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March 11, 2021updated 25 Apr 2022 4:07pm

TripAdvisor’s new subscription service represents potential boon for lodging industry

Tripadvisor's subscription service provides an opportunity for hoteliers to boost visibility for free, and this will act as a lucrative opportunity in light of decimated revenues due to Covid-19.

By Globaldata Travel and Tourism

Tripadvisor’s subscription service provides an opportunity for hoteliers to boost visibility for free, and this will act as a lucrative opportunity in light of decimated revenues due to Covid-19.

Hoteliers typically rack up hefty costs through online distribution and third-party commissions when working with online travel agents (OTA). However, when signing up to Tripadvisor Plus, there are no upfront costs and zero commission rates. Rolling out across the first half of 2021, this new service also acts as a key differentiator for Tripadvisor within a highly competitive marketplace and, if successful, could challenge the likes of leading OTA’s Expedia Group and Booking Holdings.

Cost reduction remains a primary objective

Cost savings remains one of the primary objectives for hoteliers as the industry grapples with the effects of the pandemic on travel demand. GlobalData’s Live Tracker Poll found on its verdict site that both reducing staff headcount (13%) and salaries (13%) were two of the most common actions taken by hotels during Covid-19 to save on outgoings.

Different from traditional OTA merchant and agency models, hoteliers can list their services on Tripadvisor for free. The only requirement is that a minimum discount of 10% is provided for travellers that subscribe, alongside other perks, such as complimentary wine, spa packages and room upgrades. The better the offer, the higher the hotel is likely to rank in search results, boosting its visibility and leading to more bookings and an improved retention rate.  

Travellers will be the ones to pay by signing an annual membership fee of $99. The success of the platform depends on both customers and businesses that sign up. With travellers looking for the ultimate getaway at an affordable price and businesses still striving to reduce costs where they can, the odds appear to be in Tripadvisor’s favour with this new venture.

Differentiation is needed

Tripadvisor Plus differs from other leading OTA services such as Expedia Group and Booking Holdings, where lodging providers typically have to pay hefty commission fees. The launch of this service marks a game-changer for the industry.

Throughout the pandemic, Tripadvisor has also strived to support small, independent businesses across its platforms. During Covid-19, the Tripadvisor Foundation embarked upon a partnership with Small Business Live to support small businesses most at risk from the pandemic. The OTA market is known as highly competitive. Demonstrating its support for smaller companies throughout this pandemic is an important differentiation point for Tripadvisor and shines a positive PR light on the company’s progress, which should complement the rollout of its subscription service.

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