2020 was a terrible year for U.S. hotels. Last year, thanks to the pandemic, occupancy sat at just 44%, down from 66% the year prior. And for the first time ever, hotels found themselves with more than 1 billion unsold rooms.
Unfortunately, 2021 isn't looking too rosy as far as hotel projections go. The American Hotel & Lodging Association expects hotel occupancy to average just 52% this year -- a definite improvement over 2020 but nowhere close to pre-pandemic levels.
All told, hotels are seriously starved for revenue, and at a time when a lot of people are still hesitant to book travel, many may not see a significant uptick for months. But travel platform TripAdvisor (NASDAQ: TRIP) recently launched a new service that could benefit not only members but the hotel industry as a whole.
More visibility, more revenue potential
TripAdvisor has introduced a new subscription service for travelers called TripAdvisor Plus. For $99 a year, those who sign up will enjoy perks like discounted room rates, specialized service, and in-room benefits (for example, higher-end toiletries or a complimentary bottle of wine or champagne upon arrival).
But it's not just travelers who can benefit from this arrangement. Hotels that opt to participate in the program will also enjoy more visibility on TrapAdvisor's platform. The result? The potential for more bookings.
Best of all, hotels can opt into the program for free. There are no upfront costs, commissions, or fees involved. Hotels can also opt in and out as they choose -- there's no annual commitment, which means hotels can choose to participate when bookings are sluggish and opt out when occupancy is more robust and they're not looking to discount rooms.
A lifeline for the hotel industry?
Between a slow vaccine rollout and the general economic impact of the pandemic, a lot of people aren't in a position to book travel right now, and that's hurting hotels in a meaningful way. In addition to leisure bookings, hotels are also losing out on business-related bookings -- and as of now, business travel is not expected to return to pre-pandemic levels until 2023. Tripadvisor's new service could be just the thing that helps struggling hotels drum up business -- without actually incurring any costs in the process.
If TripAdvisor's subscription plan helps hotels boost their revenue, it'll be a boon to real estate investors, particularly those with money in hospitality REITs (real estate investment trusts). Plus, extra hotel business is good for local economies. When guests book hotel stays, it often means nearby restaurants and shops see additional business. And that, too, could impact real estate investors in a positive way, because the more revenue those local businesses enjoy, the less likely they'll be to close down, leaving commercial landlords and shopping centers in the lurch.
TripAdvisor's new service launched to a limited audience late in 2020. But it should soon become widely available to more users, which means pretty soon, hotels could start to see an uptick in reservations -- and much-needed revenue.