This is the continuation of a series of articles spun out of tnoozLIVE@Arival, recorded live at the Arival in-destination event held at the LINQ in Las Vegas. More clips to come! To learn more about how to bring tnoozLIVE@ to your event, please email Kerry Cannon.
TripAdvisor's shift into instant bookings several years ago signaled an expansion in ambition for the company. The core value proposition of user-generated reviews expanded into the ability for travelers to make decisions and act on those decisions right there on site. And while hotels certainly make up a significant portion of the reviews on site, tours and activities are a major aspect of the reviews contributed by users.
Given the scale and scope of the in-destination segment, it's no surprise that TripAdvisor had a significant presence at the Arival event in Las Vegas.
As part of our tnoozLIVE@Arival series, we sat with the guy in charge of business developer and strategy for the tours and activities sector at TripAdvisor, Ben Drew. The clip is below, followed by the full transcript of the interview.
Ben: Thanks very much for having me. First of all my name is Ben Drew. I am vice president business development trip at TripAdvisor. I focus on the attractions industry, as well as the rentals industry. I have responsibilities in both. I'm from the UK, and moved over to Boston about three years ago.
Nick: So you moved from the UK to lovely Boston. Maybe a little more snowy, not that the UK is more temperate. How's that transition?
Ben: It's been an interesting transition. I love being in the U.S. I do miss it when I go back to London. There are certain things about it that when I'm there that I kind of remember. But it's very hard to remember when you're not there. But I do love it over here as well and I'm very pleased to be in Las Vegas too, which is a bit of a different place to Boston I gotta admit.
Nick: Absolutely. I'm not a snow person. I can't do that. Let's talk about tours and activities. Obviously is a big part of what you offer. User-generated reviews, plus bookings. How is that going? Walk us through some background for those who maybe aren't familiar when you went from offering user-generated reviews to offering up more on-site experience.
Ben: Let me take you back to the kind of early days of TripAdvisor, where TripAdvisor had an unparalleled advantage in the hotel space. There was this tremendous asset of reviews that TripAdvisor had built up. Pretty early on, we realized that that wasn't going to last forever. Especially in this world that moves very fast in the online space: Expedia is collecting reviews, Priceline is collecting reviews.
So over time, we needed to branch out. We needed to develop capabilities and businesses in other parts of the travel space to complement those areas.
And now, you can use TripAdvisor still for hotels, right from a five-star hotel through to a campsite and anything in between including vacation rentals and inns and bed and breakfasts. But you can also use it to find things to do when you're in destination. You can also use it to find restaurants where you might want to eat out when you are in a destination or for that matter in your local market.
I can see the future kind of expanding that more and more. I mean TripAdvisor is a travel-centric brand but we've done a what I think is a pretty decent job in opening up the tours and activities vertical.
Nick: For those who are still mid to smaller size, who either want to be bigger or comfortable where they are, do you think that the bookings are a viable channel of business for them, to make sure that the people who are doing the research want to book with them?
Ben: That's a good question because a lot of the research indicates that this market, in particular, has a very fragmented base of supply. I think half, or maybe a little over half of all the suppliers that are considered within this space, have gross sales of less than $250,000.
So one of the challenges is actually bringing together all of that supply in a way that's consistent and allows the traveler to sort easily through the different options that may or may not be available. So that's kind of some of the industry dynamics over time.
Maybe it will consolidate, maybe it won't. That's one of the interesting things that we're of looking to work out. Very much so, that if you want to win in this market, you have to play in that small space.
We have to play with the suppliers that on the small end of the spectrum and produce solutions that are very customized to them. That's what we're doing right now when we're essentially overhauling and rebuilding our extranet to allow suppliers to increasingly manage their business -- certainly manage their marketing and review collection practices online. Very much targeting those sort of suppliers.
Nick: So for the consumer, really it does come down to direct booking. Completing the process is kind of an essential next step in the mobile experience. Would you agree?
Ben: We see it as essential. We see ourselves as solving a traveler problem and that problem is that when you turn up in that destination, historically you probably didn't have anything booked. And you probably didn't consult many sources when you were looking to book your tour or activity.
