How TripAdvisor monetised consumer behaviour
TripAdvisor is a popular portal for choosing holiday destinations and places to eat. You can use it to plan your trips and search for hotels and attractions. You can find tickets for events and excursions, insurance services and much more on the site.
A key feature of TripAdvisor is its customer focus. This approach has enabled the Boston-based company to monetise its activities. The portal operates on a unique model where users are both content generators and consumers. User-generated reviews are becoming an important factor in travel decisions. TripAdvisor has become a pioneer in monetising online user reviews, an approach made possible by the unique behaviour of consumers:
– surveys show that more than 90% of users read reviews before making a purchase or booking;
– 81% of consumers trust reviews more than recommendations from friends;
– 61% of users are ready to decide after reading 1-6 reviews.
These statistics highlight the significance of reviews and feedback for consumers. TripAdvisor has built a successful business around them.
Starting a business
The company’s key figures are Steven Kaufer and Langley Steinert. They met in the late 1990s when Kaufer, inspired by holiday preparations and hotel choices, proposed the idea of a website. Steinert liked the prospect of the project, and they launched it in 2000. Nick Shanny and Tom Palk were also involved in the development of the portal.
At the start of the project, there were two sources of funding:
– the entrepreneurs’ own savings;
– Flagship, which provided US$4 million to support and develop the project.
The initial version of the site was an aggregator of existing travel resources. However, this format did not meet expectations, and the company decided to change its strategy. User-generated content was at the heart of the new approach. This transition proved successful, and TripAdvisor began to evolve actively.
Many people wanted to share their impressions of a holiday destination, restaurant, or event. Their reviews began to attract users who were planning a holiday, and the site’s traffic grew rapidly. The site was monetised by advertising hotels and tours. Over time, the ability to book rooms was added.
The portal today
The COVID-19 pandemic came as a shock to TripAdvisor and the industry as a whole. The company lost around 50% of its revenue in 2020. This forced the company to look for new development opportunities, which led to an expansion of the portal’s functionality. The situation gradually stabilised until the crisis of 2022. Inflation and geopolitical conflicts had a negative impact on the company’s stability. Its shares fell to a low of US$15 per share. However, the growth of the travel industry in 2024 bodes well for TripAdvisor.
