and small independents once the product matures.
Speed may have won again
Lacoste was approached by Kaufer in March 2013 to oversee the project. "It's been a great, great, great challenge," he said, saying that identifying who the best IBEs are and setting up the product in such a short time was a major achievement. About five to 10 engineers were working on the product at any one time.
From a development standpoint, the biggest breakthrough was realizing that it was a fool's errand to try to establish an application programming interface (API) for each IBE.
Says Lacoste: "We instead created a public API and invited developers from certified IBEs to code for it. We put a dev server in place with clear explanations and sample code."
New design, too
In other news, TripAdvisor has begun to roll out its first modifications to its home page, hotel pages, and global navigation bar since 2010.
The homepage now shines an even brighter spotlight on user-generated content, especially photography and the five-star rating system. The typography throughout the site has also been updated, and there's more green everywhere.
Kaufner certainly has more green on his mind, but it's probably of the hundred-dollar-bill variety.