In recent years, digital platforms play a significant role in the global sharing economy. Airbnb, Booking, Tripadvisor, as three giants in the tourism industry, act intermediaries controlling and profiting from most transactions (Gössling & Hall, 2018). Today, let us have a better understanding of the Online Travel Agency (OTA) Pioneer – Tripadvisor.
Development of Tripadvisor
Tripadvisor Inc., an online travel company found in the US in 2000, operates a global platform with user-generated content, price comparison tools, and online reservations for transportation, lodging, travel experiences, and restaurants (“TripAdvisor”, n.d., para.1). It has more than 465 million reviews together with restaurant, hotel and tourist attraction options with 315 million members (Marketing91, 2019). Here is a video introducing Tripadvisor.
In the beginning, three founders of Tripadvisor would like to build a travel information platform， resources of which are through more traditional channels such as newspapers, guidebooks, magazines, etc. With the growth of digitalization, yet, they gradually realised that sharing visitor reviews is the most popular function of Tripadvisor. After grasping this selling point and combining other functions, Tripadvisor became the first OTA pioneer in the tourism industry and the most popular travel websites in the US. In 2018, the revenue of Tripadvisor is 1.62 billion dollars, occupying 4.65% of worldwide OTA revenue (Lock, 2019).
by monthly users (in millions) (Clement, 2019)
How Tripadvisor makes money?
The main source of revenue for Tripadvisor is from advertisements (Marketing91, 2019). For the users, because of all travel comments shared by visitors, it is free to access the majority of functions such as reading travelling stories, searching restaurants and reservations. For tourism corporations, Tripadvisor is an effective marketing platform, as the rich travel content attracts numerous tourists’ attention, especially those whose income in middle and high levels. Therefore, companies with products that of target marketing is the same as the character of Tripadvisor’s users would rent advertisement space from Tripadvisor. Taking an example of Expedia and Priceline, Tripadvisor contributes the high customer flow to the hotel booking.
Booking Conformation Page in 2017 (Pinchain, 2018)
Why it is successful in the tourism industry?
The main reason for Tripadvisor operating successfully may attribute to it obeys sharing economy and the term of “SMAC”, which are the building blocks of digital transformation comprised by four factors (Olenski, 2016).
* Social Media Platform
Creating a free communication platform for users is the most significant successful point of Tripadvisor. Initially, it ensures the reliability of guests’ comments. Once visitors consume their reservation, they will have the right to rate their experience and write feedbacks. It also creates a community for users to share their travelling photos, tips and stories. In order to ensure the reliability of guest feedbacks, the company employs quality assurance measures to try and make sure that only authentic data and reviews are posted on its site; however, it could not totally prevent malicious negative comments. Besides, another benefit is that potential travellers could make their own decision through different feedbacks.
Moreover, Tripadvisor effectively uses human psychology that people tend to prefer “wisdom from friends” rather than “wisdom from cold score” (Narayanan, 2015). Once users link their Tripadvisor and Facebook account together and look up reviews of a hotel, the reviews posted by users’ Facebook friends will appear right on top, even though it perhaps not protects privacy since someone may unlike reporting his or her travelling trace to acquaintances.
* Mobile technologies
Tripadvisor’s target clients are all the travel enthusiasts who use any operating system device to seek for online help as far as travel services are concerned. Therefore, it developed application systems that are compatible with all the major operating systems namely windows computers, windows phones, android OS and iOS. Moreover, the company internationally operates and localises websites in places such as China, Canada, Thailand, Turkey, Spain, the UK among others.
* Analytics
For businesses, Tripadvisor Business Advantage, a subscription service, assists businesses better market their property to potential guests and connect them to their direct booking channels. The subscriber could access the TripAdvisor analytics to (1) assess performance at a glance, (2) benchmark the performance against competitors, (3) monitor online reputation, (4) track traffic and rankings in business market, (5) find out what travellers are clicking on, etc. (Tripadvisor, 2020). For tourists, the price comparison tool helps them make better decision, even though it would make users spending more time on selection.
