TripAdvisor strengths
- Brand Reputation and credibility
- rich user base
- Strong management team
- low cost business model
- Diversified revenue sources
- Financial position up to 2019
TripAdvisor weaknesses
- Reliance on Google’s SEO
- Mobile App and InstantBook
- Dying Stock
- Lack of recognition of the E&D unit
- Depletion of reviews since 2014
- undifferentiated service; Trivago, Kayak, Google
- unable to analyze customer data
- lack of engineers to implement new projects
TripAdvisor Opportunities
- Experience and restaurants industry
- In city plan-making
- Users profile
- Increasing online penetration of the global travel industry
- 80 % of the travel activities are still booked offline
- Consumers are accustomed to use the Internet for travel search
- Expansion in South America and Australia for TheFork
TripAdvisor Threats
- Airbnb, google flights, Southwest airline
- Hotels personal websites
- Threat of backward vertical integration from OTAs and direct suppliers who want to cut the intermediary TripAdvisor
- Threat of forward vertical integration from Google
- OTAs, direct suppliers and Google want to drive traffic to their platforms at the detriment of TripAdvisor
- online traveler reviews were ubiquitous across the web by 2016
general industry analysis
- $1.7 trillion Global Travel Market Worth (Still Climbing)
- 35% Decline of travel agents from 2000 to 2016
- $183 billion Travelers activities expected worth (2020)
- 10 to 30% Hotel and airlines commission to OTA
5 Forces: new entrants
Threat of new entrants
- relatively low
- high barriers to entry
- ->takes time to build credibility and user base, and acquire suppliers
general current situation of TripAdvisor
- World’s largest travel platform
- Growth in restaurant and experience verticals
- Presence in many different businesses
TripAdvisor main competitors
Airbnb
-Substitute threat for TripAdvisor as Airbnb popularity is growing rapidly
Google
-Google positioning its travel products suite as a substitute of other intermediaries such as TripAdvisor
Hotel Industry
- Many hotel such as the Marriott International, are pushing clients to their own websites
Relevant segments of the general environment
Economic
-The economy plays a huge role on people’s purchasing power and will to travel.
Sociocultural
- As TripAdvisor offers personalized trip planning, they must understand the cultural and psychological differences in their consumers.
Technological
- Rise of the internet allowed consumers to act as their own travel agents
- The growth of technology allowed consumers to share reviews around the world = TripAdvisor business.
Global
-TripAdvisor operated in 26 countries (2010)
Key success factors in the industry
- high level of traffic
- strong brand reputation
- direct suppliers (many)
- user engagement
- diversify revenue
- consumers’ loyalty
- personalizing the platform
- monetize the “free aspects”
- experience and dining
- opportunities
Resource-based view analysis
Financial Resources
- Publicly traded
- Net Income of $118M in 2018
- Diverse revenue sources
- Profitable since 2002 (profit margin of 7% in 2018)
Human Resources
- CEO Steve Kaufer
- 3,300 employees
- Allocation of directors to each business unit
- Strategic hiring (Nelson, ex COO at Vox Media)
- CoreX restructuring
- engineering team
- rewards employees
Physical Resources
- Limited
- Ecommerce based business model
- Data centers, IT structure, servers
Technological Resources
- Data collection
- Metasearch engines
- Reliance on Google’s SEO
- User traffic/ user-friendly platform
- strong technology and algorithms
- Organic growth development
Reputational Resources
- “one of the most used and trusted travel websites in the world”
- strong
- window stickers –> studies showed that traveler were more likely to visit a business with a TripAdvisor sticker on the window
Org resources
- Hotels, Dining and Experiences, and branded displays and platforms
- Existent gaps
describe their comp advantage (in terms of valuable, rare, costly to imitate, and non-substitutable)
Valuable
- TripAdvisor’s vast selection of accommodations, restaurants lists, and experiences
- Strong management team
Rare
- Most reputable and important website for travel purposes
- High Market share
Costly to imitate
- Amount of M&A TripAdvisor has participated in
- Synergies that have been created through acquisitions
- Brand awareness developed through the years
Non-substitutable
- Industry leader,
- Possess first mover advantage
- Access to abundant amount of knowledge and data
Business-level strategy
Differentiation Level Strategy
● B2C and B2B approach
