Eight out of ten UK holidaymakers book their holidays online.
Ignoring the internet as a source of bookings is impossible in this day and age - but as hoteliers know all too well, different sources of online bookings can have vastly different values.
Online travel agents (OTAs) are seen by many as a necessary evil - they place your hotel in the virtual shop window in exchange for commission.
With OTA agreements usually specifying that accommodation providers must offer their best rates through their platforms, the difference between a direct sale and one achieved through an OTA can be significant.
Regardless, most hotels are at least partially reliant on trade reaching them through sites such as Booking.com and Expedia.
In recent years, TripAdvisor has begun to function as an OTA too, by offering customers the chance to book directly through the TripAdvisor interface.
This feature's called instant bookings.
If this is the first you've heard of TripAdvisor instant bookings or want to learn more about it, you've come to the right place!
How it Works
When users search for hotels on TripAdvisor (with a date range and location specified), they see something like this:
If the user clicks a 'View Deal' button, they head through to the OTA's site to see more details and carry out the booking process.
However, if a hotelier is using instant bookings, the 'View Deal' button will look a little different:
Now if the user clicks 'Book Now', they're sent to this section of the hotel's TripAdvisor page:
The user selects the room they want, and can then book it - still through the TripAdvisor website. Here's a glimpse - click on the image to see a larger version.
No payment is due until their stay.
So that's how instant booking works from a consumer's perspective.
What about from a hotelier's point of view?
TripAdvisor earns commission on bookings made through instant bookings. Instead of paying fees up front, hoteliers are only billed once stays have been completed.
Of course, TripAdvisor needs to have access to data on prices, rooms and availability to be able to complete bookings for your hotel - so hoteliers need to be using a suitable 'Connectivity Partner' to ensure the data is accurate and up-to-date.
Interested in what you've seen so far? Let's break down the setup process further.
- Check eligibility. Your connectivity partner must be instant booking certified. You can check the list of connectivity partners to see what your options are. There may also be some geographical restrictions on eligibility.
- Check your data. It's vital that your software partner is pulling across the right data to TripAdvisor. That means doubling checking prices, room details and your cancellation policy.
- Choose commission rates. TripAdvisor has two different commission rates based on traveller views. A traveller view is when a user sees the 'book now' button. On the highest commission rate (15%) a user will see your Instant booking rates 50% of the time, and the OTA's rates for remaining views. Opt for the lower 12% commission rate, and the OTA's share of traveller views increases to 75%.
- Add your payment details. You don't pay anything up front, but TripAdvisor still needs your card details for when the time comes to pay commission.
- Review monthly statements. On the 5th of every month, you'll receive a monthly statement via email. This isn't a bill - it just gives you the chance to double check that all stays booked through TripAdvisor were actually completed. You have 15 days to make any changes.
- Pay. The fees for the previous calendar month will be finalised on the 20th. Your card will be charged automatically.
What's In It For Me?
TripAdvisor claim there are plenty of benefits to using its instant booking service, including:
- A fair and competitive commission structure which only applies to completed stays.
- Access to guest data (such as email addresses) which OTAs usually withhold.
- The opportunity to take full advantage of traffic on your TripAdvisor page.
- Improved conversion rate - users don't have to leave the TripAdvisor site to complete the booking.
- All the other benefits associated with using an OTA, such as not having to manage bookings on your own website and gaining the opportunity to reach a larger market.
The size of these benefits is dependent on the individual business. If you already book the vast majority of stays directly through your website, you won't gain as much as hotels which have their bookings dominated by OTAs.
However, with no contract involved, you're free to switch instant bookings off and on as you please while you test its impact.
What Are the Drawbacks?
Regardless of what TripAdvisor says, instant bookings sort of turns the site into an OTA: you lose a proportion of your direct sales in exchange for reaching a larger audience.
Given that it's so easy for desktop and mobile users to use TripAdvisor's booking interface, it seems unlikely that hoteliers will benefit from the 'billboard effect' either.
The billboard effect describes the process where travellers first notice hotels via OTAs, but then go on to book directly through the hotel.
Given the mobile-friendly nature of TripAdvisor, plus the rising numbers of consumers who use their phones to book holidays, travellers will be increasingly likely to book through TripAdvisor instead of opening another app or web page.
Arguably the long term goal for hotels should be to increase the proportion of direct bookings. Although TripAdvisor offers a competitive (and usually favourable) commission rate, they're still taking a cut.
How Can I Maximise My Opportunities Via Instant Bookings?
If you've decided to try out instant bookings, there are plenty of ways you can increase conversion rates and average revenue per guest.
First of all, it's important to understand the four factors that determine whether travellers are able to book on TripAdvisor instead of an OTA's details showing up.
- Availability. You've got to have rooms available for the date(s) specified by the user.
- Competitive prices. The prices you offer through TripAdvisor must be similar to those offered through other OTAs.
- Complete pricing and room information. TripAdvisor want to secure high conversion rates via instant booking, so they need you to provide accurate and complete information.
- Commission. On the 15% commission rate, the 'Book Now' button should appear 50% of the time. The 12% commission rate means it'll only appear 25% of the time.
Remember TripAdvisor's motivation here: they want to make money through instant bookings, but they don't want the process to be frustrating for users. Neither do they want to upset their commercial partners (other OTAs).
Overall, they want hotels and guests to find instant bookings useful - and preferable to other forms of booking.
For users, that means a seamless, easy booking experience. For hoteliers, that means large numbers of bookings and high conversion rates.
TripAdvisor make a number of recommendations to help with the latter:
- Use price plan names that imply customers will receive special prices. The word 'exclusive' is supposed to be particularly effective.
- Tell customers that they won't pay until their stay.
- Promote free amenities such as breakfast, high-speed wi-fi, etc.
- Room names should be concise and specific to avoid confusion.
- Include several high quality room photos for each room type.
- Provide detailed but easy-to-read room descriptions.
You'll usually need to make these changes through your connectivity partner's software.
Are Instant Bookings the Future of the Hotel Industry?
Quite possibly. TripAdvisor isn't the only site getting on the bandwagon - Google is, too.
Although these services are in their infancy, they're worrying 'old-fashioned' OTAs and hoteliers.
Large chains may continue to hold out against OTAs, TripAdvisor and Google with their own apps, but if instant bookings through a search engine or a review site are simply more convenient for the consumer, it seems likely that they'll increasingly be the booking method of choice.
Hoteliers should keep track of how their booking options change, and if their current booking software provider supports instant booking on various platforms.
We'll also do our best to keep you up-to-date with the latest changes on the TripAdvisor front!
TripAdvisor Instant Bookings might be a welcome source of bookings for some hotels, but others will see it as yet another way to lose out on direct, commission-free bookings.
It entirely depends on your circumstances.
However, do bear in mind that OTAs are in a strong position to claim high proportions of mobile bookings, through their mobile-optimised sites and apps. And mobile bookings will account for an ever-larger percentage of bookings.
Still, it shouldn't all be doom and gloom for hoteliers. With Google and TripAdvisor aiming for their share of the booking market, we may start to see some price competition - perhaps leading to more favourable commission structures for hotels.
Have you tried out instant bookings? What are your impressions so far?