Sounding Off: Tripadvisor Plus changes show the complexity of travel subscriptions

Brian Hoyt, Tripadvisor

“While we have tens of thousands of hotels you can access at any given moment through Tripadvisor Plus today, we knew that we wanted even more supply. Because our belief is that more supply directly equates to the ability for more travelers to access the benefits of the program.”

Quote from Brian Hoyt, Tripadvisor spokesperson, in an article on PhocusWire this week about changes coming to the Plus subscription program.

Each Friday, PhocusWire dissects and debates an industry trend or new development covered by PhocusWire that week.

Yes, it is true that a larger supply of hotels participating in the Tripadvisor Plus program would mean that subscribers have more choice over where and how to access the program’s benefits.

But it's worth remembering that before travelers can access those benefits, they actually have to pay the $99 fee to become a Plus subscriber.

In the original model, launched in the United States in June, that annual subscription fee was the only source of revenue for Tripadvisor since it did not require participating hotels to pay a commission on bookings (in exchange for hotels giving subscribers discounted rates and perks).

Tripadvisor will not disclose how many subscribers it has – but one could assume it’s not what the company considers “enough” at this stage, hence the desire to make changes.

As Hoyt explains, Tripadvisor is changing the fundamental structure of the Plus program with the hope of attracting more supply. The complaint from hotels – particularly large chains – was that in the original model, rate parity was an issue since Plus was openly displaying discounted room rates.

Effective in the fourth quarter of this year, Tripadvisor Plus will shift to a cash-back benefit for subscribers. Participating hotels will provide their lowest publicly accessible retail rates and pay a commission on bookings. After check-in, Tripadvisor will pay the traveler an amount that it says will equate to the same “level of value” of the original upfront savings, estimated to be about 10 to 15% - although it’s unclear if the company will transfer the entire commission amount to the subscriber.

Let’s assume this change does what it is intended to do: satisfies the concerns of hotels, prompting them to join the program.

It’s a stretch to believe that the move will instantly result in more consumers becoming Plus subscribers, which is the revenue driver for Tripadvisor.

Even with a longer view, will consumers – in large numbers – be willing to pay $99 up front for the delayed gratification of cash-back at check-in?

Tripadvisor points out that Plus benefits go beyond the savings on hotels to include discounts on rental cars, flights, experiences and more. That certainly adds to the appeal, but likely only to frequent and/or big-budget travelers.

How many subscribers, and bookings, does Tripadvisor need to have to make Plus a worthwhile product?

Additionally, there are operational issues. Tripadvisor says the reward is transferred to subscribers within 24 hours of check-in. But how exactly will Tripadvisor access check-in data from hotels around the world? How does that transfer – and the future “wallet” it is planning – become reality? And what does it mean for Tripadvisor’s balance sheet if it is paying subscribers a reward at check-in, but potentially not receiving commission from the hotel until weeks later?

While questions around Tripadvisor Plus remain, it's worth recognizing the value in innovating, testing and - when necessary - starting over. Tripadvisor says these changes are indicative of the natural evolution of a new product, incorporating learnings and feedback. As the Plus product evolves, the industry will be watching.