On one hand, the first reaction would be to resist. It does not seem ideal to advance towards a scenario in which the direct sale, whose main objective should be cost reduction and increase of hotel independence, is obliged to withstand a cost level close to that of the OTAs and depend on another industry giant.
It would be ideal if the hotel and its direct sale did not have to endure this but since TripAdvisor is becoming a huge showcase and OTAs (and now, Booking.com especially) are taking part in it, not connecting your website to it would marginalise your business.
As the lesser of two evils, we recommend taking part.
The reasoning is the following:
- Guaranteed profit. With a CPA model, you will not run the risk of costs soaring (like it can happen in CPC –cost-per-click– investments, especially in hotels with lower-mid costs and short-mid stays).
- It does not demand a lot of control and monitoring. Due to this guaranteed cost effectiveness, you will not have to monitor it regularly, which results in not having to waste precious time. Also, the hotel does not need to manage it as a new channel because it uses the existing rates.
- If you do not put your “direct sale”, an OTA like Booking.com will do it instead. Simple as that. To make the most of this showcase (and TripAdvisor is one of the most powerful ones), you have two options: either you pay directly or you pay via Booking.com commissions, which, in any case, will be there anyway.
Where will the client click when he sees this result?
- Cannibalisation risk. By taking part, you make certain users book through instant booking rather than through other existing options. Some of these transfers may take place:
- Instant booking instead of Business Listings: A negative effect for you, although. You will have the fixed investment on Business Listings and now you will also have the Instant Booking cost. Will TripAdvisor lower the cost of its Business Listing now that it offers another way to reach the hotel direct channel?
- Instant booking instead of TripConnect: The effect will be:
▪ Positive if TripConnect was costing you (on percentage) more than instant booking would cost now.
▪ Negative otherwise.
- Instant booking instead of OTA. Positive effect and likely it will happen. It is the great advantage of instant booking: you will reduce distributions costs, since you will go from OTA sales (20% average commission) to 12% or 15% plus the cost of your direct sale. You can save between 1% and 6% on each booking.
Clarification: Your total sales will NOT increase with instant booking, but rather you will be able to distribute them through more cost effective channels. In other words, you will NOT sell more. The advantage is in the transfer of bookings through channels, in that positive cannibalisation from OTAs to your direct sale.
- Instant booking instead of direct bookings: Negative effect although highly unlikely. Certain users used TripAdvisor as a showcase but they would end up booking on the hotel website on another tab, session, etc. Now, instant booking offers a more immediate and easier way to make that “direct” booking.
- Compatible with TripConnect. TripAdvisor is the biggest showcase in the world and each square inch gained on its green is pure gold. The cost for you will be one or the other (not both) depending on the user’s choice.
Also, remember that instant booking guarantees up to 50% of appearances. You must protect the other 50%.
An example of Booking.com on TripConnect and instant booking at the same time:
- The best showcase, within your reach. For the most advanced users, the best strategy is not only connecting to instant booking but also removing all of the intermediation from it. In other words, requesting Booking.com and the rest of the OTAs (many of whom you do not have contracts with and feed off bed banks) to give way and not bid to be on instant booking, since it is a showcase where you, as a hotel, can get there by yourself. Remember that the aim of intermediation is to reach where you can’t.
- Will taking part affect my position in the TripAdvisor ranking? It does not influence the ranking based on rate and reviews. Altering it could endanger its credibility and impartiality in the eyes of the user.
- However, more prominent ordering factors are being added to the “traditional” ranking: by price, by distance and, above all, “just for you”, which takes into account different criteria: among them, as is to be expected, is probably each hotel’s bookability.
TripAdvisor must not be though at “the website with the listings by reputation”. Now, it offers more services to the user and, the more the hotel takes part in them, the more it will benefit from the benefit that it will bring it as a showcase.
Instant booking is a new transformation (the latest of many) of online distribution. As a hotel, you have two options: do nothing -and leave OTAs like Booking.com jump on the bandwagon of change and make the most of the opportunity- or jump on the bandwagon yourself and compete with the OTAs face to face. You decide.
- What is TripAdvisor instant booking and how does it work?
- Tripadvisor instant booking in detail
- Has TripAdvisor become an OTA?