Tripadvisor sees new product as a key to its 2021 fortunes


Tripadvisor sees new product as a key to its 2021 fortunes

Tripadvisor Plus, Tripadvisor's new membership program currently in beta testing, is a key priority for the company in 2021, CEO Steve Kaufer said.Kau

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Tripadvisor Plus, Tripadvisor’s new membership program currently in beta testing, is a key priority for the company in 2021, CEO Steve Kaufer said.

Kaufer discussed Tripadvisor Plus in detail on the company’s fourth-quarter earnings call Friday morning.

Tripadvisor Plus, announced last November, allows travelers who purchase an annual $99 subscription to receive deals and perks from hotels that sign on to participate as well as on Tripadvisor’s bookable experiences.

The beta rollout of Tripadvisor Plus is still in “pretty early days,” Kaufer said, and is taking place in the U.S. only. Tripadvisor plans to
officially roll out Plus in the first half of 2021, with a rollout to other
English-speaking markets to follow.

On Friday’s call, Kaufer described the program as a “win-win-win” for travelers, Tripadvisor and suppliers. The traveler, he said, will receive perks and discounts. Tripadvisor gets the subscription fee and a recurring revenue stream, and the hoteliers are gaining bookings for the same, or better, distribution costs as with other channels. They are also benefitting from preferred placement on Tripadvisor, he noted.

Tripadvisor is offering consumers discounts by taking what would normally be a commission for selling a hotel and passing that on to the subscriber, Kaufer said. That, combined with a perk the traveler will receive, “becomes something pretty compelling for the consumer.”

The target audience for Tripadvisor Plus is travelers who typically take more than one trip each year, growing the value of their membership.

CEO Steve Kaufer described Tripadvisor Plus as a

CEO Steve Kaufer described Tripadvisor Plus as a “win-win-win” for consumers, suppliers and his company. Photo Credit: Jamie Biesiada

Tripadvisor is promoting Plus via owned channels, particularly when the value of the deal a traveler would receive on the hotel is in excess of the $99 membership fee. Kaufer said the ideal audience for Plus already exists, and its travelers are willing to transact via Tripadvisor. In pre-Covid days, the site saw more than 400 million views each month and served 1 billion travelers per year, according to the CEO.

“If it’s only 10 million that sign up for Tripadvisor Plus, that’s still less than 1% of our annual traffic,” he said. “But 10 million signups times 100 bucks, and obviously the math looks pretty nicely in a returning subscription revenue.”

He acknowledged that is not likely immediately after Plus launches out of beta, but he said he believes there is a “huge market” that will eventually embrace the product.

Some churn among subscribers is to be expected, but with discounts that exceed the subscription fee — especially for those who take more than one trip per year — Kaufer  said he believes re-upping a subscription will not be a difficult ask.

• Related: With Reco, Tripadvisor’s door opens, admits living, breathing trip advisors

Right now, deals and perks are available for more than 100,000 hotels. Tripadvisor has used traditional discount and perk aggregators to build that supply and also continues to sign properties up via its direct sales force.

Kaufer said Tripadvisor is not signing hotels on with long-term contracts and does not require that, for instance, a property guarantees discounts on every room. The distribution channel can be tuned to meet a property’s particular needs.

CFO Ernst Teunissen said the average discount on a hotel stay is around $250. With a $99 membership fee, subscribing becomes a “no-brainer” for travelers. Then, similar discounts available on later trips come without a fee in that year of membership.

All bookings are completed on Tripadvisor’s website, Teunissen said.

According to Teunissen, in 2019, there were 160 million instances in which Tripadvisor visitors expressed enough interest in a property to use its meta-auction and click off the site to an OTA.

“We think of it as shots on goal — 160 million opportunities,” he said.

In the fourth quarter of 2020, Tripadvisor revenue fell 65% to $116 million. The company recorded a net loss of $73 million.

For the full year of 2021, revenue fell 61% to $604 million, and the company recorded a net loss of $298 million.