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Strategic†and†Tactical†Tools†for†E?Business
by group 23
Anne Dorte Dybkjær (92957)
Bengin Durkal (13120)
Ziwei Jiang (114148)
28 of November 2017
Copenhagen Business School
Pages/characters: 7,74 + frontpage and appendix /17.594
Copenhagen Business School Group 23
Strategic and Tactic Tools for E-Business Fall Semester 2017
TripAdvisor
This analysis grasps a deeper understanding of the success of TripAdvisor according to the
article Managing†Online†Reviews†on†TripAdvisor†, written by Teixeira, T. and Kornfeld, L. from
Harvard Business School (2016). The purpose of this project is to identify the reasoning
behind the success, especially focusing on an e-business perspective.
The analysis will be looking into the factors which are attracting customers, creating trust
and why companies are depending on TripAdvisor. In order to do so, the case will be
answering four questions, which are:
1®†Why†has†TripAdvisor†become†a†successful†source†of†hotel†reviewsø
2®†Why†is†TripAdvisor†so†appealing†to†consumersø†Why†do†users†write†hotel†reviewsø
Why†do†users†read†hotel†reviewsø
3®†How†can†major†hotel†chains†influence†online†reviewsø†Should†they†even†try†toø
4®†Which†online†WOM†©word?of?mouth®†approach†do†you†prefer?†The†one†practiced†by
the†Four†Seasons¨†or†the†Homewood†Suites†approachø†Whyø
Combined, all these critical success factors are creating a valuable business model which is
making TripAdvisor the market leader on the online travel reviews market. Furthermore, the
report will conclude feedback question on the exercise class.
This report is limited to only focus the on hotel reviews, even though TripAdvisor has many
services. This has been done, as the article which is basis of this assignment is also limited
thereto.
1ƆWhy†has†TripAdvisor†become†a†successful†source†of†hotel†reviewsø
In year of 2000 the CEO, Stephen Kaufer and his co-founders, decided to solve a problem
they had encountered several times: According to them it was impossible to get unbiased
travel-related information on the internet. Websites and brochures was very polished and
biased, and they felt that these brochures many times were far away from the what the
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Strategic and Tactic Tools for E-Business Fall Semester 2017
traveller actually experienced. So, they were interested in the more personal side of a
traveller’s experience, the word-of-mouth of reviews and recommendations.
Their first business model was based on banner ads and licences to content. This did not
work as they expected. Stephen Kaufer and his co-founder revised and came back with a
new strategy. A website that contained only reviews and ads, and then the reservations
could be made by transferring the customer to an online travel agency partner. This resulted
in an ad-click through rate of 10%, compared to the avg. of 2% in the industry (Teixeira, T.
2016, page 1). In the following years tripadvisor expanded their services, to include search
for flights and rental properties. Based on the case-material this is one of main factors in
Tripadvisors success. However expanding upon the case-material, the current success of
Tripadvisor has many interesting views to consider:
Applying some of the theory of and nuances from the course literature we would also
highlight the following reasons.
TripAdvisor is a great example of a successful web 2.0 company. No licensing, no sale, not
sold or packaged, it is a delivered service. No trappings just usage from the user. They
reach out to everybody in the whole world. “The†long†tail†the†collective†power†of†the†small
sites†that†make†up†the†bulk†of†the†webs†conten†t” (O’Reilly, T. 2007). As an example,
TripAdvisors services are made up of so many different hotels and restaurants, it is not
limited to the big chains. Which therefore means that users from all around the world without
paying, can judge, read, provide, review/create content in all price ranges from low-high end.
In essence TripAdvisor is the product of the collective activity of all its users. TripAdvisor
success grows organically in response to the user activity.
Through their app, website and content, TripAdvisor has created a voice and visuals for
online travel reviews. They heavily invest and use a large part of their budget to have the
best possible app and content.The TripAdvisor app has light visuals, user-friendly
commands and availability 24/7 all over the world. They have policies and contracts
prohibiting hotels of financial benefits when writing positive reviews. They serve and are
perceived as trustworthy. TripAdvisor has emerged into being the leading force of
trustworthy word-of-mouth travel reviews.
An analysis of TripAdvisor has been conducted, and can be seen in Appendix 1.
