Founded in 1999, TripAdvisor has become one of the most well known travel businesses in the world with millions of members contributing to the platform every year. As of October 2017, TripAdvisor had recorded over 535 million reviews and opinions, over 415 million monthly average unique visitors, and over 7 million total businesses reviewed (accommodations, restaurants and attractions). TripAdvisor was started with the goal to allow travellers to research and plan their trips using professional reviews sourced by the company. However, it has become much more than this over the past 18 years. TripAdvisor now allows travellers to contribute to a global travel community while providing services that allow customers to: research and plan their trip, compare prices, book through the TripAdvisor site, and gain access to reviews while travelling.
What makes TripAdvisor unique in the online travel business is that it is a full-service platform that aims to create a community of like-minded travel individuals. While other sites like Booking.com or Trivago aim to assist travellers in specific areas like hotels or flights, TripAdvisor has made the choice to become a one-stop shop for all of a traveller’s potential needs. Membership to the site is free and access to content is unrestricted. With millions of reviews and active users, TripAdvisor has become the place to go to plan a trip, which shows strong network effects in play.
Since TripAdvisor does not charge membership fees, it collects its revenue in other ways, such as advertising and acting as an intermediary between consumers and travel businesses, such as hotels. While other travel sites have consolidated their services and built niches in the market, TripAdvisor has taken a different route. Their approach has been to open up their services even more and encourage greater contribution from active members through loyalty and recognition programs. By building up their portfolio of services and membership, TripAdvisor has chosen to diversify their revenue streams so that they are not dependent on just one service to ensure the future of the company. One example of this is in their hotel booking branch of their business where nearly 50% of TripAdvisor’s revenue comes from Expedia and Priceline. While this seems quite risky, this is considerably better than direct competitors like Trivago, which rely on the same two businesses for 80% of their revenue.
Since it was founded in 1999, TripAdvisor has consistently shown the value of free user-generated content both for revenue and consumer value generation. As one of the only full-service travel platforms, it provides a unique and sustainable business model that is globally recognized. With continued growth and added features, it is likely to remain the go-to resource for global travellers.
References:
https://tripadvisor.mediaroom.com/US-resources
http://marketrealist.com/2015/11/tripadvisors-revenue-drivers-largest-revenue-stream/
TripAdvisor in the Age of Platforms Tries the Full-Service Model
