Figure 1: The picture showing the Trip advisor App
TripAdvisor is exhausting the potential of the internet services to connect customers with the user-generated contents. The company is involved in the comparing the shopping website of the retail companies and also providing online reservations and bookings for hotels, restaurants, transportation companies, and travel companies across the world (Okazaki, Andreu and Campo, 2017). As result, a critical analysis will be conducted on TripAdvisor and how it’s transformative has effects on the travel, hospitality and online retail sectors in the world. The overview about the operations of TripAdvisor will be provides in the first section, the next section will be about the historical development of the company and regulatory issues that it faced. The business model of the company will be examined under section three and the internet ecology in section four of this paper. Finally, the discussion about the revolutionary internet transformation about will discuss.
What is TripAdvisor?
TripAdvisor is an online website of an American travel company that offers reviews and information about travel and accommodation services. The company has other sister websites in other countries such as India, Spain, Italy, U.K, German, Japan, Ireland and France (Gupta and Herman, 2011). There are nifty features in the company’s online website besides the obligatory reviews about the hotels, restaurants and other tourism attractions that travellers might be interested during their trips.
The travel marketers can display their properties on the Trip Advisors and the individual users of the site can easily and quickly post videos about their vacations on the site for free. According to Gupta and Herman (2011), the strategy helps the company to attract new users to the websites who might be interested in booking hotels and vacations to the attractive sites displayed on the websites, and this earns the company commissions .
One of the competitive advantages of TripAdvisor.com is the presence of personalization tools. The tools permits the users to create “My Trips” folders where they save restaurants, hotels and attractive sites that they would like to visit in the future. There are also tools which allow travellers to add photos, travel plan details, maps and notes, of which they can expand and customize (Gupta and Herman, 2011). Further, ‘Check Rates” is another feature of Trip Advisors which allows the website’s users to check the prices of hotels and their availability in their respective commerce sites.
Figure 2: Personalized features in TripAdvisor App
Historical Development and Regulatory Issues
Stephene Kaufer and Langley Steinert established TripAdvisor in 2000. The company was formed in Boston, Massachusetts, United States (U.S). The company was formed to help customers with the reviews and information that they need about the accommodation facilities that they might be interested in, and other attractive travel destinations across the world. Initially, the main reason for the formation of the company was not about the reviews regarding the hotels and attraction sites (Linda, 2018). The site was designed as a B2B tool, where only companies in the larger tourism and travel industry were allowed to display their properties and destinations to attract customers. However, that later changed when the travel community started using it as customer review site and this evolved to cover that need.
In 2007, the company purchased Smart Travel Media, Travel-Library.com, TravelPod.com, SeartGuru.com and BookinBuddy.com which helped in the online expansion of the corporations. In 2019, the company attained more than 463 million users who visited the site on a monthly basis. Today, the site has incorporated the use of 28 languages to reach the potential users and companies that uses other languages besides English (Gupta and Herman, 2011). There is presence of approximately 8.5 million establishments that are using the sites, which includes restaurants, hotels, lodgings, rental properties and those companies offering travel experiences services (Linda, 2018).
Despite its amazing growth as one of the world’s largest online platform for travellers, it has faced a number of legal issues in the past. In 2014, the company was fined €500,000 by the Italian Antitrust Authority for improper commercial practices. The TripAdvisor was found to have published misleading information about the reviews’ sources. Again, a newspaper established a fake restaurant in Italy that occupied the top position of the TripAdvisor in Italy and this made the company to face legal penalty.
Further, the company faced legal liability after it was reported that there was breach of advertising standards in the U.K. In 2011, the U.K Advertising Standards Authority (ASA) launched an investigation into the complaints of KwikChex Company that TripAdvisor did not provide honest and trustworthy reviews from the travellers (Linda, 2018). The situation forced TripAdvisor to pull down “reviews you can trust” and “reviews from our community” was used to replace the hotel reviews sections.
Revolutionary Business Model
TripAdvisor has three major business model that is agency model, advertising model and merchant model. There are other minor models which contribute to the total revenues of the company. However, the advertising model is the one that generates the greatest percentage of the total revenues for the company.
The revenue model applied in the agency model is the same as the good old brick-and-mortar travel agency, where the company earns commissions from the bookings and reservation services. In this model, Trip Advisor has contracts with the Booking.com where the company enjoys between 10 and 30 percent of commission in each booking. However, it depends with the hotel size and its ranking in the pages of Bookings.com. One of the competitive advantages of this model is that the best interests of the users, the contracted hotels and the company itself within the Booking.com. The strategy attracts clients and helps the business partners to also raise their revenues.
The next model is the merchant. In this model, Trip Advisor is focused on reselling the hotel rooms it has already bought to the travellers. That shows that the company is also connected with the travel companies, besides the individual travellers themselves to facilitate these business transactions. The company buy the rooms earlier in large numbers to enjoy economies of large scales that means they are offered at a cheaper price and later sell at higher prices to make profits. The travellers are also bundles with rental cars and airfares as well, which boost the profits of the company. For example, in 2015, the model offered 63 percent of the total revenue of the company, which is equivalent to $6.7 billion.
