TripAdvisor Plus: Innovative Subscription Model or Risky Gamble?

THR's opinion

TripAdvisor Plus: Innovative Subscription Model or Risky Gamble?

In March of 2021, TripAdvisor surprised the travel industry by announcing the launch of TripAdvisor Plus, a new subscription program for US customers charged at $99/year.

When the program was launched, Tripadvisor Plus was presented as a free program for hotels, with no commissions to pay. Potential consumer subscribers were offered discounts on room reservations and other benefits, such as personalized treatment during their stay at the hotel.

That initial strategy met with a number of challenges, namely from the hotel provider side with price parity issues. TripAdvisor has subsequently revised the program for Q4 of 2021 to a cash-back model for consumers, rather than a discount on the initial booking.

This cash-back can then be applied to future trips/bookings or activities and other experiences during the trip such as spa treatments, free meals at the hotel restaurant, etc. This shift from an immediate savings system via discounts to a rewards system has a number of cash-flow implications for both hotels and TripAdvisor.

According to the TripAdvisor Plus website, the program benefits can be enjoyed at more than 300,000 hotels and 400,000 experiences worldwide. In Q4 2021, Tripadvisor as well added benefits for subscribers through partnerships with Rent the Runway and Audible, for example.

Through the program TripAdvisor hopes to emulate successful subscription programs such as Amazon Prime, offering select hotels the option of increasing their visibility on the platform while simultaneously engaging a typology of traveller with higher purchasing power.

With the launch of TripAdvisor Plus, TripAdvisor moves from being a strictly B2B platform to a B2C platform, also competing with the large traditional OTAs such as Expedia and Booking.

TripAdvisor Plus and commission payments

According to Phocuswright's Europe Travel Market Report 2020-2024, in 2020 OTAs captured approximately 64% of hotel and accommodation online bookings in Europe. OTAs, such as Expedia, Booking and others, function as intermediaries between hotels and the end consumer and charge a commission for each booking obtained. These commissions range from 10% to 25% of the sales price, sometimes even reaching 30%. This is a considerable cost that could be eliminated by obtaining reservations through direct channels.

Initially, TripAdvisor Plus was presented as an attractive program for hotels by offering the possibility of reducing distribution costs to zero, since it facilitated direct contact between hotels and travellers without charging commission. However, since September 2021 a commission has been reintroduced – minimum 10%, with 15% recommended to maximize visibility - but this money will be returned as a reward to program subscribers.

Added benefits for hoteliers and consumers

  • Data collection: As the reservation is made directly, hotels participating in the program will have access to all customer data on each reservation, which is invaluable for future communication and marketing actions.

  • Increased visibility: The hotel's positioning in Tripadvisor's destination search results within the Best Value ranking is significantly improved, as well as earning a special badge. In addition, Tripadvisor has added an "only hotels Plus" filter that narrows the results to just those hotels participating in the program.

  • Diversification of distribution channels: Thanks to proposals such as TripAdvisor Plus, small / independent hotels that do not belong to large chains and often do not have the capacity to comparably promote themselves enough to obtain direct bookings, can use the option to depend less on large OTAs, balancing their mix of distribution channels.

  • More affordable commissions: The commission price is lower on TripAdvisor Plus compared to traditional OTAs.

  • Improved traveller experience: The TripAdvisor Plus benefits system allows for discounts and other advantages during the stay at the chosen hotel, increasing opportunities for personalization and improvement.


Reasonable doubts about TripAdvisor Plus business model

  • Perception of TripAdvisor. Perhaps one of the main stumbling blocks to the success of the TripAdvisor Plus program is that TripAdvisor is not traditionally known for being an OTA, but rather as a website that provides reviews of travel-related content. It also functions as a metasearch engine, i.e. it provides hotel listings in a structured way and, at the time of booking, the user is redirected to the OTA. Getting users accustomed to TripAdvisor offering the possibility to make bookings and getting them to forget the idea that it is only a review website can be a challenge.

  • Number of subscribers. The TripAdvisor Plus program is aimed at travellers with a certain level of purchasing power and who travel frequently. The rewards system offered by TripAdvisor may be attractive to the end customer if the reward (money back) from booking compensates for the 99 USD subscription fee. However, the question is whether these rewards are enough to convince travellers to pay a subscription fee when there are other free options, such as the one offered by Booking.com, which offers a 10% discount to members of its Genius program.


In sum

TripAdvisor Plus is an innovative subscription model and presents a different option within the complicated hotel distribution system. Time will tell if the reward system it offers for travellers works well enough and is attractive enough to attract the necessary number of participating hotels and consumer subscribers.

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