Six months ago, Tripadvisor announced its newest membership program Tripadvisor Plus which is a brand new method to enhance your travel experience. An innovative method that has sparked many different opinions, however it also raised some issues from the hotel industry particularly in relation to price parity issues. Tripadvisor has just announced a significant twist in its initial strategy (link to the Plus program) moving from a instant savings (or discount to travelers) model to an "reward" model (to the same travelers but for future bookings and the possibility of cashing the rewards). The company plans to gradually end the instant savings model based on hotelier and consumer adoption. The purpose of this article is to give the hotel industry with all answers to the numerous concerns Tripadvisor Plus still raises. What exactly is Tripadvisor Plus and what does it mean to the users?It's an annual membership for customers (travelers) with hotel rewards and other perks when they book through the Tripadvisor Plus platform. Users earn cash rewards they can use in future bookings, or during their stay in the hotel (restaurants bars, spas, etc.). ). How does Tripadvisor Plus work for hotels?Plus's initial approach was to "instant savings" for travelers. This meant that hotels had to offer the net rate which was typically 15% less than the public rate and any perks they were willing to provide. Hotels didn't have to pay any commission for these bookings (some wrongly said they didn't have any expense). The new Plus reward model works very differently. There's no requirement to provide an exclusive discounted rate. Tripadvisor Plus will operate with similar rates to OTAs. This is the most important issue that hoteliers faced with the old model. Additionally, hotels will have to pay an amount of net commission (cancellations and no-shows are excluded) to Tripadvisor. The minimum amount of commission is 10 percent (15 percent is recommended to increase visibility) and it is applied to the amount before taxes (something normal, but you should keep in mind that hotels pay commissions on taxes with several OTAs such as Booking.com). Tripadvisor states that hotels pay commissions to travelers to be "rewards" to encourage future bookings. Tripadvisor Plus is open to both OTAs and agenciesYes. Any channel that was able to connect rooms and rates with Instant Booking will be welcome to take part in Plus. So, Plus is not an exclusive placement of the direct channel. In the end, hotels would be competing with OTAs to access the Plus placement. Here's the problem. OTAs are charging hotels between 18% and 25 percent. What is the amount they willing to offer for free? This will decide whether the minimum requirement of 10% (recommended 15%) plus any additional requests are enough to compete with OTAs. An obvious proof of the commissions hotels pay to OTAs go to competing against themselves in online marketing placements. An interesting paradox. What is the rate of participation in Plus in major cities around the globe?This is the participation rate as of the date this post is put on the market. Based on our testing, it shows that there are 550,000 hotels who have joined for Plus in major cities. This is a combination of "instant savings", "discount" or "reward" models. Be aware that this is only an image of what the program looks like in the present.
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