Times are tough for all players in the tourism industry, and online platforms are no exception. With the collapse in the number of bookings, their entire business model is suffering.
For a platform like TripAdvisor, there are no many ways to make money: charge professionals (hotels…) or customers.
An under-monetized customer base for TripAdvisor
Up until now, the platform has been paid exclusively by industry professionals, taking a commission on sales. Needless to say, this is a business line that has seen a considerable decline in recent times, even if we can’t compare the situation of a digital pure player with that of a player whose business is based more on tangible, non-scalable assets.
This highlights the need to better monetize the customer base. A subject that existed before the crisis and should have been addressed anyway, given that the platform itself admits it was a major flaw in their business model today, and that the crisis has made it all the more urgent.
TripAdvisor Plus: more services for a subscription fee
That’s why TripAdvisor has launched TripAdvisor plus: a subscription-based service (still in beta) that gives members benefits when they make a reservation.
For $99 a year TripAdvisor plus offers its members various benefits such as free upgrades, free meals, free services... benefits vary from hotel to hotel.
TripAdvisor Plus: a paying loyalty program?
From a distance, it looks a bit like a loyalty program, but with a charge, at least if you look at the benefits it offers, which are those enjoyed by members of such programs.
However, this should not be seen as an approach aimed at diverting customers away from hoteliers’ direct channels, but rather as an initiative to better retain and monetize existing customers, or even attract those from competing platforms.
Today, the choice for members of a hotel loyalty program is clear: it’s in their best interest not to book through an online agency, as the hotel won’t count their stay and give them the benefits to which they are entitled. And there’s no reason for that to change. OTAs will never be cheaper (no matter what people think) than hoteliers direct channels and this type of customer prefers to have advantages that are linked to their person and not to a distribution channel.
But this only applies to high-income customers, who are very loyal to direct distribution channels, which reward “big” customers with loyalty programs.
On the other hand, TripAdvisor plus is a good alternative for those who don’t travel enough to achieve “interesting” status and wonder whether it’s worth joining a program that restricts their freedom of choice without necessarily giving them any significant benefits.
If the offer lives up to its promise, TripAdvisor Plus will provide them with the benefits of an intermediate status member, without the effort required to achieve it. All to their advantage.
But then again, we’re not talking about the same kind of customer, so we don’t think this is a trade-off that many customers will have to make.
For TripAdvisor, on the other hand, this represents an interesting lever for monetizing its customers, building loyalty and poaching those of its competitors.
And for once, an OTA is thinking up an offer for its customers and not for professionals…
Will customers want to pay for TripAdvior Plus?
Given the benefits offered, it’s well worth the price. Provided, of course, that as many hotels as possible take part, and that the promised benefits are actually offered.
Let’s look at Amazon Prime, which is roughly comparable. While Prime subscriptions are not a major source of revenue for Amazon, its members spend much more than others and are more loyal.
Maybe TripAdvisor Plus won’t be the choice of the majority, but it will be the choice of those who TripAdvisor wants to keep at all costs. Win-win.
Image : Trip Advisor by Gil C via Shutterstock