* Cloud-based technology services
It is easier for Tripadvisor users to reserve the travelling posts that they like in their accounts. Moreover, when they use the same account to log in Tripadvisor through different devices, their favorite posts are still there.
Tripadvisor is the pioneer of OTA, the digital business model of which attributes to it standing at the top. Although the revenue of its competitors, Airbnb and Booking.com, have been higher than Tripadvisor’s in 2019, these three have different advantages in the tourism industry. For Tripadvisor, it may find methods to increase income; however, the platform of sharing tourist reviews and assist tourism firms marketing and analysing is difficult to be imitated.
References:
Clement, J. (2019). Most popular travel properties in the United States as of April 2018, by monthly users. Retrieved from https://www.statista.com/statistics/269130/monthly-visits-to-travel-portals-in-the-us/
Gössling, S., & Michael Hall, C. (2019). Sharing versus collaborative economy: how to align ICT developments and the SDGs in tourism?. Journal of Sustainable Tourism, 27(1), 74-96. doi: 10.1080/09669582.2018.1560455.
Lock, S. (2019). Leading online travel agencies (OTA’s) worldwide by revenue in 2018. Retrieved from https://www.statista.com/statistics/934995/revenue-of-leading-otas-worldwide/
Marketing91. (2019). Marketing Mix Of Tripadvisor – Tripadvisor Marketing Mix. Retrieved January 25, 2019 from https://www.marketing91.com/marketing-mix-tripadvisor/
Narayanan, C. (2015). The Value of the Digital Handshake. Business Today, 24(6), 24-25. Retrieved from http://eds.b.ebscohost.com.uoelibrary.idm.oclc.org/eds/pdfviewer/pdfviewer?vid=1&sid=b3f0e94f-0d9d-448f-b54b-8ef1bb09b840%40sessionmgr102
Olenski, S. (2016). Why Marketers Need A SMAC. Retrieved May 26, 2016 from https://www.forbes.com/sites/steveolenski/2016/05/26/why-marketers-need-a-smac/#46e203cb6a3d
Tripadvisor. (2015, October 27). Get the latest facts on the power of reviews…all in under 90 seconds [Video file]. Retrieved from https://www.youtube.com/watch?v=vr6q3PTNnQk
Tripadvisor. (2020). What is TripAdvisor Business Advantage?. Retrieved from https://www.tripadvisorsupport.com/hc/en-gb/articles/200614567-What-is-TripAdvisor-Business-Advantage-
TripAdvisor. (n.d.). In Wikipedia, February 18. 2020 from https://en.wikipedia.org/wiki/TripAdvisor
Watch the Review. (2019, January 11). TripAdvisor Review – Online Travel Services [Video Files]. Retrieved from https://www.youtube.com/watch?v=x1Ur-gkna0M
Emma's blog :) 
Hi Emma, thanks for your interesting blogpost. Agree that Tripadvisor is doing a great job in online social marketing with their appealing pictures and great content. The comments and ratings do help companies and businesses improve their overall performance and attract more customers. However, with the advent of reviews, I think they need to keep abreast of the customer experience. Especially for some negative comments, there needs to be a swifter way for the response. From my working experience, I found out the staff do not take those complaints seriously as there are more positive ones online. This is disappointing and perhaps there could be something to do between Tripadvisor and travel businesses. I really like your point of SMAC contributing to the success of Tripadvisor. Great link to our weekly online session! Your analysis is very comprehensive and insightful which makes me want to use the app more often.
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Hi Xingyuan, love your blogpost of Tripadvisor! What surprised me the most was that Tripadvisor’s main source of income was advertising rather than agency fees. I strongly agree that the number of active users and visits means that the website has resources to monetize, but what I didn’t expect was that the advertising costs of the website exceeded the agency fees charged. I think It is also confirms the great potential of the e-commerce market. In addition, there are many and novel ways to make profits under the digital business model. It does not necessarily require the traditional method of collecting commissions to obtain profits. In addition, I also agree with you that the way Tripadvisor is associated with social platforms has advantages and disadvantages. The method of building a user community can make users feel more at home, thereby increasing user stickiness, especially in the sharing economy. However, due to the website is mainly for sharing tourist reviews, false reviews may have a significant impact on the travel companies that are settled in. The website may be able to further screen the users who participate in the review, such as blocking the posts of some users with a high rate of negative reviews, but it is more difficult to avoid fake positive reviews. Inevitably, some travel companies might use some coupons and other methods to make users leave positive reviews. This aspect needs further discussion, and may only depend on consumers’ own judgment.
