Trip Advisor Case Study

Tripadvisor

Key Business Problem

The key business problem identified in the Tripadvisor (TA) case is focused on how Kaufer, founder and CEO of TA, should address and prioritize its growth plans for the company, considering the new challenges present to him in the areas of flight service, vacation rental and the entrance in the new and highly competitive market which is China.

According to the case, Kaufer’s main objective is to follow a strategy that maximizes profitability but keeping in perspective the core business of the company.

Assessing the problem

To better evaluate the alternatives Kaufer should base his analysis on the following steps: i) revise the positioning and context of TA, by considering the 5Cs analysis ii) perform a SWOT analysis; iii) review Porter’s 5 forces and iv) analyze and evaluate each of the possibilities, to assess how each one can or cannot promote the maximization of profit and growth in the long term.

Company:

TA is the most popular and largest travel community in the world and is operating in 24 countries and 16 languages. It has listings for 455 thousand hotels, 92 thousand attractions and 564 thousand restaurants in over 71 thousand destinations worldwide. Monthly visitors accounted for in May 2010, are 35 million.

TA is a website where travelers can rely on other travelers’ reviews to plan their trips, or at least be satisfactorily helped in their decisions by them. Therefore, the company is focused on creating good user experience for people while searching for new travel locales, but keeping in mind the generation of revenues. Sources of revenues can be identified as text links, business listings (B&B, hotels, inns, restaurants) and advertising.

Finally, in 2009 the company has presented revenues of $352 million and operating income of $196 million.

Customers:

Online social travel networking has changed the way tourists plan their trips and these websites, such as TA, allow customers to interact and provide reviews on hotels or on local tourist attractions and facilitate the consumer’s decision making process.

TA is appealing to consumers because it provides detailed and useful information to consumers when planning their travel and it uses “word of mouth” publicity to spread information about travelling places, which is perceived by costumers as being more rich, easier to use and more reliable than commercial advertising. Also, the guaranty of unbiased information in the reviews is well perceived by the customers, promotes trust and therefore stimulates continuous and repeated usage of the platform.

Consumers write reviews because most of them were pleased with their hotel or travel experience, so they wanted to share that information with others. Some consumers write reviews because they were not satisfied with the hotel service and a few others just want to have a conversation or use TA as a shortcut to reach management.

In summary, consumers write reviews because they feel that it is useful to get advice from the website and want to exchange useful information and experiences with others.

Competitors:

Competition is a challenge in all service areas because each one has very entrenched competitors.

In the flight service competition became even harsher with the entrance of Google in the sector, through the acquisition of ITA which was the leading flight information software company. TA launched in 2009 a flight meta-search service where consumers could compare prices, and it was competing essentially with Kayak, but Google’s entrance in the market has put competition to a new level, because Google also owns the platform where people do their “first search” for leisure destinations.

In the vacation rental TA competition is harder to address because it is a very fragmented market. The number of property owners promoting their own vacation rental is widely spread and this market is even larger than the properties promoted directly by specialized companies on vacation rental.

Finally, in the China market competition is very tough, namely for foreign companies, because local competitors respond very fast and quickly copy innovations developed in western countries, such as the U.S.

Collaborators:

The most important collaborators are the people who write reviews and give advice, because they write reviews voluntarily and the network becomes more valuable by each person’s review: more consumers providing more interesting content, more advertisers can offer more promotions and appealing bookings, and more locations