Tripadvisor revamps Plus and turns rebates into cash back

Three months after its official launch to consumers in the United States, Tripadvisor is making major changes to its Tripadvisor Plus membership program with the goal of attracting more hotels – especially large chains – to the program and, to their turn, more subscribers.

The most notable change concerns room rates. In the original version of Plus, which launched in beta in December 2020 and opened to hotels worldwide in March, hotels were offering Tripadvisor subscribers lower rates than what was publicly available on their websites and in exchange n did not have to pay any commission to Tripadvisor on reservations.

Starting in the fourth quarter of this year, Tripadvisor Plus will transition to a Subscriber Cash Back benefit.

Participating hotels will offer their lowest public rates and pay a commission on reservations. After check-in, Tripadvisor will pay the traveler an amount that, according to Tripadvisor Plus CEO Sean Graber, is calculated by an “internal algorithm” that “will return the vast majority of the commission … to consumers.” The company says the reward will equal the same “level of value” that subscribers experienced in the original Instant Savings Plus model.

Tripadvisor says that upon launch, it will send money to travelers within 24 hours of check-in through multiple payment partners.

“I don’t know if we’re even ready to disclose the different partners we’re going to use, but these are household names, payment solutions that you know well. We know the choice in those is really important, so we’ll be launching with a few and then we’ll continue to build additional payment channels, ”Graber said.

“The longer term vision is to create wallet technology on Tripadvisor, where when you book on Trip, you can earn funds in that wallet… and you can spend for the trip you’re currently on or put those funds in the bank. for the future to travel. “

The question of how the wallet will work – for example how a traveler can use the “wallet” to pay for a meal or spa service during their stay – is always an “open question,” says Graber. He says Tripadvisor hopes to work with hotels to develop solutions that will entice Plus members to spend the money on-site, instead saving it for future travel or taking it in cash.

Another essential but not entirely clear feature is how Tripadvisor will know that the guest has checked in at the hotel, thereby triggering payment of the reward. Tripadvisor spokesperson Brian Hoyt said the company would use “a mix of APIs and other methods” to track registrations.

According to a source who asked not to be identified due to a conflict of interest, “I’m not sure they’ve given any thought to any of this.”

Along with the complexity of tracking records, this source says she expects investors to be concerned about how the rewards will be funded – noting that the Tripadvisor stock ended the day down 7.6% .

“If hotels pay on their normal commission cycle, that is, after checkout, it’s about seven to 45 days after checkout. If Tripadvisor gives travelers money up front, mostly on arrival, how are they going to fund that? It’s bad from a cash flow perspective, ”the source said.

Tripadvisor claims that its commission model will be able to “always fund” the rewards program.

“What allows us to do that is just our knowledge of the technology and industry connectivity, and we can kind of smooth out the timing of those cash flows so that we can deliver more value to our travelers, ”Graber said.

Tripadvisor says this shift from discounts to booking to refunds at check-in comes after receiving feedback from subscribers and hoteliers over the past several months. Hoteliers have been concerned about rate parity since Tripadvisor was showing the discounted Plus member rate to non-subscribers in order to persuade them to sign up.

“Although we have tens of thousands of hotels today that you can access anytime through Tripadvisor Plus, we knew we wanted more on offer. Because our belief is that a larger offer directly equates to more travelers being able to access the benefits of the program, ”said Brian Hoyt, Tripadvisor spokesperson. Hoyt says the company expects “thousands of more” hotels to join Plus due to the ongoing changes.

But hospitality consultant Simone Puorto says he thinks the changes have less to do with parity issues than with Tripadvisor’s desire to repackage Plus because the hotels in the program have not performed well. Puorto says several of his clients have been participating for several months, “with almost no results.”

Puorto says a customer who sits in “Tripadvisor’s number one position in one of the busiest cities in the world” only got three bookings through Plus in about five months.

Hoyt says Tripadvisor continues to have “high hopes” for the program and believes that as more hotels join Plus, subscribers – then bookings – will follow.

“It starts with savings on hotels, but Tripdvisor Plus is much more than that. You have to take into account the advantages. You should take into account that you get discounts on rental cars, thanks to the Dollar Flight Club partnership on flights, and 10% off each bookable experience. The value beyond hosting is really starting to add up, ”he says.

In recent weeks, Tripadvisor has added benefits to subscribers through partnerships with Rent the Runway and Audible. Plus members also have access to travel planning services through Tripadvisor Text.

Puorto wonders if these perks are enough to entice travelers to pay the $ 99 subscription fee, especially when there are other options, such as Booking.com which offers a 10% discount to its members. free program Genius.

The company says the original instant savings option for Plus could be maintained for some hotels if they express interest, but it plans to focus on developing the rewards model.

Tripadvisor is communicating the changes to hoteliers and will launch the revised program to consumers in the fourth quarter. The company says, based on feedback from early testing, it expects subscribers to welcome the change. However, Graber says that if a subscriber no longer wants to be part of the program with the new cashback model, Tripadvisor will adapt on a case-by-case basis.

* Check out this interview with Lindsay Nelson, Tripadvisor’s Head of Experience and Branding, discussing the introduction of Plus at the PhocusWire Pulse: Loyalty For The Long Haul event in March 2021.

PhocusWire Pulse: Long-Term Loyalty – Tripadvisor’s Lindsay Nelson

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