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Hi Emma, another useful blog! After reading your blog about Tripadvisor, I get a better understanding of why it is successful, which still satisfies Geiss’s description of the 10 digital business model patterns (Michael Geiss, 2018).
Firstly, Free pattern attract users to Tripadvisor.
Secondly, promoting the increasing number of loyal customer or long-term users in Tripadvisor.
Lock-in pattern
“Communication platform” and “wisdom from friends” increases the cost of switching to a competitor, such as Airbnb and Booking.
Platform business pattern
Bring Facebook with Tripadvisor together on one platform to interact with each other.
Rent instead of buy pattern
Cloud computer technology based on AWS help Tirpadvisor put more effort into other areas, like improving customer experiences.
Finally, making profit
Renting advertisement space from Tripadvisor to other company which has a same character between its consumer group and Tripadvisor’s users.
However, you discuss this rely on SMAC which is a really interesting perspective.
Michael Geiss. (2018, September 28). 10 patterns for successful digital business model innovation [Blog post]. Retrieved from https://iconstorm.com/en/10-patterns-successful-digital-business-model-innovation/
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Hi Emma,
Thank you for your interesting article. I have just known that the main source of income is mainly from advertisement instead of intermediary fee from hotel or flight. I think TripAdvisor Business model is successful because it relies heavily on global large community for people to share their experiences, tips, photos, and feedback. One thing that I like for the review system is to only permit a person who make a reservation and have direct experience rather than allowing random people to rate and share feedback. However, the company should also strictly monitor reviews from time to time to ensure authentic review rather than fake review (overrated or underrated) hired from some party.
In terms of SMAC, as for Mobile technology, I think it is a part of success because travelers, nowadays, mainly rely on smartphone app, which allows them to browse reviews, write feedback anytime and anywhere within a few clicks. Therefore, it could greatly enhance the traffic flow of user on TripAdvisor service. From my direct experience, I have TripAdvisor app on my smartphone, it is truly convenient for me to look up reviews of hotel and restaurant while I am on the go to somewhere.
Overall, I am not surprised that why it could become global largest review platform because of its business model. Lastly, I have some questions. Do you think what the future of TripAdvisor business will look like in the next 10 years? and could it potentially be substituted by other company like Booking.com which might introduce the same platform as TripAdvisor.
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Hello Golf, thanks for your comment. In my opinion, generally, Tripadvisor may be difficult to be replaced since its market share is large in the world. Actually, I believe Tripadvisor and booking.com are more like friends, because of different marketing focus. Yet, Tripadvisor is different in China, as it seems more like a new OTA launched in 2009. Before that, Chinese tourists are used to searching for information in Mafengnwo that is the Chinese Tripadvisor. Therefore, it is one of the reasons why Tripadvisor is difficult to explore its Chinese market.
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I am very honored to see your article, let me have a further understanding of Tripadvisor which is the online travel company.
there are some reasons for Tripadvisor’s success in the tourism industry reflected in your article. Indeed, the company has seized the opportunity of development in the data era, and its business model successfully embodies the ‘SMAC’ principle.
I think its greatest success lies in the practicality of the information on the website and the authenticity of the website. Travelers could provide real travel experience on the website. These kinds of comments have considerable reference value for tourists who are about to travel, especially for tourists who intend to travel by themselves. These comments let them understand the basic situation and cultural history of the destination, help them to make a reasonable tour plan and obtain the most. For a complete tour experience, some reviews will also recommend the most distinctive dining places and accommodation options in the local area, eliminating the fear and strangeness of tourists who are new to the city.
However, the website will also encounter some problems, such as how to control some false and negative comments, which is worth thinking about.
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