Finally, there is an advertising model. The company is involved in click-based advertising where the potential traveller visits the TripAdvisor.com before booking for their trips. The site displays the hotels that interest the users and they can have opportunity of searching for more details about them. The site later redirect the users to the booking page of that hotel and this generates revenues from the cost-per-click (CPC). Under the same model, there is display-based advertising where airlines, tourism companies and suppliers and hotels are advertising their products on the Trip Advisor.com website for a fee. In 2016, Click-based advertising and display-based advertising raised $ 730 and $ 283 million revenues for the company respectively.
Internet Ecology of TripAdvisor
Internet ecology is where there are agents interacting with each other in an organized manner using information technology to support the operations that each agent is conducting to gain profits (Jeacle and Carter, 2011). Since TripAdvior is dealing with customer reviews and bookings of the contracted hotel and attractive destination companies, including their online advertisement, the company is considered to be a major competitor in the tourism and travel sector.
There are many competitors of TripAdvisor in the industry. One of the major competitors is Expedia Group that was established in 1996. The company offers travel product and services to the travellers on the online platform. Another major competitor is Yelp which was formed in 2004. The company is helping people who are searching for attractive destinations across the world on the online platform based on the reviews and opinion of a community that are informed (Yoo, Sigala and Gretzel, 2016).. Further, there is Trivago which is a public corporation that was formed in 2005. The company is targeting travellers who are searching for a place to stay during their trips and vacations.
TripAdvisor has core partners which help in achieving its goals of providing online services to travellers. One of the key partners is the travel service providers such as hotels, restaurants, attractions and vacation rentals (Bussgang, 2012). There is also Online Travel Agencies (OTAs). Although Booking.com and Expedia are competitors of the company, they are the biggest companies that advertise their services on the TripAdvisor.com (Rabanser and Ricci, 2005). Further, there are also content creators whose work is to upload pictures and write reviews that are important for the success of TripAdvisor. The reviews act as the core value proposition of the company.
Trip Advisor’s Ecosystem
Internet Transformation of TripAdvisor
In the Tripadvisor Goes Social: What Accommodations and Restaurants Need to Know, it was reported that TripAdvisor has been successfully in changing the way people are interacting socially. There are new integrated content types and social features that are included in the new site of TripAdvisor and its mobile experience with an intention of empowering and inspiring travellers. The members can use those social features to link with their family, friends, brands and travel experts (Peng, Zhang and Wang, 2018).. The users can receive inspirations and recommendations in their social feed, which are travel-dedicated. There are streams of content within these personalized feed features from the people they follow. The content includes the food items that people can eat inside the restaurant, the activities that people can do while on the vacation and the best places that they could seek accommodation around them. Therefore, TripAdvisor as changed the way people interact socially with each other using their personalized social features.
TripAdvisor has also triggered new regulation process. Prior to 2013, there was no legal regulation that prohibited publication of fake online travel reviews. However, in November 2013, TripAdvisor was found to have 15 percent of its travel reviews to be fake and they were forced to remove them from their website (Oxford Economics, n.d). The situation compelled the Australian Competition and Consumer Commission (ACCC) in 2013 to establish Supplier Guide that would help in preventing online travel companies such Trip Advisor from publishing fake reviews sources.
Further, Trip Advisor has played critical role in the cultural change of how people travel. TripAdvisor – changing travel one review at a time states that since its establishment in 2000, the company has altered the traditional travel agents market through ensuring that there is authentic reviews in an online platform for the travellers (Shah, 2019). That has helped people to have wonderful travel experiences since there expectations are meet.
TripAdvisor has caused significant digital transformation to the tourism and travel industry. The company has personalized features on its platforms that helps the travellers to connect with friends and family as they share contents of tourism and travel products and services ,including videos and photos. Further, the company has triggered the introduction of ant-fake travel reviews laws and regulation in Australia. Furthermore, the company has altered the traditional ways in which people travel as people have to confirm the reviews on the platforms to avoid being disappointed. Therefore, TripAdvisor is resulted into a great internet transformation in the world.
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Jeacle, I., & Carter, C. (2011). In TripAdvisor we trust: Rankings, calculative regimes and abstract systems. Accounting, Organizations and Society, 36(4-5), 293-309.
Okazaki, S., Andreu, L., & Campo, S. (2017). Knowledge sharing among tourists via social media: A comparison between Facebook and TripAdvisor. International Journal of Tourism Research, 19(1), 107-119.
Peng, H. G., Zhang, H. Y., & Wang, J. Q. (2018). Cloud decision support model for selecting hotels on TripAdvisor. com with probabilistic linguistic information. International Journal of Hospitality Management, 68, 124-138.
Oxford Economics. (n.d).“Sizing Worldwide Tourism & TripAdvisor’s Economic Impact”; https://www.tripadvisor.com/TripAdvisorInsights/wp-content/uploads/2018/09/Worldwide-Tourism-Economics-2017-compressed.pdf
Rabanser, U., & Ricci, F. (2005, January). Recommender systems: do they have a viable business model in e-tourism. In ENTER (pp. 160-171).
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Bussgang, J. (2012, October 2). “The Secrets to TripAdvisor’s Impressive Scale”; https://hbr.org/2012/10/the-secrets-to-tripadvisors-im
Linda, K.( 2018, Aug. 17). “How TripAdvisor Changed Travel”; https://www.theguardian.com/news/2018/aug/17/how-tripadvisor-changed-travel
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