TripConnect is platform offered by TripAdvisor that allows hotels to market their booking engine on their TripAdvisor page. Are you a hotelier, hotel manager or hotel marketer looking to get more direct reservations and avoid costly OTA (Online Travel Agent) commissions? If you are, then you won’t want to miss this!
TripConnect actually contains two distinct parts: TripConnect Instant Booking and TripConnect CPC (Cost Per Click).
TripConnect Instant Booking
With TripConnect Instant Booking, hotels get reservations directly through TripAdvisor by connecting their booking engine with TripAdvisor. A Book on TripAdvisor option is displayed alongside the other OTAs that the hotel is listed on. Guests complete the booking on TripAdvisor and the reservation details are passed to the hotel through their booking engine. Commission payable to TripAdvisor ranges between 12% and 15%.
You may be thinking, Wait, how is this different from OTAs? It’s not! TripAdvisor has essentially positioned themselves as an OTA. To make things more confusing, OTAs, such as booking.com, will also be using Instant Booking. So that means that a guest can book through booking.com by going to booking.com, by going to TripAdvisor and then clicking a link to booking.com, or by going to TripAdvisor and booking through TripAdvisor. TripAdvisor has invited hotels and OTAs to come together, then forced them to fight with each other for the chance to form a relationship with a potential guest. This cruel, Hunger Games-like strategy may bode well for TripAdvisor and their 12 billion market cap, but what does it mean for hotels?
Essentially, the “risk” to a hotel for not using Instant Booking is having a guest reserve directly through an OTA. So, what’s the difference for the hotel? For a hotel who receives most of their bookings directly, using Instant Booking will give guests another non-direct, commission-based channel to book through, and may actually decrease direct bookings. What about a hotel who receives most of their bookings through OTAs? In this case, it comes down to commission. If a hotel pays an average commission of 15% to their OTAs, then paying 15% commission to TripAdvisor is really the same thing. However, if a hotel pays an average of 30% commission to their OTAs, then a 12%-15% commission may sound like a bargain.
So, you want to register your hotel for Instant Booking? Your booking engine must be a TripAdvisor Premium Partner. Hotels no longer need to sign up for a business listing before using TripConnect.
The second part of TripConnect is its cost per click (CPC) platform. With TripConnect CPC, hotels bid against the OTAs they are listed on in order to have their booking engine listed along with the OTAs on TripAdvisor. When a potential guest clicks on the hotel’s booking engine listing they will be taken to the hotel’s booking engine page. The place their booking engine is listed depends on their bid. Advertisers can specify different bids for different countries and also for desktop and mobile devices. TripAdvisor will suggest what bid is needed to put the hotel in first place and also offers insights along the lines of a bid of $x will put you in y place. Hotels also set a maximum daily budget. To use TripConnect CPC hotels just need their booking engine to be a TripAdvisor Connectivity Partner.
Okay, so you may be thinking, Great, so now my hotel’s booking engine is competing against my hotel’s listings on OTAs. It kind of feels like my hotel is paying money to compete against itself. True! It does. After all, we’re talking about TripAdvisor here. But before we write this off, let’s take a closer look. Suppose your hotel doesn’t use TripConnect CPC. A guest arrives on your TripAdvisor page. They put in their travel dates and voila, they see prices for your hotel on Expedia, booking.com and hotels.com. They choose booking.com because it’s displayed as the cheapest option, click on the booking.com logo and complete the reservation on booking.com. At the end of the month the hotel pays 15% commission to booking.com. Now, what if your booking engine was listed along with the three OTAs mentioned above, and has a rate that’s the same as booking.com? Or, maybe your hotel doesn’t sell its cheapest rooms on booking.com, and the rate displayed for your hotel’s booking engine is cheaper than the rate displayed on booking.com. Wow, says the guest. Why would I book with booking.com when I can get the same, or even a cheaper, rate by booking direct? Instead of going to booking.com’s website, the guest books directly with your hotel. They click your reservation system icon, complete the booking through your reservation system, and at the end of the month there’s no 15% commission. What have you spent? In this case, you’ve spent the cost of one click. Maybe $0.50. Maybe $1.00. Maybe a little more. The exact price depends on how the OTAs are bidding and what spot you’d like your booking engine listed in (we’ll touch on this in a bit). In any case, it will be much much less than the 15% commission. Of course, it’s possible some guests will click on your hotel’s booking engine and not book direct through the hotel, or not book at the hotel at all.
Let’s take a look at some common questions.
What place should a hotel aim to have their booking engine listed?
There is no 100% right answer for this, but not being in the top three is almost useless.
Ideally, hotels would be in the top two listings, so they are clearly visible on both the listing and hotel pages. If a hotel works with few or no OTAs, it actually makes it easier to have a higher ranking (fewer OTAs bidding). In fact, if a hotel only works with one OTA, even with not bidding at all, or placing very small bids, they will be in second place.
The difference between first and second place is debatable. If the hotel’s booking engine shows a lower cost than all the OTAs (we’ll touch on this later), then it could be reasonable to assume potential guests would be inclined to click the hotel’s booking engine even if it was in second place. TripAdvisor recommends bidding to first place (of course!), but the cost:benefit ratio may not support this. At the end of the day, it comes down to the additional bid needed in order to go from second to first place vs. the additional anticipated or measured return.
If a hotel has a business listing wouldn’t potential guests go directly to their site and book anyways through the “Hotel Website” link on their TripAdvisor page?
