

TripAdvisor could challenge the big two providers of online travel services - e15ctr0n
http://www.economist.com/news/business/21611100-tripadvisor-could-challenge-big-two-providers-online-travel-services-david-vs-two

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coldcode
A total crock. Having worked for an OTA I can guarantee you that the last
thing TA will do is try to build an entire backend to book the hotels
themselves. In hotels you only make good margin on huge volume since they more
you bring customers the better numbers you can demand. It's not just the
processing, it's the relationships with thousands and thousands of hotel
chains and individual hotels. It's customer service and dealing with all of
those hassles. It's competing in all the different types of hotel booking
submarkets (tonight, opaque, long term, vacation, packaging etc). Getting a
small percentage of so many sales with almost no expense is way easier than
getting more margin but having huge outlay and competing with the big guys
(namely Expedia mostly in the US and Priceline mostly everywhere else in the
world outside of China). They would be insane to switch their business model.
Orbitz is too dinky to compete effectively and Travelocity gave up and is
essentially Expedia now. Tripadvisor is in a great place where they bring
traffic to everyone but compete with no one. Once they lose that they will
lose period. I highly doubt E and P miss their percentage at all.

~~~
e15ctr0n
> TripAdvisor's boss, Stephen Kaufer, denies he wants to take on the big two.
> "We are a media site," he says. "I want Expedia and Priceline to thrive
> because they are my clients."

Looks like the boss agrees with you.

> But soon, holidaymakers will be able to book their entire trips without
> leaving the TripAdvisor app. Rivals beware.

The Economist is known for making bold predictions. What do you think this one
is based on?

~~~
foobarian
They could be reading too much into it. The on-site booking still talks to
OTA's back-end API. It's probably most useful to small OTAs who don't want to
bother/don't have resources to build their own top-tier UI. But a site like
Expedia will probably have their own, nice, well converting UI.

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e15ctr0n
This is the Harvard Business School case study mentioned in the article:
[http://hbr.org/product/TripAdvisor/an/511004-PDF-
ENG](http://hbr.org/product/TripAdvisor/an/511004-PDF-ENG)

Another fascinating article on how TripAdvisor took $4 million of invested
capital to build a company now worth almost $14 billion:

[http://www.businessinsider.com/scaling-is-hard-case-study-
tr...](http://www.businessinsider.com/scaling-is-hard-case-study-
tripadvisor-2012-8)

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sanj
I work at TripAdvisor and am quite enjoying myself.

I'm happy to answer questions to the extent of my ability.

~~~
OrwellianChild
Can you break down the commission structure that differentiates TripAdvisor
from someone like Yelp? Stop me where I go off the rails:

    
    
        - TA collects reviews, good or bad, for free from users.
        - Then they set up commissioned links to someone like
        Expedia for the hotel.
        - Expedia pays them a commission for closing the sale.
        - Expedia then passes the reservation on to the hotel.
        - The hotel gets the booking, and pays Expedia for the
        lead.
    

As long as there is enough money in the system to support two layers of
outsourcing on BizDev, this sounds like a fairly stable relationship...

...If TA starts booking directly, however, it can do any of several things:

    
    
        - Charge lower rates than Expedia
        - Make more margin on the same booking
        - Provide bundling or other discounting not available
        from the existing Expedia arrangement
        - Start selling "preferred listings" which always float
        to the top of search results
    

It strikes me that the only reason this relationship exists is that Expedia
doesn't have a good review front-end... Because the spun it off as TA.

Is there any back-end connection/relationship/ownership across Expedia and TA
that would facilitate these two not eventually competing as described above?

EDIT: Formatting.

~~~
sanj
The way that I think about TripAdvisor is that we have become a location that
aggregates traffic that is interested in booking a hotel (or restaurant, or
attraction) better than anyone else. And this is a nice flywheel: more reviews
means more value to users, which means better SEO traffic and brand awareness,
which means that this the best place to write said reviews.

Once the visitor is here, they peruse our content, photos, etc. and we direct
them somewhere else to complete their transaction. Instant book is a way to
streamline that transaction for our visitors.

I can't comment on the whether or not we'll ultimately compete. Ultimately is
a long time.

