Who’s really profiting from the big plays of TripAdvisor and their acquisitions Bokun and TripAdvisor Experiences (Viator)?

Spoiler alert: It’s not you. Or me.

TripAdvisor, owner of Bokun and TripAdvisor Experiences (Viator), have been front and centre of most discussions amongst tour and activity companies lately. We’ve seen long threads on Facebook groups, received emails from operators around the world, and have had meetings with clients looking to discuss the next play of this powerhouse.

While many in the tour and activity sector had once considered TripAdvisor a great platform that ‘independently’ helps to grow their business, today, many are expressing frustration over TripAdvisor’s growing presence and power over small, medium and large companies.

2018 was an interesting year for TripAdvisor.

Here are some dates to note:

• In February, TripAdvisor updated their algorithm which affected the positioning of top ranked operators around the world. TripAdvisor were quick to release a statement saying they have “fine-tuned how the Popularity Ranking for businesses was calculated”.
• In April, TripAdvisor launched ‘Sponsored Placement’ for accommodation providers. This allows companies to appear at the top of their city search page.
• Also in April, Bokun, an Icelandic booking system for tour and activity operators, was acquired by TripAdvisor. Immediately, the system slashed its prices down to 0.1% per transaction and offered a free 3-month trial.
• Around the same time, our team at TrekkSoft were contacted by operators who noticed that direct links from their TripAdvisor profile to their website were disappearing. For those connected to TripAdvisor Experiences (previously Viator), their website link was replaced with a link to their Viator listing page.
• During the Arival conference in September, Dermot Halpin, President of TripAdvisor Experiences and Vacation Rentals was interviewed for “Ask Me Anything”. During the interview, he confirmed that preferential treatment will be given to Bokun users on TripAdvisor.
• TripAdvisor CEO Stephen Kaufer retracted the above statement in November 2018 stating that no preferential treatment will be given to Bokun users.
• TripAdvisor launched a“new look” in November 2018, integrating a content and social element to the platform.

January 2019

In January 2019, TripAdvisor launched ‘Sponsored Placement’ advertising for Experiences, which would offer free of charge to Bokun users during testing.

So far, response to this campaign has been mixed.

Many have pointed out that TripAdvisor has gone back on the words of Stephen Kaufer by giving Bokun preferential advertising, thus proving that the industry giant will flex its muscles whenever it wishes to.

Perhaps if TripAdvisor had taken these steps 12 to 18 months earlier, the response would have been that of grateful operators queuing up at the opportunity. But today, tour and activity operators are incredibly savvy. The power plays of one of the travel industry’s largest tech company is not going unnoticed and operators are speaking out.

Given that everyone is in this business to make a profit, who are the real winners of these changes? And more importantly, how will the power of TripAdvisor affect tour and activity companies in the long-run?

Bokun dropped its prices to 0.1% per transaction. Isn’t that great for your bottom line?

This is an interesting topic for us at TrekkSoft. Not only is Bokun a competitor of ours, but they were also once a partner of ours. Back in 2016, we partnered with Bokun to create the largest B2B marketplace available.

However, their business model has changed completely since the acquisition last year.

The real cost of using Bokun

Bookings via TripAdvisor:

Shortly after the announcement, many suppliers with listings on both TripAdvisor Experiences (Viator) and TripAdvisor saw their direct contact information and website links removed from their tour and business listings, or that their booking button had been redirected to their TripAdvisor Experiences (Viator) listing.

Given that TripAdvisor Experiences (Viator) then takes a 20% to 30% commission for that booking rather than the 0.1% they would have charged for a booking via your Bokun-driven website, it’s worth re-evaluating the actual cost of each booking you make.

Control over your distribution:

Having a tech giant owning a segment of the industry could have serious implications for tour and activity operators. At the moment, we know that TripAdvisor Experiences (Viator) already requires suppliers to sell at the lowest price on the market, cheaper than they would sell on their own websites.

Let’s say you use Bokun as your booking system and you sell 50% of your tours on TripAdvisor Experiences (Viator) at 20% commission. Both companies are owned by TripAdvisor, your application is probably fast-tracked or you have a dedicated account manager — Great. You are able to offer a great value tour with 80% of the tour price going towards staffing, resources, insurances and other costs. Tours are coming in, you have a profit and your customers are happy — Even better.

So, what happens when TripAdvisor Experiences (Viator), who provides 50% of your bookings, demands that commission must increase, while your selling price on their platform remains the lowest? They currently have control over your distribution as they’re contributing to 50% of your bookings. On the other hand, not working with them might affect your listing on TripAdvisor or your pricing with Bokun. What do you do?

The product

Bokun isn’t going to stay at 0.1% forever. It wouldn’t be a viable business if it was. For now, their strategy is to grow their market share with the backing of TripAdvisor and TripAdvisor Experiences (Viator)’s database and reputation. But this has implications.

1. Onboarding — Setting up a new booking system and educating your entire team about new software is no easy task. It takes time, training and a dedicated integrations/support manager to help set your business up for success. When targeting mass volume, you can’t expect a level of dedicated service that your business deserves.
2. One size fits all — Do you think that a newly founded tour company with one team member will use the same software as a multi-regional company with a turnover of over €1 million? Last year, we at TrekkSoft realised that what we were promoting as an all-in-one booking solution really wasn’t for all tour and activity operators. So, we chose to focus on specific verticals, building our system for those businesses.
3. Product development — The tours and activities sector is constantly evolving, especially with the rate that technology is developing, no one can afford to stay static. Again with a mass volume of companies reporting bugs and making requests you need a large product and development team. Plus you need to be forward thinking about what operators will need next.

How will TripAdvisor re-gain the trust of the travel industry?

Slowly, TripAdvisor is losing its trust and reputation from industry professionals. Most of it seems to stem from poor communication, the constant back and forth in strategy and promises, and the uncertainty all this creates.

It will be interesting to see how they turn this around in the coming year, or if other OTAs will see this as an opportunity to expand their own distribution.

For now, we can only wait.

This article was co-authored and edited by Stephanie Kutschera.