It is very likely that some guests who would have booked through the hotel’s site anyways will now book through TripConnect, and the hotel will have to pay for an additional click. It is also very likely that some guests who would have booked through an OTA would now book directly with the hotel via TripConnect. Bookings that originated from the Hotel Website link can be tracked in Google Analytics and compared to months when TripConnect CPC was not setup to see if there is a noticeable decrease in bookings originating from the Hotel Website link when TripConnect CPC is active. Total bookings from TripAdvisor (link and TripConnect CPC) after TripConnect CPC is active can be compared to total bookings through TripAdvisor (link) before TripConnect CPC was active to get a holistic idea of the real benefit of TripConnect CPC. The good news is that the reward:risk ratio is quite high: the reward is saving a 15% or 20% commission on a booking and the risk is paying for an additional click. Of course, as mentioned, it’s possible some guests will click on the hotel’s booking engine and not book direct through the hotel, or not book at the hotel at all. It should also be noted that having a TripAdvisor business account comes with a monthly fee as well.
How is the the actual benefit from TripConnect CPC calculated?
To make things simple, let’s assume 100% of a hotel’s revenue for an additional room sold is profit. When competing against other hotels, we assume if a guest does not book with our hotel, they will book with another. However, with TripConnect CPC a hotel is actually competing against itself on different booking engines.
Suppose Hotel A implements a TripConnect CPC campaign and receives an additional $10,000 in revenue (profit) from this campaign. Their campaign spend is $3,000. So, in other words, Hotel A needs to spend $3,000 to make $10,000 through TripConnect CPC. How much would they have spent without TripConnect CPC? Supposing guests who booked through the hotel’s booking engine via TripConnect CPC would have booked through an OTA via TripConnect CPC, and an industry standard commission of 20%, then without TripConnect CPC implemented the hotel would only need to spend $2,000 to make the $10,000. Of course it can be argued that some people who booked through the hotel’s booking engine via TripConnect CPC would not have booked at the hotel otherwise. However, more than likely, if a guest wants to book at a hotel he/she doesn’t really care whether he/she books directly or through an OTA. Additionally, having guests book direct has some other advantages, including upselling.
It’s important to develop a holistic strategy for measuring the ROI (Return on Investment) of TripConnect CPC campaigns. We’ll have to make some assumptions, but it’s important to take into consideration:
- Bookings generated by TripAdvisor before TripConnect CPC was implemented.
- The real risk, in most cases, of not using TripConnect CPC is not losing a booking, but rather having to pay a commission on that booking.
To make things simple, a very safe strategy is:
Revenue/Costs before TripConnect CPC:
A. Revenue: Monthly revenue from TripAdvisor business account link referrals (if any)
B. Costs: Monthly costs for the TripAdvisor business account (if any)
Revenue/Costs after TripConnect CPC:
A. Revenue: Making the assumption that guests who book direct through TripConnect CPC would have booked anyways through an OTA via TripConnect CPC, monthly revenue is:
- Monthly revenue from TripAdvisor business account link referrals (if any) +
- [Monthly revenue from TripAdvisor CPC] x [average OTA commission] (the additional revenue from direct bookings)
- Monthly costs for the TripAdvisor business account (if any) +
- Monthly costs for TripAdvisor CPC
What bidding strategy should we use?
TripConnect CPC is simple in the sense there are no keywords. The bids are the only things that really need to be determined, and there are two main bidding considerations:
- Bidding by country: Suggested bids for each country are not the same. Richer countries, such as the US and UK, generally have higher bids than poorer countries. Ultimately, bids will be determined by how the OTAs your hotel is competing against are bidding.
- Bidding by mobile vs. desktop: It’s possible to offer different bids for mobile and desktop devices. Google Analytics data can be used to guide the bidding strategy here. For example, if it’s determined that conversion rates for desktop devices are 5% and conversion rates for mobile devices are 0.5%, it would likely make sense to bid lower for mobile devices.
It’s also important to note that some OTAs adjust their bids daily, and will bid higher during peak times of the year, so bids should be monitored regularly.
What if it appears that it’s more expensive to book direct than through an OTA?
OTAs can be sneaky. Often times you’ll see prices on TripConnect split between the cost per room night and taxes per room night. The cost per room night is in bold, while the taxes are in smaller text under.
OTAs often split the total cost per room night into the cost per room night and the taxes per room night even if the hotel does not. For example, Hotel A has a total cost per room night of $200 and may include taxes in its rates, so when guests book direct they see the total cost at all stages of the reservation process. Hotel A may have loaded their rates on booking.com in this fashion as well. However, booking.com knows that Hotel A is in England and England has a 20% VAT on all bookings. Therefore, when booking.com displays their rates on TripConnect CPC for Hotel A, the total cost per room night of $200 is split into $167 + $33 in taxes. However, when Hotel A displays their rates on TripConnect CPC they are shown as $200 per room night with $0 in taxes. This is very important even if the total is the same. Many people will not bother adding the two rates together. They will simply book with whoever has the lowest cost per room night, excluding taxes.
Therefore, it is important that hotels:
- Have an equal (or lower, by only selling the cheapest rooms direct, or have direct booking promos) total cost per room night than all OTAs on TripConnect.
- The rates are displayed on TripConnect such that the taxes are separate from the room cost in order to compete with the OTAs
At the end of the day TripConnect CPC can be a very valuable tool for a hotel to increase direct bookings. However, the points above need to be considered when implementing this potentially powerful marketing tool.