Tripadvisor is a leading online platform for travel-related reviews, aggregating 884 million reviews and opinions about 7.9 million hotels and other accommodations, destinations, restaurants, and activities as posted in 2020. According to the third annual Access America Vacation Confidence Index, 60% of American consumers say they factor other travelers' online reviews into their plans when booking a vacation. Benefiting from the trend and capitalizing on the traction gained from users, Tripadvisor continues to introduce travel planning tools on its websites to act as a definitive resource for travelers.
Tripadvisor branded websites include tripadvisor.com in the United States and localized versions of the website in 48 markets and 28 languages worldwide. With rich user-generated content, Tripadvisor has valuable monetization opportunities. Travel businesses can advertise on Tripadvisor's platform and benefit from its large audience and global reach. Tripadvisor derives most of its revenue from the sale of advertising, primarily through click-based advertising and to a lesser extent, display-based advertising. The remainder of Tripadvisor’s revenue is generated through a combination of subscription-based offerings, content licensing, and its recently launched private sale site, SniqueAway. It also offers deals on top hotels at lucrative discounts. Tripadvisor has diversified its geographical mix in the past few years with the contribution of its US operations declining from 82% in 2008 to approximately 50% in 2020. Long-term revenue growth is expected to be driven by expanding traffic and user-generated content.
Of late, Google has upgraded its travel search tools in recent years to compete with trip booking websites like Tripadvisor and Booking Holdings. Google is pushing its own hotel products in search results and siphoning off quality traffic that would otherwise find Tripadvisor via free links and generate high margin revenue in its hotel click-based auction, which is now leading to the revenue to decline in this segment.
Tripadvisor maintains a global presence both through the reach of its global portfolio of ~30 websites and through its in-market staffing in more than ten countries. The flagship Tripadvisor brand operates websites in 48 countries in 28 languages. Its core Tripadvisor platform and many of its other brands are uniquely positioned to appeal to travelers globally and strive to provide universally relevant content and community. Since 2013, the company focused on enhancing its brand image in the emerging markets by incorporating more local language content to drive higher user engagement.
The sheer scale and reach of Tripadvisor should help it command attractive rates from advertisers seeking placements on Tripadvisor websites.
Tripadvisor launched Business Listings in January 2010, which allows property managers to directly connect to Tripadvisor's community of people.
As part of a Business Listings subscription, accommodation businesses may display any combination of contact information on their Tripadvisor listing, including their URL, email address, and phone number. Subscribers also gain access to Tripadvisor's special offers feature, enabling properties to attract travelers with customized offers.
In Q1 2014, Tripadvisor rolled out its Instant Booking feature which aimed at reducing the friction related to mobile bookings. The user experience is enhanced by allowing users to complete all booking related steps from selecting a room to inputting personal and credit details on the Tripadvisor platform itself. With its Instant Booking Platform, Tripadvisor plays the role of an intermediary between a traditional online travel agent (OTA) and a travel advertising website.
Consumers are increasingly leveraging social networks for research before making purchases for any product including travel. Trefis sees social media, such as Facebook, being used heavily as a means to communicate and exchange travel information and opinions. The trend can create strategic growth opportunities, allowing Tripadvisor to attract new consumers and develop unique and effective advertising solutions.
To capitalize on the social media boom, Tripadvisor entered into a partnership with Facebook in 2010 and launched a setup that allowed users to receive “Instant Personalization” when visiting the site with an active Facebook account. Using the system, Tripadvisor users can check out their friends' travel experiences before planning their own trip. Under the system, users who are already logged into Facebook can view friend reviews of various locations while checking out places their friends visited during their travels. Users are also treated to a “most popular” destinations screen based on their friends' cumulative travel information.
Recent historical trends show that each year, an increasing percentage of global travel spending has been conducted online through supplier websites and online travel agencies. The trend is expected to continue as online penetration continues, mobile smartphone and other devices continue to proliferate, and as travel grows along with an expanding middle class in certain developing countries like China and India.
The internet is expected to become increasingly integral to the travel planning process due to increasing worldwide online penetration, particularly given the capability that the internet provides travelers to refine searches, compare destinations, and view real-time pricing. With internet penetration currently estimated at 40% globally (88.5% in North America, over 80% in Europe, ~ 60% in Latin America and ~ 30% in Asia), Tripadvisor has the potential to grow in all markets.Link
The global online advertising market is growing as advertisers continue to shift their spending from offline to online channels, mirroring the trend in consumer media consumption.
Given the size of the travel market, travel providers and travel-related advertisers will continue to be motivated to devote significant resources to advertise their travel products and services. In addition, as more travel dollars are spent online generally, an increasing amount of travel advertising spending is expected to migrate from traditional offline advertising channels to online advertising opportunities.
Tripadvisor has been investing heavily in its mobile platforms such as GateGuru mobile and tablet applications. The company introduced the Facebook log-in functionality and launched its new iPad application a few years back.