Tripadvisor has formally launched its subscription service to US customers, as it looks to transition its business model out of the pandemic. The move comes as other hotel groups, from CitizenM to Soho House, look to the recurring revenues of subscriptions, as a way to build baseline income.
A new, USD99 per year subscription will give Tripadvisor members access to a range of travel deals, including the promise of discounted hotel deals. As well as savings on accommodation, members will be offered discounts on experiences such as tours and attractions, special car hire rates from Hertz, personalised advice and flight deal alerts.
Lindsay Nelson, chief experience and brand officer, called Tripadvisor Plus “a programme that helps members become better travellers by saving them money so they can get more out of every trip they take. You can save more to spend more on what you’ve been missing, whether a quick weekend away or a postponed honeymoon.”
The company claims many new subscribers will more than make their money back on a first booking, with “an average of USD350 savings per stay”.
Hertz, as car rental partner, will not only give subscribers instant “Five Star” status within their own loyalty scheme, but will also actively promote Tripadvisor Plus subscriptions to their own car rental customers.
On a previous earnings call, CEO Stephen Kaufer commented: “We see a huge opportunity ahead and fully expect that Plus is going to be a very exciting part of our future. Converting even a small percentage of engaged Tripadvisor traffic, not to mention the hundreds of millions of visitors per month that are searching on Tripadvisor for hotels and experiences, implies a potential long-term growth opportunity of tens of millions of subscribers and a multibillion dollar recurring revenue stream.”
“We’re absolutely dedicated to making a win for hoteliers just as much as it’s a win for the travelers.” Speaking of a trial in the US, he added: “What we’ve learned over the past couple of months is that a number of chains and independent hoteliers really like what we’re doing. They’re perfectly comfortable with how we’re displaying the Plus, our merchandising, how we’re — how we require a traveler to buy a Plus subscription in order to book at discounted rate.”
Kaufer said the model was about curation, rather than domination: “We don’t need every property. We just need a few dozen in all the geographies that people are traveling to. So, it may take a little longer than others for some of the chains to hop on-board, to see the benefit. But we want to make sure all of their properties, again, get the share of bookings that Plus will be driving.”
“The basic model we’re working with….is that we’re encouraging hotels of all types to identify a discount that we are able to pass along to the traveller. And we’re in fact passing along the entire discount they’re able to offer to be kind of the most beneficial to the consumer to get them — to get that consumer to book to the properties.”
“There is a minimum discount when we sign up the hotels, but that is something that they can kind of toggle up and down depending on their demand needs at a particular point in time. Of course, down the road, we could always choose to not pass along the full discount to the consumer, but that’s not our plan at the moment, as we want this to kind of catch fire with consumers as quickly as possible. Maximizing the discount is one way to do that and we’re still making our money on subscription and growing that recurring revenue stream.”
“If we have a lot of properties with a very small discount, it doesn’t move the needle for us. But when we’re getting the 10%, 15%, 30%, 40% discounts, those become best sellers pretty quickly and we’re really helping those hotels fill that empty room and that’s why — that’s why the whole model is so powerful.”
“We’ve been in the lead generation business for hotels, the transaction business just like the other OTAs for experiences and now we’re introducing this new direct-to-consumer subscription model. So it’s not that other folks can’t, it’s that it’s a new way to think of something in travel. And because of – well, the challenge with somebody else doing it, a start-up or a new company is that they may not have the traffic to expose the subscription product to. But that’s not Tripadvisor’s challenge, we already have so much of the traffic.
Kaufer acknowledged that a travel subscription is different to something such as Netflix or Amazon Prime: “Travel is more episodic, but the value that we’re presenting in this form of subscription is oftentimes much higher and can offer that instant savings. Because we have the traffic is why we think we’ll be successful where others might be challenged.”
Kaufer pointed out that, as it is behind the subscription paywall, any deal does not need to be directly comparable to other, publicly quoted room rates. “It’s the pay gate that enables hotels to give us a discount that they’re not putting out there on their own website or through other channels and that’s what makes our deals special. So, in the weeds I guess if the hotel is offering this discount — same discount on some other opaque discount site or packaged with an airline flight, that would be fine with us. But if it’s also on a deal that’s also on their own website, then they’re just — it’s not going to work.”
Also looking to major on its subscription business is Soho House. The hotels and clubs business has confirmed its intention to list in the US, filing papers with authorities for a full IPO. Emphasising its subscription business value, the company will rename as Membership Collective Group and list under the ticker MCG. In an email, founder Nick Jones emphasised the company’s digital offering to its membership. The group has a range of membership options, depending on a customer’s usage and location.
HA Perspective [by Chris Bown]: Welcome to the new Secret Escapes. Tripadvisor has launched something that’s not unique – but does promise to be different by having broad appeal. The company insists that if it gets millions of signups at USD99, then it doesn’t need to make a commission on the hotel deals it offers. However, it will surely move to a commission-based model, as it scales up – and invests millions in promoting Plus along the way.
For hotels, here’s another chance to try a new distribution platform that could help fill off-peak nights – and keep those offers away from pesky competition authorities, and the OTAs.