With TripAdvisor you can source all that knowledge from the accumulated base of wisdom that is there on TripAdvisor. And you can book, so that you can plan your vacation around the things that you want to do while you're there.
You brought up a good point with mobile. The mobile bookings that we're seeing, or the mobile interactions with the site that we're seeing a little bit different to the desktop as you might imagine.
Mobile bookings tend to be lower in value. They tend to be more last minute and they tend to be made from within the destination themselves. And that will make sense. It's often a less considered purchase, something on desktop would be much more considered and probably be a more complex product with a higher average value. And mobile is growing a lot faster than desktop.
So one of the challenges that we are solving is to make the mobile experience more bookable and higher converting.
Nick: Is that something the suppliers know to ask for? Do they kind of look to you guys to help fix this? What's the sophistication of the suppliers?
Ben: Well, that's a good question. Most suppliers, if you talk to them about their marketing strategy, they will say, 'I have my own website and I use online travel agencies such as Viator and TripAdvisor, in addition to that.
About 60 percent will say that they have those things, plus they use the online tools. And when you talk about mobile commerce, that number falls to 40 percent. And actually I was surprised, because 40 percent is still quite a high number of suppliers using mobile commerce. But it's substantially lower than those who use desktop.
There is still a way to go from where we are today to where we need to be to allow travelers to book online while they're in destination on their mobile.
Nick: Would you guys see yourself as kind of the primary spot in helping people distribute further on other channels? Is it that I can put my inventory in one place and you would help me make sure it's everywhere it could be booked? It seems to me, as a supplier, that it's just a lot of work. If I'm making 250k I don't have time to manage 50 channels.
Ben: Yeah. Well, it depends on the supplier. Some small suppliers are perfectly willing and able. They do a great job of managing their tours and activities using the software that we provide and that anybody can sign up for.
Then there are the suppliers at the other end of the spectrum, who actually have the funding and the need for a customized piece of software that they can build themselves.
And then there are those suppliers in between. And that's where it gets interesting because those suppliers are big enough that it's quite challenging for them to manage their marketing on using just the tools that an OTA has. But not yet worth investing in a piece of software.
And for them, there are a number of emerging software products. Many of many of which are available both in the U.S. and beyond. And Viator actually has deep connectivity. So if you choose one of those products to help you run your business, it actually makes the quality of your listing on Viator and TripAdvisor much better.
Nick: Which makes sense to centralize, and then allows you to manage your reviews and making sure that you're always focused on that which is so important.
Ben: Moreover it saves you time. What I want I would say is that some of those suppliers are kind of evolving not just to be providers of software but to be providers of e-commerce support. They tie their own fees to how well you do...which is exactly what we have always done with our commission model. If you don't make money, we don't make money. So that's an interesting model. Yet to be seen whether that will take hold in the software space but an interesting emerging trend.
Nick: There's that kind of business model tension that we see sometimes.
Ben: At TripAdvisor, we span the hotels, rentals, attractions, restaurants and we see a similar kind of dynamic in many of those verticals where you have segmentation by size.
In tours and activities, I understand that about 50 percent of suppliers in the U.S. already use some kind of software and 10 percent intend to look into it or investigate using it. Leaving 40 percent that is still at the end of not.
Nick: So what do they do? Are they really just kind of like call in and take a sheet to get information?
Ben: Yeah, could be Excel spreadsheets, could be pen and paper That isn't to say that that's a bad way of doing it. A lot of these businesses are built very effective operations and that's great. But it's always using the tools that are most suitable for where you are.
Nick: And there are so many different types of suppliers. Some people are perfectly fine making 250k. My life is good. We've talked a little about dynamic pricing, and moving what is now kind of table stakes in other industries into tours and activities. More and more folks are doing this, and thinking about demand curves and you know when and where. What do you guys think about that? Does that make sense for tours and activities?
Ben: I think it's an interesting question because in hotels, and other verticals, yield management -- which is the practice of raising prices when demand is high and lowering prices when demand is low so that your price is always a balancing factor between supply and demand -- has become commonplace. The hotel company will have an entire team of revenue managers.
