Pivotal moments 2015 – When TripAdvisor’s instant booking won Marriott
With the world’s most-downloaded travel mobile app, TripAdvisor provides a solution to hotels which have been struggling to market mobile users. This summer, it successfully signed Marriott to participate in its instant booking functionality.
My pick for the year’s most pivotal moment was this summer, when TripAdvisor successfully signed Marriott to participate in its instant booking functionality. The move placed a huge pressure on other global hotel chains to participate, too.
For hotel owners and Expedia Inc and Priceline Group, the pivotal moment must have felt like that level in a video game when a new competitor suddenly appears out of nowhere.
For more than five years, the giant online travel agency (OTA) groups Expedia and Priceline dominated the game of third-party online distribution, with ever-increasing success.
But this summer TripAdvisor suddenly upset their dynamic. It became a viable competitor with its OTA-lite model, offering a semi-direct distribution model for hotels. Priceline recognized this new reality by pulling a strategy U-turn and agreeing to participate, too.
The instant booking tool is a game-changer, as long as TripAdvisor doesn’t get greedy. If the company keeps its commissions materially lower than Expedia Inc’s and Priceline Group’s, then most of the big major global brands will pour inventory into the instant booking channel.
Yet lower commissions for “direct” bookings isn’t the only motivation that the global hotel groups will have for participating.
Hotels also have a mobile problem. Travelers are using their smartphones to research and book, and hotels are struggling with how to market to these mobile users.
TripAdvisor offers a solution to the mobile problem. It has the world’s most-downloaded travel mobile app as well as an expertly-designed mobile website.
Travelers only have the physical and mental space to handle a couple of travel apps on their mobile devices. So, TripAdvisor has grabbed an early lead as one of the two or three apps that users rely on for travel, and that early lead gives it huge influence as a mobile marketing channel.
TripAdvisor is also encouraging its users to visit its app and mobile site repeatedly throughout the year by adding more restaurant and tours-and-activities inventory (which users might access for local discovery, not just during vacations).
The mobile-centric thinking matters because TripAdvisor could launch a series of services that are based on providing hotels access to its mobile channels.
A huge chunk of hotel web referrals are viewed in TripAdvisor’s app — yet are not known to hoteliers. Could TripAdvisor start offering access to that data for a price?
How long until TripAdvisor follows up Instant Booking with Instant Reviews, a streamlined interface for hotels to respond to customer complaints while guests are still on-property and when problems can be resolved in a way that thwarts a nasty review using an SMS-style messaging service that interacts well with property systems?
Anyone interested in where mobile is taking the industry should read Benedict Evans, an analyst with A16Z — in particular his 16 mobile theses (published a couple of weeks ago)
Then think about how the product, behavior, and revenue trends may impact your travel business, especially for infrequent use cases, like hotels.
Fred Wilson (a VC at Union Square) believes mobile will have many platforms, unlike the desktop browser-based Internet.
If true, travel companies need to ask themselves if they are ready to reach customers through mobile messaging and communication tools like Facebook Messenger, Whatsapp, Slack, Siri, and Google Now.
For clarity of thought, maybe we should think from now on of TripAdvisor as a hotel app — a hotel app that will grow in power for hoteliers and users. Messaging between guest and hotel may become a service of that app.
The messenger-app-as-platform-on-which-travel-commerce-is-conducted meme will also challenge TripAdvisor along with other companies.
But TripAdvisor has positioned itself well to survive.
First, it has a product team that’s well placed to find answers because of its willingness to experiment, sometimes blindly, such as without the clarity of referral data (that’s often withheld by companies like Facebook).
Few other companies have positioned themselves to be able to find the solution. (or tomorrow’s next unlikely hit platform, such as possibly KakaoTalk, which is used by nearly every smartphone user in South Korea.)
Second, it has likely triggered a cascade of profitable hotel reservations growth by signing Marriott this year.
Third, the company is headed by Steve Kaufer, who has deftly navigated a few spectacular business transitions during the past 15 years, turning his company from a minnow into a shark.
Jeff Boyd’s tenure as CEO of Priceline, from, was was the most spectacularly genius display of transformative leadership at any travel e-commerce company in the mid- to late-2000s. But Kaufer’s tenure as CEO of TripAdvisor — moving it from a media (or reviews) company, to a technology (or OTA-lite) company — is quickly proving to be just as impressive during the 2010s.
If this were a video game, it would be time for every travel player to level up.
An expected twist in 2015
Last year I wrote:
“Peering ahead to 2015, my guess is that one of the pivotal moments of 2015 will when a major travel brand embraces wearables for its day-to-day operations.”
My guess missed the mark.
I didn’t foresee Google withdrawing Glass, the computerized headset, from use, despite promising tests with front-line staff at London’s Heathrow and other airports by brands like Virgin Atlantic.
During the year, none of the other much-touted wearables products, like Apple Watch, took the travel industry by storm, either.
The true wearables story turned out to be about airlines like Qantas and hotel chains like Marriott experimenting with offering virtual reality eyewear to their customers as entertainment options.
Yet wearables is still a long-term trend. Google has submitted its patent for Glass 2.0. that the industry — certainly at the enterprise level — will need to come to terms with to enjoy efficiency gains.
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