Think back to the last time you booked a trip. Chances are you, like many other travelers, researched hotels, restaurants and activities at your destination, likely via TripAdvisor. Tnooz reported that in October of 2015, TripAdvisor received over 68 million visits in the U.S., leaps and bounds ahead of Expedia and Priceline, which received almost 33 million and 18 million, respectively. TripAdvisor generated more views in both the U.K. and Australia than its competitors during the same times.
Perhaps during your search, you read reviews left by past guests at a hotel and decided to stay at that property. You may have even clicked a link from the hotel’s TripAdvisor page to either an OTA listing or the hotel’s own website. This seemingly simple convenience is actually part of a bidding scheme, much like Google Adwords, where OTAs and hotels compete for the top position on the page by placing the highest bid. Pay-per-click is only one way TripAdvisor generates revenue despite offering free access to its wealth of information and is one example of how TripAdvisor has changed since its inception.
TripAdvisor has expanded their operations considerably since their early days as solely a user-generated review website. World Travel Market claims that about 280 million people use TripAdvisor when planning travel. Over the past few years, TripAdvisor has aggressively acquired travel-related start-ups in an attempt to diversify the company’s position. Viator, a tour-planning website, Vacation Home Rentals, and lafourchette, a European online restaurant reservation system, are notable acquisitions.
The company began their instant booking feature rather modestly; OTAs paid the review site a commission for every click that brought guests to their websites. This approach was extremely successful; Expedia and Priceline now account for 46% of TripAdvisor’s income according to World Travel Market. However, the sites recent, more aggressive moves into the booking sphere have some industry observers questioning if TripAdvisor could become a direct competitor with OTAs. This could be a mistake for the company because they would lose a significant portion of their revenue and may not be able to make it up.
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