At any gathering of accommodation providers, conversation about TripAdvisor can instantly raise blood pressure levels and divide a room.
Unfortunately living and interacting with the demon child is not optional. Fighting TripAdvisor will only waste energy and get you beat-up, so the only way forward for accommodation providers is to adopt a positive attitude by increasing awareness, working with it and and accepting co-habitation.
Although the blame for the recent fall in fortunes for world's largest online travel company, Expedia has been pointed at the rise of TripAdvisor, there are other factors at play that include a rising trend for consumers to use TripAdvisor along with OTAs to research and then book direct.
So maybe the biggest future threat to TripAdvisor (and OTAs) will increasingly come from accommodation providers that are adopting their own highly accessible and intuitive online booking channels?
We'd like to see that trend continue :-)
The trouble with TripAdvisor is …. that … it's … too … damn ….
powerful. Even more powerful than it was a few weeks ago. One day it
launches a new meta-search engine and the next – bam – the business of
the world's largest online travel company, Expedia, goes through the
floor.
Just like Google, TripAdvisor can make or break a company. The power
of its (unsubstantiated) reviews is notorious. Has been for years. Now
it has double the force. TripAdvisor is coming at you from both
directions – if its reviews don't impact you in some way, its search
engine will.
The recent second quarter results from TripAdvisor and Expedia, which once owned TripAdvisor and spun off its demon child in 2011, sum up the situation beautifully.
TripAdvisor made a lot more money in the second quarter than it did
the year before – net profit was up 26% to USD67 million – while
Expedia's result was down 32% to USD71.5 million.
Expedia CEO Dara whatshisname cited TripAdvisor's replacement of its
product pop-ups with a real honest to goodness search engine as the
major factor.
No two ways about it, Expedia got slammed, in the process demonstrating how vulnerable, and perhaps unsustainable, it is.
Like all online travel agents, Expedia is utterly dependent on
marketing – especially through online channels such as Google and
TripAdvisor – to drive traffic and customers.
Feed the beast, spend more on advertising.
This approach has already brought a few online travel agents undone.
Check-in.com.au is a great example here in Australia.
A mid-size operator, it collapsed under the weight of excessive
marketing spend – read Google AdWords – a diktat from delusional
management who could see no other way forward for a struggling business.
Feed the beast. It gets hungry.
But there's no long-term future in that.
Yet marketing budgets keep on growing.
For example, at Expedia marketing as a proportion of revenue reached a
staggering 48.7% in Q2 compared with 42.4% the previous year.
In late 2008 Expedia's marketing as a percentage of revenue was 34.6%.
That's an increase of 40% (as a pecentage of revenue) in just five years.
At some point it has to stop. Or something will give.
Are the first cracks appearing?
Maybe so.
But what about TripAdvisor – where does it go from here?
Onwards and upwards you would think.
Its millions upon millions of reviews give it an enormous free presence on Google while it now more than 50 million members.
And membership spells loyalty – something that's many online travel businesses do not have.
Combine all that and you have a sustainable business model.
For now.
Source:
Click HERE