● Competitive Market, same conventional cost for consumers
● User integrity and community
main differentiators:
- unbiased reviews
- forum section creates sense of community
- price comparison software
Trip Advisor’s Sweet Spot
● Middle ground between customer needs, competitors offerings and company abilities
● Unique, unbiased travel review content
● Free of charge for consumers
●org capabilities: strong tech, data, fraud-detecting systems
Corporate level strategy
CoreX
- Introduced in 2018
- Flights, hotels, restaurants and experiences all in one
- Connective tissue, synergies
Related constrained strategy
- Multiple related businesses - Degree in diversification
- Relationship between diversification & performance
Value creating diversification
- Customer profiles
- Horizontally diversifying, multipoint competition
–>cruise critic, smarterTravel, SeatGuru, and FlipKey (all other travel ventures)
–>synergies: expansion of content, search capabilities, and deal offers
- Economies of Scope
- Geographic Diversification
- Vertical Integration: increase in market share
–> big ones were TheFork (restaurants) and Viator (experience)
–>synergies:
·Economies of scope as TripAdvisor and Viator share the same inventory
· TripAdvisor became a “hub” for planning trips
· Cross-selling opportunities
*also tried to do app + Instantbook, but they failed –> was capitalizing revenue and not giving any comp advantage –> value-reducing diversification
Mergers and acquisitions
2002
-InterActiveCorp acquired TripAdvisor for $210 Million
2007-2008
- Smarter Travel, travel deals site- SeatGuru, online resource for airline seats arrangements
- Cruise Critic, forum for cruise reviews
- FlipKey, online vacation rental portal
2013-2014
- NIUMBA, Spanish vacation rental site
- LaFourchette, restaurant booking business
- VacationHomeRentals, vacation rentals business
- Viator, a tour and attractions platform
2018-2019
- Bokun, platform to connect tour suppliers to TripAdvisor
- Restorando, a south American restaurants booking company
main problem with TripAdvisor case
- OTAs and hotels trying to pull travelers directly to their sites
- Google consolidating products into one stop shop (alternate sales channel for OTAs and direct suppliers)
- ->Now competing for advertising money
- User traffic from Google’s organic search result declining
- ->Google pointing users directly to its proprietary travel tools and products
5 Forces: Rivalry
- very high
- AirBnb, Booking.com, delta airline, southwest airline, google
- Growing Competition
- Lack of differentiation
- other metasearch engines (Kayak, Trivago)
- ->traveler can compare prices here
- OTAs:
- -> Travelers can’t compare prices
- > Dominated by Expedia Group & Booking Holding (80%)
- -> 2012: purchased Trivago & Kayak
- -> 2013-2015: Expedia snaped other OTAs (Travelocity & Orbitz) and vacation site HomeAway, and Booking acquired restaurant reservation site OpenTable
- > Pumped up TV advertising to generate traffic directly (eliminate intermediaries) & tried reducing dependence on metasearch engines
- established travel players and start-ups
- ->experience segment: Klook and GetYourGuide
- ->dining segment: OpenTable
Google (search engines) → Compete for travelers, but rely on for traffic
- Relies on OTAs, metasearch engines, & direct suppliers for ad revenue
- Entered the industry with launch of hotel finder & flight search engine ITA
- Began hosting traveler reviews
5 Forces: Buyers
Bargaining power of buyers
- high
- many agencies have the same capabilities and are standardized
- ->low switching cost
- consumers = large amount of TripAdvisor revenue
Five forces: substitutes
- intermediate
- Airbnb
- traditional travel agents
- ->80% of travel activities were still booked offline in 2018
-friends and family as a source of information
five forces: suppliers
- medium
- forward integration by hotels
- google has high power
- but direct suppliers (hotel, restaurant, et) are dependent on metasearch engines and OTAs for an extra distribution/sales channel
Value Chain relevant sectors : distribution + supply chain management
Distribution
- done through search engines
- -> a rather weak component since distributed through a competitor (Google)
- -> but Google also relies on TripAdvisor for traffic, so coopetition
Supply chain management:
- their offering is supplied by restaurants, hotels, etc.
- -> very complex dynamics again due to coopetition
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External Environment8
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Internal Organization15
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review session5