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2ƆWhy†is†TripAdvisor†so†appealing†to†consumersø†Why†do†users†write†hotel†reviewsø
Why†do†users†read†hotel†reviewsø
In order to understand why TripAdvisor has become one of the most popular travel review
portals, it is necessary to state how the marked was before the market introduction of this
service. At that time, the marked was not as generic and unbiased as today. All the available
hotel information was originated from a professional marketing department. Therefore, the
consumer would be forced to mainly base their choice of hotel on advertising materials. This
created screwed information, which is a large extent was biased. This meant that the size of
the marketing budget was more important that the quality of the hotel. The lack of quality
would never be detected by new customers, as there where very little reviews from previous
guests. Due to the birth of TripAdvisor, this tendency has decreased. Reviews mean
booking, and bookings mean revenue. Therefore honest, critical reviews of bad quality will
have an impact on the profit.
Travelers can now read reviews from previous guests, who has an unbiased intention. As
writers have no interest in promoting a hotel they disliked, or vice versa, the reviews are
much more real. Customers will have the opportunity to avoid polished images. Instead, they
now can focus on real-life experiences of fellow travelers. This increased trusted opinions on
hotels and therefore also the general trust in online reviews.Today the trust in online reviews
is very high. 72% says that they trust just as much in online reviews, as a review from family
or friends (Teixeira, T. 2016).
Due to the creation of TripAdvisor, customers have gained a greater, wider source of
information and has, therefore, it has transformed the online consumer behavior. A study
from 2012 (Teixeira, T, 2016, page 3) showed that people who read reviews are 81% more
likely to make a booking. This number states the importance of reviews.
As the benefits of TripAdvisor now has been outlined, the next part will focus on the people
who are writing the reviews. A 2013 study from StrategyOne stated that the up to 50% of
travelers writes reviews after staying at a hotel (Teixeira, T, 2016, page 4). The report
conducted 15,000 responds form Internet users and focused on examining the motivation for
writing reviews. The result of the study showed, that the top motivation was to share
experiences. Previous customers focused on sharing their experience and pass on good
information in order for new customers to make wise decisions. The secondary reason
behind writing reviews, where to reward hotel which is doing good, and at the same time
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Strategic and Tactic Tools for E-Business Fall Semester 2017
punishing the bad ones. This shows that the review writers do it to help others. Actually, the
reason that scored the lowest, was “Because it is fun” (Teixeira, T, 2016, Exhibit 5, page 8).
Therefore, it is a less selfish reason, as only 22% chose this one.
The following section will state the impact on hotels degree of bookings and the profitability.
It will be focusing on TripAdvisor as an E-business and its impact on hotels.
A 2013 study (Teixeira, T, 2016, page 3) showed the distribution on how American travelers
find their hotel. The biggest group, equivalent to 40%, answered that they would consult
multiple sites before booking. As TripAdvisor is a travel platform that generates multiple
results of hotels, this is a good starting point when looking for a hotel. The users are mainly
interested in three factors when booking a hotel. These are the location, price and the
precious guest experience. TripAdvisor can impact the last factor, and therefore has a great
influence on the hotel market.
Guest experience can be split into three sub-categories, which are the position of the listing,
the number of reviews and the average score. They are all important, as they influence the
consumer behavior. E.g. a drop from 3th to 4th position on the list, means 11% fewer
bookings (Teixeira, T, 2016, page 4). Likewise, will an increase in average score by 1
percentage point in general mean an increase the booking by 14%. This shows the
significant impact that TripAdvisor has on the market.
3ƆHow†can†major†hotel†chains†influence†online†reviewsø†Should†they†even†try†toø
This question can be split into small questions. Firstly, which hotels are so-called major hotel
chains? According to several authoritative rankings, Starwood Hotels & Resorts, Four
Seasons Hotels & Resorts, Accor, Best Western International and Jin Jiang International etc.
are considered to be major hotel chains in the world.
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What are those hotel chains doing now? In fact, many major hotel chains had taken account
of the effects and were acting to improve what consumers were saying about their properties
online. The Four Seasons Hotels and Resorts stood out among competitors in the luxury
category while Homewood Suites was notable in the mid-price range.
Four Seasons focuses on six pillars to shape its content strategy, which extends from the
group level to the level of each hotel. The brand hands over its content management tasks to
a single department that has a central team that delivers content to all digital channels. Its
website is the cornerstone of its digital strategy since consumers can get access to all its
information and about it from the main page. In the meantime, this channel allows users to
browse the online magazine Four Seasons offers fresh content for specific categories. Part
of Four Seasons’ content strategy is to leverage user-generated content, while others
provide an engaging experience online and offline. Four Seasons devoted fifty per cent of
the marketing budget to digital media platforms in 2011, with an emphasis on developing a
family travel blog and a social media presence. Online sales rose by 10 per cent from 2010
to 2011, with online booking accounting for 12 per cent of revenue (Verbeke, 2013, page
70). Its new website launched in 2012 strayed from the practice of most luxury brands and
displayed users’ reviews written on TripAdvisor in each Four Seasons property’s website. In
addition, they conduct wine tasting through Twitter and provide advice on wedding planning
to build brand personality and enhance consumers’ interaction.
