Tripadvisor CEO on Company's Evolution From Advertising to a Booking Model

22.09.2024 - 23:29 / skift.com / Dennis Schaal / Matt Goldberg / Seth Borko

This isn’t the old Tripadvisor, the one where the company was dependent on metasearch and chasing advertising clicks. At the new Tripadvisor, users can use generative AI for trip-planning and to book experiences, dining reservations and hotels.

In other words, “we are shifting from arbitrage economics to engagement economics,” Tripadvisor CEO Matt Goldberg told Skift’s Head of Research, Seth Borko, at the Skift Global Forum.

Tripadvisor used to generate around 90% of its revenue from hotel and online travel agency advertising through its metasearch feature, Goldberg said. Playing the arbitrage game, Tripadvisor would draw customers to the site through Google and other advertising, and then collect higher revenue than it paid for the ads when users clicked on a hotel link and went to a third-party website to book.

Users would come to the site, “move off,” and Tripadvisor would get paid, Goldberg said.

Tripadvisor isn’t dropping that model, but metasearch is no longer a growth driver. In the second quarter, the Brand Tripadvisor segment, which includes metasearch, accounted for less than 50% of the company’s total revenue, and it fell 10% year-over-year.

Instead, users can book tours and activities on Tripadvisor and sister brand Viator, and can now book hotels in the Tripadvisor app through a new partnership with Hopper.

The idea is to engage with travelers “mid-funnel” in the Tripadvisor app and use generative AI-laced tools like its Trips feature to help travelers build itineraries. Tripadvisor “can show the actual human who made that review,” Goldberg said.

The average revenue of a Tripadvisor member who uses Trips is 15 times greater than users who visit other parts of the company’s site, Goldberg said.

When someone books an experience on Tripadvisor, they are far more likely to book a hotel, and the average revenue per user rises, he said. Goldberg added that the unit economics of its app users are better than cost per click economics. In contrast to its old ad model, It is leaning into travel bookings, and cross-selling hotel bookings and experiences.

Vrbo’s Partnership Will Change

Tripadvisor is shutting its exisiting vacation rental feature as of November 1, and Goldberg told Skift that in a reboot of vacation rentals Tripadvisor will be using Vrbo, among other third-party suppliers, to provide vacation rental bookings. Vrbo previously provided vacation rental supply to Tripadvisor, but wasn’t the merchant of record for bookings.

Goldberg said Tripadvisor is closing the loop on transactions — becoming more of a booking site than it had been previously.

Tripadvisor has a treasure trove of review and other data, but won’t necessarily be selling it to companies such as OpenAI and others,