I remember, three years ago in the vacation rental space we looked at rentals and noticed there wasn't a lot of yield management going on amongst owners and property management companies and said there's no reason why this shouldn't follow the hotel market.
And largely that has been correct. There's been a lot of progress within the vacation rental industry. It's not there yet by any means but there's been a lot more progress and more funding in that space a lot more products providing services that accomplish that goal. So I think the same will happen here. Typically, these things tend to happen faster than you expect. You might imagine it's a long way off, it's a long way off. But I have a suspicion it will probably come to us faster than we might imagine because there's a lot of money to be made.
Nick: And the data is there. You guys obviously know search volumes and you have a lot of that information about, is my tour or popular at this time. So all the information is easily grabbed and it's kind of about acting on it.
Ben: It is. It is kind of easily grabbed. I do think though that developing a deep competency in that is something that probably comes a little bit later after we've really solved or really made big strides in solving the traveler problem and the supplier problem. How do they work with us in the easiest, effective, high-quality, frictionless way on the supply side and then how does the traveler find that supply and how do we match them. Those are the fundamentals of a marketplace and the science of pricing up and down it, tremendously valuable. Probably a secondary problem compared to those two.
Nick: Are you seeing particular trends with the traveler behaviors on TripAdvisor that are interesting? Maybe the way they're using the site, or the mobile versus desktop. There's always an advantage to having a bigger screen. Are we at mobile saturation or do you see it continuing to run as far as the percentage of views and use?
Ben: I can't speak for all of TripAdvisor by is but with the areas that we focus on here in tours and attractions, mobile continues to grow much faster than desktop.
And a lot of that is related to the destination aspect. One of the products that we offer as a skip the line type of product where you know you want to go to a popular tourist attraction, there's a line in order to buy a ticket. But if you buy it on your cell phone there and then you can skip the line. A lot of people find this product while they're in the destination and go I'll turn up. But then they see the line and then they buy the product. Those kinds of things is becoming more and more popular for an obvious reason that it's a great product. Some of that is driving mobile adoption.
Nick: I love it when I see things kind of get segmented and make something into a premium version. You know how it can keep giving people new ways to buy.
Ben: We have things like the Met in New York. And you can obviously go and visit the Met but you can also buy a tour from a qualified art historian before the doors open so that you're in a private tour with a small group with somebody who knows what you're looking and can educate you when there's no one else in the entire museum.
It's products like that that are unique and give people great experiences and often they get found in destination whilst you're wondering what I should do with the time before breakfast tomorrow morning.
Nick: But really focusing on the experience which is the whole point. And you'll pay a little more for it.
Ben: And it's a very memorable experience.
Nick: Last couple of questions. How do you market what you guys do at TripAdvisor in your particular vertical?
Ben: We have a tremendous sales team that is on the phone contacting suppliers. Apart from being the largest global collection of suppliers, we're still pretty small in the market. Our market share is low compared to what we don't have, not necessarily compared to other competitors, but compared to what's out there. There's a tremendous amount of supply and suppliers that we don't yet work with. So we have a great sales team that is constantly on the phone connecting with our suppliers as we come to conferences like this. We do a huge amount of marketing online to find and onboard new suppliers.
Nick: And probably a lot of education. For those 40 percent remain that aren't maybe digital?
Ben: And just understanding what those suppliers are looking to get out of it. Often they're looking at different things. It's not just distribution, it could be review collection. It could be all sorts of things. Every supplier is different.
Nick: Final question, one I've been asking everyone. Arival is a first-time event. Why did you what did you guys come here and what do you really hope to gain out of being here? Talk a little bit about that desire to be here and participating for this first time.
Ben: I admire what Douglas has done for this event. I think he's pulled together a tremendous gathering and a gathering that this industry has not had in the past. He was telling us his story about how he did it earlier. And it's a very inspirational story. I think his leadership on this event has been a tremendous asset to making it happen.
We've got about 10 people from our team here. It's a perfect opportunity to get in front of suppliers and to hear their feedback and really kind of deeply hear their feedback. We're out of the office. We're out of our day jobs. We haven't quite turned our phones off but we pretty much turn the phones off and we have to listen to those suppliers that we've for a long time have relationships with. We're spending some quality time.