Let’s cut through all the noise of the upcoming TripAdvisor Connect announcement with a real life example of a likely TripAdvisor Connect scenario. In last week’s post, Rolling Out TripAdvisor Connect, we dissected the FAQ posted by Trip Advisor and speculated a bit on what’s to come based on what industry insiders are discussing. What will it all mean for you? Today, let’s dig into the details.
I was recently negotiating with one of TripAdvisor’s sale team while working on a client’s behalf. They kindly provided the past year’s data for the hotel. The scenario below is set-up using an approximation of that data for a feasibility study on implementing a TripAdvisor Connect campaign. So even though this article is speculative, it is based on actual data provided by TripAdvisor for a small independent hotel.
The TripAdvisor ROI Calculator reports this 10-room hotel had approximately 70,000 Pageviews annually on its Trip Advisor page and experienced an estimated click-through rate (CTR) of 5%, which is 3500. From the CTR, TripAdvisor derives the expected conversion rate (5% again) predicting the hotel will end up with 175 in annual bookings from their site. Sounds good, eh?
Each TripAdvisor Business Listing subscription is about $9-1,000 usd per year.
With the new TripAdvisor Connect program, the CPC to capitalize on all of these click-throughs, is estimated to be about $2-3 per click (industry estimate from Milespartnership.com). We’ll use $2.50 each for today’s calculation. But remember the OTAs are also competing for this position, so it may actually become quite a bit higher.
Based on the last year’s numbers the CPC campaign would use an annual budget of $8,750.00. The business listing and CPC come to an approximate total spend of $9,750.00 and would earn an annual gross total of $31,500 (based on a $90 per night room with 2 nights each on average) for the hotel.
The TripAdvisor take is roughly ONE-THIRD of gross sales ($9,750 is 30.95 percent of $31,500). Since a large part of the click-throughs last year went to OTAs and this new tool was invented to ‘even that playing field’ a shift could occur and that number may increase substantially. And remember, this cost does not factor in website upgrades, pass-along costs from your IBE provider, etc.
It’s important to note that this small hotel actually tracked their conversions from TripAdvisor and realized only 23 bookings, not 175, as projected by TripAdvisor. That equated to about $4140 in actual sales.
What are your TripAdvisor numbers? Is your system able to track where your leads come from? If not, do you track them manually? How much would you be willing to pay for the new CPC campaign tool from TripAdvisor? Please share your anticipated results or thoughts on this trending subject below in the comment area.
This is the second of a four-part series on the expectations of Trip Advisor Connect brought to you by Social Energizer, Independent Hotel & Lodging Marketing and Operations Integration Advisors. There’s a lot to sort out in today’s online hotel world, let us help you plan your course!
Next week I will review and compare the various Internet Booking Engine offerings. If you’re not onboard with the new TA Connect service, our final post of the series will offer ideas on positioning your property to minimize the disadvantages this may bring to the lodging industry.