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On May 6th 2010 in its press release Tripadvisor announced that over 12 000 hotels around the world had subscribed to its Business Listings service and added their urls, emails and telephone numbers.  Five months after the launch Paris has taken the leader position wih 13% slice of the total listings with urls, followed by Rome, Florence and Venice.

It looks like a great business for Tripadvisor! According to cautious estimates, the above numbers can mean at least 5 million euros in revenue generated by the new feature. But is it really worth for a hotelier to pay from 400 up to 10 000 Euros per year? Since TripAdvisor launched the service we have received many enquiries from numerous hoteliers, keen to boost their direct sales by placing a link, asking whether it pays off. We decided to check it.

So what is exactly a Business Listing on TripAdvisor?

It is a service that enables a hotelier to place a simple link containing hotel’s telephone number, URL and email on a search results page (Screen 1) and on a hotel’s sub-page on TripAdvisor (Screen 2).

The Study

In order to evaluate the benefits of using the TripAdvisor’s new feature, we asked three of our clients from Madrid to share with us their data.  As of June 2nd 2010, the first of the hotels was listed at the very top in TripAdvisor’s  search results (Hotel #1); the second one – at the bottom of the first page (Hotel #2) and the third one – on the second page (Hotel #3).

Although the hotels studied varied in some of their characteristics, such as price and size, the factor of their location was eliminated – all 3 hotels had a superb location in the very center of Madrid.

Hotel 1 Hotel 2 Hotel 3
Number of room range 51-100 51-100 26-50
Average price per room 134 € 105 € 86 €
Tripadvisor’s Fee 2,470 € 2,470 € 1,235 €

The presented data covers data 3 months since the beginning of March 2010. We used Google Analytics for tracking, so anyone who has it in place can easily make the same analysis.

Areas of analysis

In our test we studies 3 major aspects of the new service such as:

1)     Volume of traffic brought by TripAdvisor

2)     Quality of that traffic

3)     Return of Investment

One of the objectives was to test TripAdvisor’s performance against other sources of traffic such as Paid Search and Organic Search to be able to determine what investment is more profitable.

1 Traffic volume – disappointing surprise

Expectations were high; after all it is a leading site in the travel industry and an assumption it should largely contribute to the whole traffic pie was reasonable. To our surprise it was not the case – TripAdvisor represented less than 1% of total traffic for all three hotels. So if you count on a huge boost of the site traffic, it is just not going to happen.

Although TripAdvisor ranks amongst top referral sources it cannot compete with Paid Search or Organic Search. Note that we did not see the relation between high position in TripAdvisor’s search results and traffic volume to the hotels’ websites.

2 Traffic quality – having great reviews pays off

The most appropriate way of measuring traffic quality is via the so called conversion rate (#of reservations / traffic). In other words, the highest conversion rate the better the quality of the traffic.

Only in Hotel #1 conversion rate from TripAdvisor is significantly higher than from other sources (caused by high user rating). In general, conversion rate is very much similar across all channels. That busts another myth of highly qualified traffic from TripAdvisor. The truth is that it is not any better or worse than any other source unless you rank flawlessly on user reviews.

What is worth noticing is a high conversion rate from Paid Search in case of Hotel #2, that is mainly because of long history and established position of this account, but this is a topic for another post.

3 Return of Investment – Big differences between hotels

So the traffic is not as expected, neither is conversion rate but the question remains, does it pay off to buy a Business Listing on TripAdvisor?  Let’s take a closer look at the cost and benefits issue. Let’s compare Return of Investment (ROI) of TripAdvisor  with  other channels like Expedia, Booking, Venere or Paid Search.

Most of hoteliers are used to a commission-based system, mainly because it allows to monitor and compare cost and benefits. In this model, cost is converted into commission. Nowadays the commission level of intermediaries is between 12% to 20%, above this point profitability of using a channel is questionable

The cost of a business listing is not based on a commission model. TripAdvisor charges a paid-upfront yearly fee that may generate new bookings over the course of the year. The value of those bookings should cover the initial investment in an exactly the same way that it has place in the commission-based model.

Transforming the investment in TripAdvisor into the commission based model.

Using Google Analytics we analyzed the reservation value obtained from TripAdvisor and the cost of the service, calculated proportionally to the 3 months of our test. To enable us a like-for-like analysis with other booking channels based on a commission model, we calculated what percentage of the reservation value covers the investment in TripAdvisor’s service. This allowed us to see the profitability in a clearer way.

(TripAdvisor’s Fixed Fee) Divided into (Reservation Value) =Commission.

We benchmarked the results of our three test hotels with another significant source of reservations – Paid Search.

For the Hotel #1 its cost/benefit relation proved to be on an acceptable level, for the Hotel #2 was at the lower end of profitability. Lastly, for the Hotel #3 this investment proved to be really expensive.

