Tripadvisor is in the midst of a transformation, moving away from its old reliance on metasearch and advertising clicks to a new model focused on engagement economics. While the company used to generate the bulk of its revenue from hotel and online travel agency advertising through its metasearch feature, this is no longer the main driver of growth. Instead, Tripadvisor is now offering users the ability to book experiences, dining reservations, and hotels directly through its platform, using generative AI to enhance trip planning for travelers.
The shift towards engagement economics has been highlighted by Tripadvisor’s move away from its previous reliance on arbitrage economics. While the company used to attract users to its site through Google and other advertising, hoping they would click on a hotel link and go to a third-party website to book, Tripadvisor is now looking to engage users at a deeper level within their platform. By offering booking capabilities for tours, activities, and hotels directly on the site, Tripadvisor hopes to increase user engagement and drive higher revenue per user.
The partnership with Hopper allows Tripadvisor users to book hotels directly through the app, further enhancing the company’s focus on travel bookings and cross-selling opportunities. By using generative AI tools like its Trips feature to help travelers build itineraries and engage with reviews from real users, Tripadvisor aims to increase user spending and loyalty. The average revenue of a Tripadvisor member who uses the Trips feature is significantly higher than users who visit other parts of the site, showcasing the success of the company’s new engagement-focused strategy.
In a move to streamline its vacation rental offerings, Tripadvisor will be shutting down its existing feature and partnering with Vrbo to provide vacation rental bookings. By becoming more of a booking site and closing the loop on transactions, Tripadvisor is evolving its business model to focus on direct bookings and engaging users throughout their travel journey. This shift towards becoming a one-stop-shop for travel bookings is reflected in the company’s decision to focus on partnering with third-party suppliers like Vrbo to offer a wider range of accommodation options to users.
While Tripadvisor has a wealth of valuable data, including reviews and other content, the company does not plan to sell this data to external companies for use in generative AI or other technologies. Instead, Tripadvisor aims to leverage its own data and supply to enhance the user experience on its platform. The company has also taken steps to protect its content by blocking AI crawlers that may scrape its freshest content, ensuring that its valuable information remains secure and protected. By focusing on internal data utilization and user engagement, Tripadvisor is positioning itself as a leader in the evolving travel industry landscape.
Overall, Tripadvisor’s shift towards engagement economics and direct bookings signals a new era for the company as it evolves to meet the changing needs of travelers. By offering a more personalized and seamless experience, Tripadvisor aims to increase user spending and loyalty, while also expanding its range of offerings to become a more comprehensive travel booking platform. With partnerships with companies like Hopper and Vrbo, Tripadvisor is well-positioned to continue its growth and innovation in the travel industry.
