TripAdvisor’s revenues come from a variety of sources, but the primary one has always been click-through advertising. Display-based advertising is growing more rapidly than click-through, up 29 percent in the third quarter of 2013 over 2012, compared to 13 percent growth for click-based.
“Then there are numerous other sources of revenue, including a subscription model,” notes TripAdvisor Global VP of Sales Julio Bruno. “We also have partnerships—for example, when we do syndication of our product. And we have business listings, which is when a property is putting up a listing with a special offer. We also have the vacation rental side. One thing we don’t do is act as a travel agent. We never take a percentage of a booking.”
Though TripAdvisor doesn’t make money directly off bookings, it is now ranked as the No. 1 source of traffic for online bookings. And with the rollout of its TripConnect service in October, independent hotels with a business listing can compete alongside online travel agencies and large chains and drive direct bookings from TripAdvisor to their own property’s website.
Part of TripAdvisor’s popularity with consumers is based on its reputation as an unbiased source of reviews and rankings. “You can’t be at the top of Expedia unless you’re booking a lot of business on Expedia. That’s true of any OTA; they’re biased toward hotels that book more,” says Gutman. “TripAdvisor is the most unbiased place, because it is agnostic of how you booked your reservation.”
Naturally, much of TripAdvisor’s overwhelming success relative to other sites stems from it being first to market in this particular space, though it takes much more than that to grow at the rate TripAdvisor has. “TripAdvisor was at the forefront of a huge trend, and they’ve managed to dominate the market,” Craig says. “There are several reasons for that, I think. One is the traffic it receives. Second is the volume of content—a huge volume of new reviews posted every day. Content is king online; it helps their search ranking and drives new traffic. And the third is consumer confidence. Social media enables people to easily connect with the advertising source that they trust most, which is other consumers.
“Also, TripAdvisor offers varied functions—planning, sorting, and filtering functions—that really help you plan a trip. That’s something other review sites don’t do as well.”
TripAdvisor’s Next Journey
TripAdvisor may be the leader in its not-so-little niche, but there are certainly some powerful competitors in the travel-planning market, such as Google, which has its own hotel finder, and Pinterest, which recently announced its travel planning and booking channel.
“Our competitors are not staying put, so we are going to continue innovating and see what the consumer wants and what the suppliers want and match those two,” Bruno says. “We’re going to be focusing heavily on our growth in mobile going forward. We have 108 million unique monthly users in mobile. The growth is staggering. And we need to monetize that much better.”
TripAdvisor announced in late October that it would begin taking direct hotel bookings on smartphone apps in 2014, a clear sign that, indeed, there will be a major emphasis on the mobile side. When planning travel at home or in the office, consumers may be more likely to use their laptops and desktops, just as they have since the advent of TripAdvisor. But when they’re actually traveling, when they’re at the property and in the midst of the experience, their reviews and reactions will often be phoned in.
Of course, we mean that literally, not figuratively. TripAdvisor has become too influential for anyone in the industry to “phone in” their interactions with the site in a figurative sense. It seems counterintuitive that a property could provide a truly personal touch when communicating with 53 million monthly users at once, but that’s exactly what hoteliers need to strive for if they’re going to make TripAdvisor work for them.