In a final analysis other factors should be taken under consideration as well, such as:

  • To calculate TripAdvisor’s commission we would need to add a commission of booking system on the website.
  • Both investments in TripAdvisor and Paid Search are pre-paid and as a result a hotel will be charged upfront, where a potential the return on investment remains unknown.
  • Typically a part of the reservations is cancelled, what normally is taken under consideration in the commission model. Yet in the case of Paid Search a hotel pays per click, not considering the cancellation level.
  • There are some other issues such as “increasing brand awareness” or “getting more calls or emails from direct clients”, but since both of them are quite difficult to measure, we’ve left them out of this analysis.

Conclusion: Buy a TripAdvisor Business Listing if…

  • Your strategy is to sell directly through your website
  • Your site is user friendly and has a high conversion rate
  • You always offer best rates and last available rooms
  • You already invested in Paid Search
  • You are willing to risk a bit (similary to any other fixed costs investment)

All three of our test hotels meet those requirements.

On top of that, there is another factor that makes profitability different: ranking in the first places of TripAdvisor. The higher you are the better profitability.

Buy a Business Listing if you have a high rank in users’ reviews. If you really care about your clients, you will get excellent reviews, your conversion rate in TripAdvisor will increase and your average commission will go down, making the overall investment more likely to be positive.

Please, if your conclusions are different please do not hesitate and share it with us.

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21 Respuestas »

  1. Excellent analysis, but I think you may have overlooked something.

    1. Those who clicked through from the business listing could have found the hotel websites without any business listing by doing a search on Google.

    2. Those who booked would have been more likely to search Google, since they obviously are motivated to find the hotel site.

    Therefore the ROI is probably overestimated since some of them would have booked even without the business listing link, simply via a Google search for the hotel in question.


  2. I agree Phil I would say most of the time the potential customers are coming through Google or Bing while looking for either your specific hotel or the location. Trip Advisor is a great website for travelers but from a hotels perspective I would say they are better off just going with an affiliate program so that Trip Advisor is going to promote them anyways and they don’t have to fork out money for something that will probably happen anyways.

    Also why not just increase your SEO for those keywords you are trying to reach by generating specific pages on your website so that you can grab even more traffic while having complete control over the content. Very interesting case-study as I was wondering how this service was helping hotel owners.

  3. I think the major oversight here is that TripAdvisor is owned by Expedia. The site is clearly designed to channel as many bookings to Expedia as possible (note the very large yellow “Check Rates” button … where is the hotel’s brand.com link in this highlighted box?). Most guests won’t instinctively click on the hotel’s very small URL link listed above. There is no doubt TripAdvisor has the traffic and that the potential for hotels is great, but when selling the “Business Listing” product, the properties were mislead. The renewal on the listing subscription will most likely be poor because hotels will realize that TripAdvisor is not delivering.

  4. Great post! (as usual )

    There are details of this study that to me are not very clear but I consider these results very interesting and noteworthy of being analyzed.

    If I (still) were an hotelier I would also consider if it was really worth of increasing the quality of Tripadvisor web pages with the official hotel details. My concern would be that this increased quality could transmit a growing sense of quality to this web page and also to the “check rates” button as perceived by Trip Advisor visitors (the second effect being probably more worrisome for hoteliers as this button opens many pop-up windows belonging to the intermediaries that are paying for it…).

    I mean, if you look at the booking box on the second image (right-hand side), with all the hotel details above it, it looks like you could expect to receive the price and availability directly from the hotel (being the intermediaries checkboxes kind of hidden).

    If this “theory” should be proved right, not only hoteliers would not achieve completely their objective of getting these potential customers straight to their websites but they would incentive them to book through intermediaries (which is good for the advertisers), boosting overall at the same time Tripadvisor revenues…

    Sincerely, I would not be surprised if it was the case. In addition to it, should the hotel in this case also pay high CPC for providing its own prices and availability through TripAdvisor?

    So, my dear friends and ex-colleagues, I hope you will illuminate this point in one of your next posts.

    Keep up the great work!

    A big hug to everyone


  5. There is an important factor that is also been missing out.

    When paying for a business listing you are adding your website on tripadvisor, webmasters call this link building, it is an excellent strategy to get higher rankings on Google, the more the site is relevant (and higher on Goolge ranks) the better it is for your website, so essentially you are also increasing your organic searches by applying for this.

    I think it is a very good approach, since Tripadvisor is on page 1 on Google, when searching for a travel destination.

  6. Hi Garen,

    Thanks for your comment. This is indeed a good point.

    However, if you take a closer look you will see that the link to the hotel website has a “nofollow” tag so Google and other search engines do not take these links into account. Even worse. The link is generated on the fly using javascript, so if you “view the source” of the page (the html) you will find not link there.

    So the SEO value of the link is close to zero. As google interprets more javascript, the more value the link will have (although it’ll still be very little as long as the nofollow is present)

    Thanks again for the comment.


  7. Interesting analysis about the new service of Tripavisor, but I have for another Room range (Less than 10) some better results.

