Tripadvisor revamps Plus, shifts discounts to cash-back

Three months after its official launch to consumers in the United States , Tripadvisor is making major changes to its Tripadvisor Plus subscription program in an effort to bring more hotels – particularly large chains – into the program and, in turn, more subscribers.

The most notable change relates to room rates. In the original version of Plus, which launched in beta in December 2020 and opened to all hotels worldwide in March , hotels provided Tripadvisor subscribers with rates discounted below what was publicly available on their websites and in exchange did not have to pay Tripadvisor a commission on bookings.

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, according to Tripadvisor Plus general manager Sean Graber, is calculated by an “internal algorithm” that will “pass the vast majority of the commission … back to consumers.” The company says the reward will equate to the same “level of value” that subscribers experienced in the original instant-savings Plus model.

Tripadvisor says, at launch, it will send the money to travelers within 24 hours of check-in through several payment partners.

“I don’t know if we are ready yet to divulge the various partners that we are going to be using, but they are kind of household names, payment solutions you would be familiar with. We know that choice in those is really important, so we’ll launch with a few, and then we’ll continue to build additional payment channels,” Graber says.

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

The question of how the wallet will function – for example how a traveler can use the “wallet” to pay for a meal or spa service during their stay – is still 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 while on site, rather saving it for a future trip or taking it as cash.

Another piece of functionality that is critical but not entirely clear – how Tripadvisor will know that the guest has checked in to the hotel, thus triggering the reward payment. Tripadvisor spokesperson Brian Hoyt says the company will use “a mix of APIs and other methods” to track check-ins.

According to a source who asked not to be identified because of a conflict of interest, “I’m not sure they thought all of this stuff through.”

Along with the complexity of tracking check-ins, this source says they expect investors to be concerned about how the rewards will be funded – noting Tripadvisor stock finished the day down 7.6%.

“If the hotels pay on their normal commission cycle, which is post-departure, that’s about seven to 45 days after departure. If Tripadvisor is giving travelers money up front, basically on arrival, how are they going to fund that? That’s bad from a cash-flow perspective,” the source says.

Tripadvisor says its commission model will be able to “constantly fund” the rewards program.

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

Tripadvisor says this shift from discounts at booking to cash-back at check-in comes after getting feedback from both subscribers and hoteliers in the last several months. Hoteliers have been concerned about rate parity since Tripadvisor was displaying the discounted Plus-member rate to non-subscribers as a way to persuade them to sign up.

“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,” says Brian Hoyt, Tripadvisor spokesperson. Hoyt says the company expects “thousands of more” hotels to join Plus due to the changes being made.

But hospitality consultant Simone Puorto says he believes the changes have less to do with parity issues and more to do with a desire by Tripadvisor to repackage Plus because hotels in the program have not had good results. Puorto says several of his clients have been participating for several months, “with almost no results.”

Puorto says a client that is located in “Tripadvisor position number one in one of the most traveled cities in the world” has gotten just three booking 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, the subscribers – and then the bookings – will follow.

“It starts with the hotels savings, but Tripdvisor Plus is so much more than that. You have to factor in the perks. You have to factor in the fact you are getting discounts on rental cars, through the Dollar Flight Club partnership on flights, and 10% off on every bookable experience. The value beyond the accommodation really starts to add up,” he says.

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

Puorto questions if those benefits are enough to attract travelers to pay the $99 subscription fee, particularly when there are other options, such as Booking.com that offers a 10% discount to members of its free Genius program.

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 developing the rewards model.

Tripadvisor is currently communicating the changes to hoteliers and will launch the revised program to consumers in Q4. The company says based on feedback from initial tests, it expects subscribers will welcome the change. However Graber says if a subscriber no longer wants to be a part of the program with the new cash-back model, Tripadvisor will accommodate that on a case-by-case basis.

* Check this interview with Tripadvisor's chief experience and brand officer, Lindsay Nelson, talking about the introduction of Plus during the PhocusWire Pulse: Loyalty For The Long Haul event in March 2021.