TripAdvisor has become one of the world’s most popular travel websites, serving as an invaluable resource for travelers looking to plan their next vacation. With over 830 million reviews and opinions covering over 8.6 million accommodations, restaurants, experiences, airlines, and cruises, TripAdvisor has established itself as a trusted source of information in the travel industry.
But how exactly does TripAdvisor work and make money? What is the strategy and business model behind this travel giant? In this article, we will take a deep dive into TripAdvisor’s ingenious business model and understand what makes this company tick.
An Overview of TripAdvisor’s Offerings
TripAdvisor essentially serves as a digital travel guide, offering end-to-end solutions for travelers to plan, book, and have the best travel experience. Some of TripAdvisor’s key offerings are:
Reviews and Opinions Platform
TripAdvisor’s core offering is its reviews and opinions platform featuring over 830 million contributions from travelers around the world. Users can read through first-hand experiences on hotels, flights, restaurants, cruises, travel packages, and more to make informed booking decisions.
Travel Guides and Forums
In addition to reviews, TripAdvisor also offers detailed travel guides on popular tourism destinations globally. It also hosts various travel forums where users can connect with other members and get their questions answered by domain experts.
Price Comparison and Booking Services
TripAdvisor allows users to compare prices across various travel sites and book hotels, flights, and restaurants through its platform. This gives users the convenience of evaluating options before booking through TripAdvisor.
TripAdvisor Experiences
Launched in 2016, TripAdvisor Experiences is a tour, activities, and attractions booking service offered in many countries. Users can book popular local experiences and tours through TripAdvisor.
Now that we have an overview of TripAdvisor’s offerings, let’s look at how the company monetizes its services and some of its key revenue streams.
TripAdvisor’s Business Model and Revenue Sources
TripAdvisor works on an ad-based business model, with a majority of its revenues coming from advertising and commissions from booking transactions. Here are some of the key ways TripAdvisor makes money:
Advertising Sales
A bulk of TripAdvisor’s revenues come from selling advertisement space to travel and hospitality businesses including hotels, airlines, restaurants, travel agencies, cruise liners, etc. Businesses can advertise on TripAdvisor to get more visibility and exposure to millions of travelers using the platform to plan their trips.
TripAdvisor offers various advertising solutions including display-based advertising, subscription-based advertising, and pay-per-click marketing. Businesses can choose advertising options based on their budget and requirements.
Commissions from Hotel and Restaurant Bookings
Whenever any user makes a hotel, restaurant, or flight booking through the TripAdvisor site or app, the company earns a small commission from the booking transaction. With millions of travel bookings powered by TripAdvisor, this has emerged as a significant revenue source.
TripAdvisor Experiences Bookings
Similarly, TripAdvisor also earns a commission when users book any tours, activities, or experiences on the TripAdvisor Experiences vertical. The company gets a percentage of booking value as a commission from the local suppliers and vendors who operate these experiences.
Business Listings
TripAdvisor allows travel businesses to create a listing on the platform to showcase their property or services. These listings can be free or paid. Paid premium business listings get more visibility and exposure in search results, maps, etc. Many hotels, restaurants, and other travel businesses pay TripAdvisor to get premium listings and reach more customers.
Subscription Revenue From Business Owners
In addition to premium listings, TripAdvisor also earns subscription revenues from premium tools and services targeted at travel business owners. Products like Reputation Pro, Spotlight, and Business Advantage offer enhanced analytics, reputation management, and other services to travel businesses on a subscription model, adding to TripAdvisor’s revenue streams.
Branded Travel Content
TripAdvisor.com features branded travel content sections that are sponsored by destination marketing organizations and hospitality brands. This provides another advertising revenue source for TripAdvisor.
So in summary, TripAdvisor mainly makes money through:
- Advertising Sales
- Commissions on Hotel, Restaurant, and Flight Bookings
- TripAdvisor Experiences Bookings
- Paid Business Listings
- Subscription Services for Businesses
- Sponsored Travel Content
The company operates on a lean cost structure, with technology and sales & marketing being two major expense heads. This has helped TripAdvisor achieve strong profitability, making its ad-based business model highly successful.
With user-generated reviews at its core, TripAdvisor has gained user trust over the years. This has allowed the company to harness its huge user traffic and data assets into a thriving travel business, cementing its place as one of the world’s largest travel platforms.
Frequently Asked Questions about TripAdvisor’s Business Model
What is TripAdvisor’s main revenue source?
TripAdvisor’s primary revenue source is advertising sales to travel and hospitality businesses. Branded and performance-based advertising accounts for over 70% of TripAdvisor’s revenues.
How does TripAdvisor attract users to its platform?
TripAdvisor attracts users majorly through word-of-mouth and SEO. User-generated reviews have helped TripAdvisor build authority in travel, which is reflected in strong organic rankings for relevant keywords.
How many users does TripAdvisor have?
TripAdvisor has over 460 million unique monthly visitors across all its global platforms and websites. It also has over 100 million app downloads.
Does TripAdvisor charge any booking fees?
No, TripAdvisor does not charge users any fees for booking hotels, flights, or restaurants through its platform. Its earnings from bookings come through commissions from suppliers.
How does TripAdvisor manage to provide free access despite being ad-based?
TripAdvisor keeps operational costs low through optimal technology usage and relatively lean teams. Also, it derives revenues not just from ads but also from bookings, subscriptions, and promoted content.
Conclusion
TripAdvisor has mastered the art of monetizing traveler insights and user-generated content. Its reviews-based platform and efficient business model have made TripAdvisor a key player in the online travel space. With a powerful network effect fueled by its huge user base, TripAdvisor is well-positioned to continue thriving in the global travel ecosphere.