    Location: Otranto (Italy)
    First hotel in Otranto for Tripadvisor

    Number of room range <10
    ADR 99-179 (229-283 in High season)
    Tripadvisor fee 200 euro

    1- Traffic volume is the same 1% but is a nice surprise. As the 1% of visits represents 5% of Organic visits and has a conversion rate 3 times higher than Organic visits (65%). Another positive aspect is the 10 different countries provenances.
    2- ROI. The lowest price offered was good itself. The results (before the end of a year) are as we said before 65% of conversion into an action on our Official Website and One reservation recognized for 1,300 euro, it means Less than 15% instead of a 20% average of commission. We also agree with Phil about the indirect effect of Tripadvisor visibility compared to Google visibility and Official website. Tripadvisor compared to others touristic (vs generalist) website Tripadvisor is second only to Hotelsfinder.com in terms of Number of visits (208 vs 355) but has the best Conversion rate (65%) among targeted (touristic) visitors.
    The service has a sense for small hotels with a good visibility on Tripadvisor.
    Marco from Hotel Palazzo Papaleo, Otranto – Italy.

  8. Hi. We analyzed the same for our 95 room Bangkok dowtown hotel We saw a traffic share from TA of up to 6%. This includes the month of May and June when Bangkok was on fire. So far, for us it works great. Bramdwebsite contributed 65% to overall revenue.

    Visit us in Bangkok!

  9. Thank you all for commenting

    @Phil – 1) Sure it is possible, cannibalization between channels has not been measured. I agree that they could have found a web via google but they might have booked via intermediaries on TripAdvisor as well, if there weren’t any link. 2) That is true only if you are well positioned, what if your site is “over ranked” by say, intermediaries again.

    @Brennan – note that commission paid to “affiliates-intermediaries” are usually much higher than having your own website, that is why hotels more and more opt for direct sales via official website simply to get higher margins. Agree that SEO should be a part of overall strategy for every hotel.

    @New York – the whole site is designed to get the highest revenue possible. I guess we will see the renewal rate sometime at the beginning of the year. I will then comment on this post to tell you what our test hotels did.

    @Francesco – great insight. I think that after all, it all come to cost benefit relation, regardless the quality of your listing, number of intermediaries etc, if the link proves to be working it will stay. I am sure that TripAdvisor optimizing its revenue can change the design if necessary to get most of it.

    @Garen – could not agree more with Pablo, SEO value of this link is close to zero. Here is that interesting article about SEO aspect of business listing http://www.tnooz.com/2010/06/10/news/tripadvisor-defends-link-policy-on-business-listings-not-search-engine-friendly/

    @Marco Palazzo Papaleo – thanks for sharing, I am glad that it is working for you. I see that on Otranto there are only 28 hotels listed and only yours has “Contact info”. You are also 1st in user reviews. That must have an impact of your ROI. Please not that we did the analysis assuming a full price of the Business Listing. Those 200 euros are after the discount, aren’t they?

    @marco – 6%, that is really high, how big is your hotel? Do you promote yourself via other channels?

  10. Many thanks for the article. Very annoying and proving the point that the site’s focus is to help expedia, is the fact that your hotel is not listed on a certain date range if you do not have availability on expedia for that date. So you have to keep availability on expedia if you want to monetize the business listing.

  11. I totally agree. TripAdvisor is pure scam. Hotels write their reviews themselves as anyone is allowed to write reviews. All the advertised business should remove and end their contracts with TripAdvisor.

  12. I bought a trip advisor listing based on the promises

    New reason for your guests to book! Make your hotel stand out from the crowd

    Plus, more exposure on high-traffic TripAdvisor pages. Your offer will be displayed on the first page of local search results regardless of TripAdvisor Popularity Index ranking.

    My hotel appears on the same sub page (was already first page) of Inns our town. All I have effectively gained is a no follow link for about 1000 USD. I feel their description of the benefits is very misleading

    Bang for your Buck ? Not even a damp squib for your buck. I won’t be renewing.

  13. Very interesting article with plenty of useful insights and contributions. Thank you!

    @analysis – The European hospitality industry shares your concerns about fraud and misuse. Therefore HOTREC, the European umbrella association for hotels, restaurants & cafés, started a dialogue initiative with all leading review sites and called for a self-evaluation along 10 principles (see http://www.hotelreviewsites.hotrec.eu). Any comment / suggestion for further evaluation is more than welcome!

  14. Hello,
    Anyone has noted a decrease on ROI and performance in general using Tripadvisor Checkrates??

  15. Fernando, desde Enero 2010 los Tripadvisor Checkrates links bajaron sus resultados y el ROI bajo muchisimo, nosotros en México usabamos tripadvisor.es y al hacer el cambio a tripadvisor.com.mx murió todo ROI positivo en nuestra campaña, tanto que para nosotros ya no es una buena opción.
    Pero aún así, yo los recomiendo y creo que funcionan mucho mejor que estar registrado como propietario del hotel y pagar por que se ponga tu información ya que la respuesta es muy baja.


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