Tripadvisor Plus, the subscription service offering discounted hotels and perks for $99 per year that Tripadvisor is closing, was both a “brilliant strategic idea” and “operationally catastrophic,” said Robert Cole, Phocuswright’s senior research analyst of lodging and leisure travel.
“It should have been great,” Cole said. “It really could have been great.”
Analysts say the shutdown of the struggling service may be part of an attempt to streamline Tripadvisor after its parent company said last month that it was exploring a potential sale.
When it launched in 2021, Tripadvisor Plus promised an ecosystem built on Tripadvisor’s global platform where consumers paid an annual fee they would likely recoup via discounts with just a single booking. With “skin in the game” via the subscription fee, Cole said, consumers would be more likely to repeatedly book on Plus.
Instead, Tripadvisor said this month it would shutter Plus, which came as no surprise to Cole, a subscriber who said the service exhibited poor behind-the-scenes infrastructure and lousy customer service.
You do not want to be, at scale, calling hotels to confirm reservations. That is a red flag.
Robert Cole – Phocuswright
Plus launched under former CEO Steve Kaufer, who left in 2022 and was succeeded by current CEO Matt Goldberg.
Lorraine Sileo, senior analyst and founder of Phocuswright Research, said Kaufer had a history of experimenting and that during his tenure Tripadvisor tried several new products.
“When [Plus] launched, subscriptions were getting very popular,” she said. “However, there were always concerns that the majority of travelers did not take enough trips to find a subscription product worthwhile, especially when they come to Tripadvisor for advice but generally book their trips elsewhere.”
Sileo also said that with strong demand in recent years, hotels largely have not looked for outlets to sell excess inventory, likely affecting Plus’ offerings.
Another issue with Plus, said Phocuswright’s Cole, was that Tripadvisor did not court hotels actively enough to join the platform. As such, much of its inventory came from bed banks instead of via direct connections, resulting in some communication errors.
Cole had issues with several Plus hotel bookings that he said pointed to larger, underlying issues with the service. In one instance, he showed up at a hotel to find his reservation had been canceled by Plus several days prior. His experience with customer service was “frustrating,” and it took 60 days to recoup his money.
While dealing with Plus’ customer service, he was surprised to learn it was policy to call and confirm each reservation. “You do not want to be, at scale, calling hotels to confirm reservations,” he said. “That is a red flag. … It’s going to be very expensive, and there must have been huge problems to even come up with that idea.”
In another instance, Cole said simply trying to select a room type to book on Plus triggered a transaction, charging his credit card five times. In another instance he was charged twice for a single booking.
“I am probably not the only one who that’s ever happened to,” he said. “This wasn’t just a blip. This was a systemic issue.”
Tripadvisor exploring a sale
Last month, Liberty TripAdvisor Holdings, the company with a controlling stake in Tripadvisor (it owns 21% of the company with 57% voting), said it was exploring a potential sale of the company. Tripadvisor in turn said it had formed a committee to evaluate proposals.
Wall Street responded positively, with stock prices rising 25% in the past month.
No suitors have surfaced, but Sileo and Cole agreed that private equity would be the mostly likely buyer, based on the amount of competition in the online travel space and potential regulatory hurdles.
Sileo said a potential sale could inject capital into the company to invest in areas like technology and artificial intelligence.
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Closing Plus was likely part of a streamlining of the business to be more attractive, she added. Tripadvisor’s experiences and dining segments, Viator and TheFork, are performing well, with double-digit revenue increases in 2023, but the core Tripadvisor business has struggled in comparison, with a 7% annual revenue increase.
Dan Wasiolek, senior equity analyst with Morningstar, said Tripadvisor itself “faces a lot of competition and that they tried Tripadvisor Plus to help boost that business, but it continues to struggle.”
Oppenheimer’s Jed Kelly said in an investor note, “We see a strategic rationale behind a potential transaction based on more flexibility to fix the core under the private umbrella.”
Other subscription models in travel
Tripadvisor Plus isn’t the only subscription model in travel, with some airlines, hotels and car rental companies having dipped their toes in the segment.
On the travel booking side, the most similar to Plus is the Travel + Leisure GO subscription service from Travel + Leisure Co. Launched in 2021, it offers discounts and deals on hotels and attractions as well as editorial content for $9.95 per month.
However, the company is currently testing an open membership model with no fee.
“Travel + Leisure GO carries our flagship brand, and we’re committed to its success,” said its head, Amy Lipka, senior vice president of travel solutions at Travel + Leisure Co. “Our new membership model is focused on adding member benefits, such as partnerships with WeWork, AllTrails and GoPro, that bring enormous value to the platform and enhance the travel experience.”
*This story originally appeared in Travel Weekly, a fellow Northstar Travel Group brand.