Homewood Suites had been reducing its spending in measured media, such as television,
radio, and print, since 2008. In 2010, the company began using an online tool to monitor the
large volumes of guest feedback on a daily basis. The E-commerce team of it is going in and
making sure that every review gets a response. Carla Raynor, who has been VP-global
marketing of Homewood Suites for the past two years said:”We really spent a lot of time
looking through the customer journey with the brand and making sure that instead of putting
our energy and investment in one area, we looked at critical areas where we needed to
strengthen our relationship with the customer.” (Jennifer Rooney,2011,page 1)
When searching for “Homewood Suites” in TripAdvisor, it’s easy to find that every hotel
belongs to this hotel chain get a high score and almost all the reviews have been replied.
Word-of mouth is no longer just whispered over a delectable vintage of red. 78% of today’s
affluent consumers around the world are using social networks to connect with friends and
brands and even to share their opinions on their latest travel destinations.
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Our suggestion would be, that TripAdvisor should try doing so. Studies have shown that
online reviews have largely influenced the customer’s choice. It’s a great opportunity to
embrace the openness of digital channels.
4ƆWhich†online†WOM†®word?of?mouth©†approach†do†you†prefer?†The†one†practiced†by
the†Four†Seasons¨†or†the†Homewood†Suites†approachø†Whyø
Both of the approaches have its pros and cons, which will be discussed in following
section.Four Seasons has taken a more proactive strategy to influence user reviews. It
combines online and offline activities to obtain better comments from their customers. And
Homewood Suites’ strategy is relatively conservative. Its e-commerce team pays more
attention to consumers’ reviews and reply to all of them to show the hotel’s respect to
consumers’ advice. However, Four Seasons does few things to control negative online
reviews. Though they tried their best to offer fantastic services, consumers still might not be
satisfied. Complaints are unavoidable. When complaints occupy the first page of reviews,
consumers tend to give up the hotel.
To Homewood Suites, customer complaints are valued. But another question shows up.
Consumers who get replies from the hotel may purchase again because their suggestions
have been noticed and they may expect a better experience in Homewood. Whereas,
Homewood needs to hire special staff to reply the comments and it may lead to an extra
cost. Hotels should not only make efforts to respond to the complaints but also try their best
to improve its services.
It’s not easy to say which approach is better. We can just tell that, from a customer’s
perspective, people may prefer the Homewood Suite Approach. And as a business owner,
people may choose the Four Seasons Approach.
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Feedback†questions
This section takes its origin from the exercise class, as these case questions were
presented. These two questions came from fellow students, and was answered orally. This
is a resume here of.
©1®†How†can†TripAdvisor†compete†with†new†social†travel†sitesø
TripAdvisor is sharing the marked with other competitors. These can be divided into classic
internet portals, like Expedia, and new, disrupting portals, like Airbnb.
New social medias might compete with TripAdvisor, as they use push-omnichannel, instead
of pulling the consumer. They post ads in a different environment, which is targeting a
certain segment. Even though this is a rising tendency, the graphs from question 2, showed
a diversity in how different people prefer to find a new hotel. 38% used social media, while
the majority still of 45% still prefered visiting multiple sites before booking. This shows that
the new competitors are established, but there is still a huge demand for services like
TripAdvisor. Furthermore, TripAdvisor has the benefit of being independent of the hotel
businesses. They provide unbiased reviews, in benefit of the consumer. The new social
media is depending on add-money, e.g. from the hotels. This paid information can be seen
as a distinctive service. This is why both TripAdvisor and its competitors can compete on
different terms. This gives both a place in this market.
©2®†Why†TripAdvisor†has†an†advantage†of†being†a†first†moverø
In marketing strategy, first-mover advantage (FMA) is the advantage gained by the initial
(“first-moving”) significant occupant of a market segment. It may be also referred to as
technological leadership.
When TripAdvisor was founded in 2000, its founders found it difficult to find unbiased
travel-related information on the Internet. The original intention they created the platform was
to provide consumers with unbiased travel reviews. Obviously, TripAdvisor discovered a new
market segment and developed this small market into a huge one.
Since there’s no such a platform before TripAdvisor, the company occupied the market very
soon. In addition, it set the industry standard and relevant regulations which made it the
leader of this new industry.
