While at first this may sound like a good thing, be careful what you wish for. Hoteliers really need to know the financial implications of the road ahead.

Last week we posted an article about how hotels have been hit with TripAdvisor sticker shock when it came time to renew their Business Listing. They are seeing renewal costs double and triple over what they paid the previous year. Have you budgeted for that?

No one knows how much TripAdvisor is planning on raising their costs in the years ahead. However some recent moves seem to be sending a clear signal that they want hotels to be subscribers for life – whether you like it or not. And whether you can afford it or not.Importance of TripAdvisor

Here’s what’s going down and what hoteliers need to do to be prepared:

  1. Automatic Renewal – With the latest renewal hotels will see a notice that reads, “Your subscription will  automatically renew on [EXPIRATION DATE] unless you cancel.” Hopefully the year-over-year increases will be less than it was most recently. But then again, you never know. As a publicly traded company they are beholden to their shareholders which means maximize profits.
  2. You Cannot Afford to Drop Out – One of our luxury hotels was so surprised at a recent renewal increase they asked what would happen if it dropped their Business Listing for a year. So we asked TripAdvisor, If the hotel decided to take a hiatus and not renew their Business listing, what would it cost to reinstate it in 2016? Just curious.
    The answer came back – $50,000! Thinking that perhaps there was some mistake, we asked again. And we received the same response – $50,000. Still concerned there was a mistake we asked a member of management and received the same answer – $50,000.
    The rationale for such an astronomical sum seems to come from an inside belief that a Business Listing is driving substantial revenue to individual hotels. If a Business Listing sends $250,000 in revenue (by their conversion calculations based on industry norms) then a Business Listing priced at $50,000 is a fair deal.
    That’s the equivalent of a 5:1 return on investment – about the same cost a hotelier incurs selling through an OTA. Such a deal.

So what’s a luxury hotelier to do? Here are a few thoughts.

  1. Make sure your automatic renewal gets paid on time – do not let it expire!
    • Keep a valid company credit card on file with an expiration date that is later than your listing’s renewal date.
    • Add an automatic annual reminder in Outlook or whatever calendar program you use. Set it up for several weeks in advance of the renewal date. Have several staff members set up reminders as well just in case the GM or Comptroller are no longer with your hotel a year from now.
    • Increase the money you have in your budget for the next renewal. At least you’ll be prepared with money in the budget. And if you budgeted too much you’ll have a little extra cash to take care of some other eventual overage.
  2. If TripAdvisor is moving to price your Business Listing at a 5:1 ROI based on “industry average conversion rates” make sure conversion rates on your website far exceed industry averages.
    Build a better website that provides the optimum user experience and keeps people on site for as long as possible. And make sure your online booking engine is operating flawlessly. If your conversion rate is double the industry average your hotel will achieve a 10:1 ROI in TripAdvisor.
  3. Increase your marketing focus on driving direct business to your hotel. Develop a state-of-the-art integrated Customer Relationship Marketing (iCRM) program. Actively manage your customers’ lifecycle from Awareness through to creating Brand Advocates. It is possible, probably more affordable than you may think and the long-term financial benefits can be immense.
    Implemented properly iCRM built on a foundation of smart database marketing will help you build a long list of loyal guests. And research shows that companies with the most loyal customers are the most profitable. Now, isn’t creating maximum profitability what it’s all about?

No one really knows what lies ahead with TripAdvisor Business Listing pricing, but recent indications are that it is on the way up. While TripAdvisor wants your hotel to maintain its Business Listing partnership for life, sooner or later you may have to ask yourself, “Can I still afford it?”

Hopefully that time is a long time off.

If you have thoughts on the subject to share with hoteliers and readers, please add a comment.

Madigan Pratt

PS – Your January TripAdvisor Business Listing Report should have arrived in your inbox yester day. Do your income estimates match theirs?

AUTHOR: Madigan Pratt

Madigan Pratt is President of MP&A Digital & Advertising, an award-winning agency helping luxury hotels attract and retain profitable customers. Principals with over 60 years of collective experience at some of the world's largest advertising and direct marketing companies lead the agency's team of marketing, creative, public relations, Internet and social media professionals.

6 Comments
  • We are the owners of a VERY tiny B&B in Maui. Last year we paid $1800 for a Tripadvisor Business Listing. (When we first started, it was closer to six hundred).

    I was told that if I did not renew before Nov 30th my bill would be $9600. That’s almost a FIVE TIMES increase! I thought it was a misprint. I laughed and called them. No, it was not a misprint. They were basing it on what they THOUGHT I earned. As I’d just had my lowest year ever, I was no longer amused – especially as they’d just slapped booking.com buttons on my site and were expecting me to pay 15% commission to their ‘affiliates’ on top of my listing costs! When I cancelled booking.com their booking button stayed on my site for almost two months. Same with Expedia and Travelocity. So, actively, they were ducting client traffic AWAY from my site for four months when they hit me with a five fold increase.

