On the same day it announced a second quarter revenue increase of 1%, Tripadvisor revealed Tuesday that it’s rolling out a service that will allow its members to book hotel stays directly within its app, thanks to a new partnership with Hopper Technology Solutions (HTS).
The announcement of the new service was timed to follow CEO Matt Goldberg’s earnings call with analysts. Total revenue came in at $497 million for the quarter, just eclipsing the $494 million for the same period last year and helping to push the company to net income of $24 million.
Experiences platform Viator saw the biggest quarterly increase with revenues of $244 million for the period between April through June, a 13% increase year over year. TheFork saw an 11% increase to $42 million, while Tripadvisor brand was down 10% for the period, though its $250 million in revenues accounted for just over half of the company’s haul.
“Our second quarter consolidated financial results were in line with our expectations, which reflects ongoing progress on
our segment strategies,” Goldberg said. “This was the first quarter on record that each of our
three segments contributed to our profitability. Our teams continue to deliver value through product innovation, marketing
efficiency and day-to-day execution, which we expect to drive long-term sustainable growth in revenue and profit as we
build on our durable position across travel and experiences.”
While Goldberg didn’t specifically mention the in-app hotel booking service during his presentation, he spoke of the company’s strategy to drive “deeper engagement” with users by rolling out new product enhancements for its app and membership program.
“Historically, we’ve seen very low average revenue per user given our reliance on low-value, fly-by traffic,” he said, adding that Tripadvisor has seen greater monetization when users are more engaged. “The formula is simple. When we keep travelers engaged on our platform, we have more opportunities to monetize, not just through clicks, but through higher value transactions as well.”
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Tripadvisor’s “essential tool” to book hotels from app
Tripadvisor members already had the ability to book experiences and explore restaurants and things to do via the app. Introducing hotel bookings furthers the user engagement by bringing Tripadvisor’s research and booking experience together into an integrated trip planning platform, company president Kristen Dalton said.
“We want the Tripadvisor app to be an essential tool for our most engaged members, who we know are looking to do more with our platform,” said Dalton, who has been president at Tripadvisor since January. “This began with the introduction of our AI Trip Builder earlier this year and will continue as we roll out this latest enhancement. The ability to book hotels within the app is a crucial part of the user journey. Partnering with HTS allows us to focus our internal efforts on creating an exceptional user experience, while leveraging a partner to scale at a faster rate.”
To complement its other hotel offerings with bookings, Tripadvisor partnered with global travel technology provider HTS, which will power both hotel bookings and hotel inventory in the Tripadvisor app, providing an end-to-end, in-app planning experience. HTS will serve as the merchant of record on the bookings, while also providing “white label” customer support.
“HTS is uniquely positioned to power Tripadvisor’s in-app hotel bookings and bring new flexible booking options to its U.S.-based app customers,” Hopper president and co-founder Dakota Smith said. “Through our industry-leading technology, comprehensive hotel supply and innovative flexibility products, together we will bring Tripadvisor members a smart and convenient way to book travel.”
The in-app booking experience is available only to logged-in Tripadvisor members. Through this partnership, Tripadvisor said it’s looking to build its free membership value proposition by exploring in-app rewards and incentives, offering further opportunities to deepen relationships with its most engaged members.
It’s a low-risk way for Tripadvisor to get back in the booking game without a major investment or having to negotiate with hotels.
Lorraine Sileo – Phocuswright
Earlier this year the company ended its three-year-old Tripadvisor Plus subscription program in favor of the free membership plan. Dalton told PhocusWire this week that the new hotel booking feature likely won’t be the company’s last move to enhance members’ experience with the app.
“I think you should see that as a signal to us leaning into a membership program in the app, where we see our most engaged users,” she said. “Not yet ready to talk about where that might be headed, but we’re certainly headed in that direction, and I think you’ll see more moves from us in the coming months and quarters. But this is certainly an important first step.”
A decade ago, Tripadvisor introduced “Instant Booking” for hotels on its mobile app and website, even establishing a partnership with Expedia Group and Priceline to offer bookings on more hotels.
Asked what prompted the company to revisit that strategy, Dalton spoke about Tripadvisor’s commitment to boosting membership loyalty and use of the app while meeting customer expectations.
“For us, this is about leaning into the consumer experience that we want to create, which is what I think differentiates this from anything that we’ve done in the past,” she said. “We know, particularly in the app, what consumers want to do is complete the planning process. That’s why they are coming to Tripadvisor. … This is a logical next step for a consumer when they’re in our app, and so by working with Hopper we’re able to facilitate that for the consumer and meet that need in a pretty seamless way.”
The new foray into direct booking makes sense for Tripadvisor, said Lorraine Sileo, a senior analyst and founder of Phocuswright Research, who compared the deal to those HTS has been making recently with banks and credit card companies.
“If banks and retailers can sell travel, even if just for incremental revenue or to provide extra value to customers, then there is no reason why Tripadvisor shouldn’t offer the same option to their visitors,” Sileo said. “It’s a low-risk way for Tripadvisor to get back in the booking game without a major investment or having to negotiate with hotels individually, although that is still always an option.”
*This story will be updated following Tripadvisor’s earnings call.
The Phocuswright Conference 2024
Hear from Tripadvisor president Kristen Dalton at The Phocuswright Conference in November as we dissect, debate and (yes!) define what travel will look like in the years ahead.
