Tripadvisor is undergoing a transformative phase, refocusing its business model from traditional advertising to embrace direct bookings. This strategic shift involves leveraging cutting-edge AI tools and innovative partnerships.
As part of this transition, Tripadvisor is enhancing user engagement through its app, integrating generative AI for enriched itinerary planning and hotel bookings.
The company is altering its approach, moving from metasearch and advertising towards a focus on direct bookings. This transition is supported by incorporating generative AI tools for trip planning and an impactful partnership with Hopper. Consequently, the existing vacation rental feature is being decommissioned, while third-party providers like Vrbo will be favoured.
Tripadvisor aims to engage users mid-funnel through its app, utilising generative AI to facilitate itinerary building. The app now allows users to book hotels directly, augmenting the traditional approach of drawing customers through metasearch.
The average revenue generated by a Tripadvisor user engaging with its Trips feature is significantly higher, marking a shift in economic focus from arbitrage to engagement.
Tripadvisor’s alliance with Vrbo highlights a strategic shift in its vacation rental offerings. Effective from November, Vrbo and other third-party suppliers will handle vacation rental bookings.
CEO Matt Goldberg noted, “We are closing the loop on transactions,” illustrating Tripadvisor’s move to become more of a booking-oriented platform.
Goldberg highlighted Tripadvisor’s enhanced focus on being the merchant of record, reinforcing its identity as a go-to booking site, rather than a media platform.
Tripadvisor possesses an extensive collection of review data but is cautious about selling it to generative AI providers like OpenAI.
Instead, the organisation plans to harness this data for its growth, all the while implementing measures to block unwanted AI crawlers from accessing its content.
Previously, Tripadvisor generated approximately 90% of its earnings from the hotel and online travel agency advertising. This was primarily achieved through a metasearch model that engaged users via advertising clicks.
While metasearch remains part of the model, its contribution has dwindled to less than 50% of total revenue, prompting Tripadvisor to explore new avenues for growth.
Goldberg acknowledged the reduced role of metasearch and the evolving landscape, emphasising the need for an engagement-based revenue approach.
Technological advancements have been central to Tripadvisor’s evolution, with AI playing a critical role in shaping new service offerings and enhancing user interaction.
By leveraging AI-integrated tools, the company can provide enriched travel planning, dining reservations, and personalised recommendations, setting a precedent for future travel experiences.
Tripadvisor’s strategic focus on direct bookings and AI integration marks a significant departure from its traditional advertising-driven model.
This evolution not only positions the company at the forefront of travel innovation but also paves the way for sustained growth amidst shifting industry dynamics.