    When I asked how they could possibly have gotten these figures, they stated (when I could finally talk to a real person) that it was based on figures from the OTAs. OK … so that pie-in-the-sky bill was based on SEVEN bookings I’d received from booking.com over a period of the two months I was with them? They were kind enough to revise the original $9600 estimate down to a mere $5000. More than double.

    I dropped my business listing and guess what? I’ve just had the best two months EVER!

    Tripadvisor is attempting corporate blackmail. Apparently most people are letting them succeed. WHY????

    In the example you used above, you stated that $50,000 out of $250,000 could be considered ‘a good deal’. That’s 20%. That’s not, by any stretch of the imagination, ‘a good deal’ – especially when OTA commissions of 15% are tacked on to that bill. Now it’s 35%. That’s my profit margin. No, I won’t be giving it to Tripadvisor this year. Sorry! Perhaps the market is ripe for new competitor?

    February 5, 2015
  • michael

    now I understand the googly eyes in the TripAdvisor logo… which is the look on the hoteliers face when they find this out. Can someone say ‘…by the balls’?

    February 5, 2015
  • I am totally in agreement with other comments. Add to everything said above TripAdvisor without our knowledge or consent changed the 800# advertised on our business listing to one of theirs that they then linked to our #.

    This number was advertised online to a business in another state which we then were inundated with calls about. Running up our phone bill and tying up our reservation line.

    At what point is someone going to challenge their unethical business practices.
    Click on the link to Professional Photos on my business listing and it takes you to the booking.com site and not to the photos.

    Any attorney out there want to take on a class action??

    February 26, 2015
  • I am trying to cancel my Business Listing on Tripadvisor, and of course there is no option anywhere on the site and you won’t know what your next bill will be.
    I’m sure this falls within the ‘legal’ parameters. But seriously? Do I want to do business with such a company? If I wish to stop my subscriptions (As with anything else) I should have the option to do so easily and know what I’m paying.

    If anyone knows a way to cancel Business Listing/Subscription please let me know.

    Thanks!

    November 4, 2015
  • Redwan

    Please note, as a hotelier our traffic from tripadvisor is close to 2.7K on averge for the 12 months we were with them; and we meticulously follow our online performance, we do PPC as well. So yes, we do manage google analytics, and during the entire year we have had only 172 qualified traffic from TripAdvisor, mind you, we have tried with many offers (some complimentary airport pick-up with 40% discount on restaurants), yes there was a landing page for that specific offer. We tested with many mix of offers and yet managed to bring 172 guest from TripAdvisor to our page, now our conversion rate it 4.2%, so based on that it is 7 booking for an entire year, our ADR is USD47 and average night stay is 5.2 days.

    We actually received 5 booking from tripadvisor during an entire year. So paying USD2100 for a year and receiving USD987.30 from 5 guests with incidentals, is a failed and ridiculous investment. This should at best have been 15 dollar a month, instead of the staggering USD175. We did agree for a year, because we banked on the reports presented to us, bringing even 10% of their platform’s qualified traffic to our website, the price would have been justifiable, in reality we got around 0.50%, that’s 13.5 guests every month out of the 2700 who was visiting our property’s TripAdvisor page. Now that makes me ask the question, exactly what the hell makes up those 2700 visitors, is it bots, humans, aliens? Is it even real? Point of the matter, always trust your own data, google analytic made the decision for us, DO NOT RENEW!

    June 20, 2016
  • Mike Rossi

    I am confused. I own a 25 room Motel in a resort town in Colorado. My Business listing cost doubled last year and is currently over $4800.
    What I don’t understand is this: The business listing provides a Link to my web site, my hotel phone number, my email address – all in my listing and above the fold. It also gives me the ability to have rotating photos and to place ads on TA. However, TA also lists the names of various OTAs with the prices I have entered for them in my PMS, on my page and on fairly large Tabs which guests can simply click on to book a room. I doubt there are too many guests who will think to look up and call my hotels phone number to make a reservation or think to look up and click on my web site link. I am guessing most guests will simply click on of the OTA links which are directly in front of them. This means I get to pay TA $5000.00/year so that I can get to pay the OTAs a commission when guests take the easy and quick way to make a reservation which is to simply click on an OTA tab. Additionally, I have Trip Connect which shows my web site price, but unless I agree to bid via agreeing to a higher commission to TA. it won’t appear unless the OTAs bid less than me. Even if a guests see my Trip connect Tab, it means I get to pay $5000.00/yr for a Business Listing which is required to get Tripconnect so that I can pay a 12-20% commission to TA. In effect, I am paying $5000.00/yr for the right to give TA an additional commission if a potential guest just happens to choose the TA Tab instead of the OTA Tab. Am I confused about all of this or is TA putting a big screwing to all of us.

    May 30, 2017

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