First Free Story (1 of 3)Join Skift Pro
On a nondescript businesses estate in a Boston suburb, the fortunes of hoteliers and restaurateurs worldwide are won and lost. This is the modest headquarters of TripAdvisor, the travel reviews website that in little more than a decade has gathered an unmatched library of more than a hundred million reviews from ordinary people online and in doing so has revolutionised the hospitality and tourism industries.
Clever hotels and restaurants now pay close attention to their reputation on TripAdvisor. With more than 200 million visitors a month planning trips based on its recommendations, a run of good or bad reviews can mean make or break, and there are consistent grumbles that the website is growing too powerful.
For Steve Kaufer, the software engineer who founded TripAdvisor in 2000 and remains in charge today, complaints from disgruntled business owners are par for the course. In the next few years he aims to massively increase the proportion of travellers who plan their trip on his website, which he currently claims is 10 per cent. Hotels and restaurants can adapt or die.
“At the beginning the impact of what was said on TripAdvisor was relatively small,” he says. “Today what is said absolutely impacts many, many businesses around the globe.
“That means the restaurateurs and hoteliers pay a lot more attention to it. So what you see in the press tends to be the hotelier who is upset by the bad review. That’s not new – hotels have always had complaints – but now the complaint is aired very publicly.
“It’s all in the name of transparency and we think we’ve done a very good service to the hospitality industry by letting value and customer service level the playing field.”
“If you’re bad you’ll be at the bottom of our ranked list. They should read the reviews, hear what’s being said about them, fix the problems, and strive to do better. If they earn better reviews they’ll rise in the rankings and turn around their own fortunes. The system works.”
Wall Street agrees. Part of the Expedia group since 2005, TripAdvisor became an independently traded company in December 2011. Since its debut its stock has almost doubled to value the firm at more than $7.5bn.
The move was the product of a long-term suspicion that TripAdvisor, a digital media business that makes its money from preferring its visitors to online travel agents, was under-appreciated as part of Expedia, itself an online travel agent.
“It’s a little hard for some investors to tease apart the pieces,” says Kaufer.
TripAdvisor’s partnerships were also held back by suspicion in the travel industry that Expedia would gain access to valuable intelligence on its rivals.
“Our business model involves selling leads to direct competitors of Expedia and that was never tampered with,” he explains. “But by being able to spin out and be independent, well, that’s just it: we’re truly independent. It’s a completely different company, and therefore we’re able to form tighter relationships.
“That perception issue was very understandable, though. If we work more co-operatively with our clients to help improve the conversion of our traffic to sales for them, that’s very valuable for them, it’s valuable for us and they’d be rightly concerned that those business insights would in fact lead back to Expedia, their competitor.
“They never did but it was never tested because most of the clients didn’t want to share those insights for fear of leakage. We’re doing that more now that we did when we were part of Expedia because there’s no danger.”
Kaufer insists that being chief executive of a publicly-traded firm has not changed his job. He eschews the financial analyst conference circuit as much as he can, he says, in a drawl that is uncannily reminiscent of Hugo Weaving’s Agent Smith in The Matrix trilogy, minus the malevolence.
TripAdvisor headquarters, in the Boston suburb Newton, certainly suggest this is not a firm that pays much attention to how it is perceived in the flashy towers of Wall Street, or on the luxury campuses of its web industry peers in Silicon Valley, for that matter. The low-rise, functional pair of buildings could just as easily be home to a mid-sized office supplies firm as to a global technology and media concern that dominates its field.
Modesty does seem to be part of the TripAdvisor culture. Kaufer, dressed as well for a spot of gardening as for running a multibillion-dollar firm, professes no interest in the accoutrements of success. His office is small and in the centre of one of the blocks, offering him no view of the outside world, but easy access to his staff to oversee the weekly releases of new features that he says are the secret to TripAdvisor’s success.
“No, we don’t have a private plane and my office is in the centre of the floor of the building,” he says. “There are no windows to the outside world because I wanted to be central to what’s going on as opposed to a beautiful corner office with a nice view. We’re based here because it’s where I lived.
“There’s a sign on my door: speed wins. It’s the informal internal motto and was handwritten by me 10 years ago and as the office has moved so has the sign.
“We’re proud of our accomplishments but we’re not the type of company to brag. I would rather be testing a new feature that’s coming out next month than at a financial conference talking about TripAdvisor’s wonderful stock performance. That as a statement is key to our culture.
Of course, TripAdvisor’s success is not the result of glorious isolation. Like virtually all web businesses, it is dependent on links and traffic, and therefore Google.
That relationship has come under strain in the past two years, with Kaufer among the most vocal complainants about Google’s alleged anti-competitive behaviour to monopoly regulators in the US and Europe. The Federal Trade Commission closed its investigation earlier this year without taking the decisive action that TripAdvisor was looking for after Google harvested its content without permission to build its own travel advice service, but Kaufer still has hopes for the ongoing European Commission probe.
“It was a big flare up with Google,” he says. ” I had conversations as high as I needed to go in Google. When I lost the individual conversations we cried foul in court of public opinion and then to the government.”
“We do feel that keeping a level of pressure on Google perhaps helps keep some factions within Google more conscious of playing fair and then we hope the EU takes a firmer stand.”
“Our relationship with Google in general is very good but because they use our content without our permission I don’t have the comfort that they’ll naturally do the right thing and so that’s what makes me nervous going forward.”
Kaufer is much more enthusiastic about TripAdvisor’s relationship with Facebook, which he also says is more important to his future growth plans. The pair has an “instant personalisation” deal that means Facebook members who visit TripAdvisors are prominently shown recommendations from their friends.
“Google drives a ton of traffic and is very important in the ecosystem but when we map out what helps TripAdvisor bring more value to our customers, Google will continue to be a big traffic source and that’s great, but Facebook and the friend network delivers the ‘what can I get on TripAdvisor that I can’t get anywhere else’.”
As for Facebook, the shift of web users from desktop and laptop computers to smartphones and tablets is a concern for TripAdvisor. however, according to Kaufer, it is insulated from losing business because travellers still make their purchase decisions, and so click the links that bring in the dollars, on a big screen.
“When I’m actually planning a holiday this tiny screen is a very unhappy experience for me, so I’m either on my tablet or my desktop, browsing researching and booking,” he says. “So we view the smartphone app as extra traffic and branding.”
Plans are afoot for location-based services for smartphone users, such as offering discounted vouchers for restaurants nearby, but they are “years out”.
It’s measuring and balancing that kind of challenge that keeps him up at night. Whether the mobile challenge ranks above TripAdvisor’s growing but more difficult Chinese operation, where Kaufer admits the normal “TripAdvisor playbook” is less effective because of powerful local competition, is the type of question that will determine its future.
“The opportunity is plenty big,” says Kaufer. “The only question is how quickly can I grow and in what direction with the set of resources in terms and talent and focus we have.”