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Strategic and Tactic Tools for E-Business Fall Semester 2017
Conclusion
Our investigation of the TripAdvisor case has illuminated several key factors for the success
of TripAdvisor. We can conclude that TripAdvisor had the competitive advantage of being a
first mover in the field of online word-of-mouth hotel reviews. TripAdvisor has become the
leading force in online hotel reviews, their position as the market leader and a major
influencer in the online hotel review industry is clearly illustrated by their 1.492 billion
turnover in 2016 (Statista 2017). TripAdvisor is spending a large amount of their budget on
marketing and innovation, furthermore they have an aggressive acquisition strategy.
TripAdvisor has acquired many companies that could potentially threaten their position,
turnover and overall business operations.
TripAdvisor’s growth is driven by the wide range of end-users and hotels which is using the
portal. TripAdvisor has organically grown in symbiosis with user created content. This is one
of the most vital trends in the most successful web 2.0 companies (google, amazon,
facebook etc).
The analysis showed that TripAdvisor has a solid business and revenue model. TripAdvisor
are not depending on one income, instead they have different income strategies such as
Cost per click advertising, Affiliate marketing, Display Advertising and Subscription
packages.
TripAdvisor’s success is defending against a grand flow of customers. The more people
writing reviews, the more relevant content is displayed for new readers. If there is no
updated reviews, TripAdvisor will lose their product. Therefore, user content is just as
important, as many readers.
It is argued that what Facebook has become in social networks, TripAdvisor is the equivalent
mastodont in the online hotel reviews industry. The turnover backs this claim up, so do their
market share, and in general how TripAdvisor is perceived as the most trusted place of
word-of-mouth reviews.
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Sources
? O’Reilly, T. (2007), What†Is†Web†2Æ0?†Design†Patterns†and†Business†Models†for†the
Next†Generation†of†Software†.
? Kenneth C. Laudon, Carol Guercio Traver, (2017) E-Commerce 13th Edition
? Schmidt, A. (2015). Understanding†TripAdvisorßs†Business†retrieved from
http://marketrealist.com/2015/11/understanding-tripadvisors-business/
? Statista (2017). TripAdvisor†Total†Revenue†retrieved from
https://www.statista.com/statistics/225435/tripadvisor-total-revenue
? Teixeira, T. and Kornfeld, L. (2016), Managing Online Reviews on TripAdvisor from
Harvard Business School
? Verbeke, A. (2013). International†Business†Strategy†retrieved from
https://books.google.dk/books?id=uQpaAQAAQBAJ&pg=PA70&lpg=PA70&dq=four+
seasons+marketing+budget&source=bl&ots=00aul0Bd2O&sig=51qym0lBZdptw9jUyv
QqM5GsEb4&hl=zh-CN&sa=X&ved=0ahUKEwihsqyWwOPXAhWFyqQKHRl2DR44
ChDoAQhnMAc#v=onepage&q=four%20seasons%20marketing%20budget&f=false
? Jennifer Rooney(2011). HOMEWOOD SUITES LEAVES NO STONE UNTURNED IN
QUEST FOR GREATER AWARENESS retrieved from
http://adage.com/article/cmo-strategy/q-a-homewood-suites-vp-global-marketing-carl
a-raynor/227812/
? Unicorn Economic (2017). How Does Tripadvisor Make Money Business Model . Retrieved
form https://unicornomy.com/how-does-tripadvisor-make-money-business-model/
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Appendix†1
TripAdvisor’s significance of the eight unique features of e-commerce technology
(Pearson.E-Commerce, 2017, Ch 1) :
Ubiquity†TripAdvisor’s app are available everywhere (home, work, via mobile devices).
The marketplace is substituted with the marketspace. Shopping/services can
take place anywhere.
Global†Reach†TripAdvisor reaches billions of peoples
Richness†In the app: Video, audio and text messages are possible
Interactivity†The technology works through interaction with the user
Information
density
TripAdvisor’ s app, have reduced the cost of information and raised the quality
of travel information, reviews etc.
Social
Technology
TripAdvisor enables user content creation and distribution. Also supports
social networks. ? Even more user driven. 125 million reviews. 260 million
people visiting every month Aggressive purchase of travel related businesses
TripAdvisor’s†Business†model†and†revenue†model?
Cost†per†click
advertising
The advertiser will know upfront that it is paying x amount for y number of
visitors to that particular ad unit (ex. x-hotel save 25% today) (Marketrealist,
2015)
Affiliate†marketing†When TripAdvisor is out of rooms, it refers to for instance booking.com
(Marketrealist,2015)
Display†Advertising
©business†owners
package®
Rich text Ads – text ads, video ads or image based ads
Sponsored hotel listings can be purchased for promoting the property at the
top search result (Uniconormy, 2017)
Subscription
packages†for
property†owners
The property owners can reply on reviews etc
10

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