The ink on the landmark partnership between TripAdvisor and Booking.com may only just be drying, but its effect is already being felt.
The user review/metasearch site agreed in October 2015 to have the Priceline Group’s hotel inventory made available for the TripAdvisor instant booking platform.
Booking.com inventory came first, with Priceline and Agoda content slated to come further down the road.
It’s no wonder at the time that TripAdvisor CEO Steve Kaufer talked up the move as a “huge win” for users of the site – although arguably the outcome is probably working out just as well, or even better, for TripAdvisor itself.
Investment bank Piper Jaffray, in a note to clients last week, says the “onboarding” of Booking.com’s inventory to TripAdvisor’s instant booking service has coincided with a significant jump in the number of leading properties now being available for travellers.
Its analysis found that 92% of the top five hotels in the leading 100 global inbound destinations now had a “Book on TripAdvisor” button contained on the property’s TripAdvisor page.
This is an increase from 76% in September 2015.
As a result of this increase, TripAdvisor’s “chicken and egg problem” (getting hotels on-board with instant booking) is now largely resolved, Piper claims, with the likely financial result being a stronger conversion rate for hotels.
However, conversion rates on TripAdvisor are still languishing around the 6% range compared to Priceline, which Piper estimates in the region of 20%-25%.
Interestingly, Piper says its analysis shows that the instant booking prices for 84% of the hotels were the same or better than the CPC ads offered for the same property (an increase of 14% from September).
Looking ahead, TripAdvisor should increase the “number and quality” of suppliers of prices made available for each hotel, with Piper arguing that there is no reason why that number shouldn’t be able to reach the same volume as those suppliers still using CPC auctions on the site.
The note says:
“This is crucial, as it will reverse the near-term revenue dilutive-ness of Instant Book as suppliers are forced to offer higher commission rates and improve their listing details to maximize in-cart conversion.”
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