Tripadvisor relationship status: it’s complicated

Posted on August 31, 2010

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TripAdvisor's Logo

TripAdvisor's Logo

As Tripadvisor rolls out their new business model, getting hotels to pay for direct access to their web sites, they are increasingly stepping into a complicated relationship with hotels.

Tripadvisor states they have signed up 16,000 hotels for their “buy a link” program. At an average of about $750 per link this means a revenue of $12 million since January 2010.

Not bad at all and a very smart move on their part. Especially since there are still tens of thousands of hotels that need to sign up.

From careful analysis and tracking of hotel bookings I have seen that these links are definitely worth all the money they cost. The return on investment done on more than 300 hotels, has showed me that it works.

However this “relationship” with hotels is predictably going to get more and more complicated. As Tripadvisor develops an economic model that works and works well, they will be more and more dependent on hotels and the payments they get from hotels.

How will they react to the pressure from these hotels when bad reviews roll in? How will they react in a few years when chains like IHG, Accor or Marriot decide to pull their funding for all their properties if Tripadvisor doesn’t remove certain reviews?

It’s hard to say, but it is definitely easy to imagine. Expedia has already worked out special deals on their mark-up for IHG, Choice and others. Will that mindset seep through to Tripadvisor?

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