Skift Take

Steve Kaufer had a great run at Tripadvisor, transforming a company with a small office over a pizza shop in Massachusetts 20 years ago into a global, household-name brand. The issue for Tripadvisor isn't necessarily who will replace Kaufer, but what innovations will it take to revive the company.

After a more than 20-year run as co-founder and CEO of Tripadvisor, Steve Kaufer will step down in 2022, the company announced Monday.

“Steve has been the driving force at Tripadvisor since its launch in 2000,” said Tripadvisor chairman Greg Maffei in a statement. “His contributions to the consumer’s travel experience are immeasurable, and his vision has resulted in the Tripadvisor we know today.”

The company initiated a search for a successor that will involve both internal and external candidates.

“We come to the close of 2021 in a strong position — travelers are returning as we exit the pandemic, exciting new initiatives are well on their way, and we continue to leverage our strengths as we evolve Tripadvisor for the future,” Kaufer said in a statement. “Given our strong position, the talented teams driving our plans forward, and after over 20 years at Tripadvisor, I believe now is the best time to announce my plans to step away from the company next year. I have such respect and appreciation for all the teams over the years who have made this company what it is today, and remain devoted to continuing to guide the Tripadvisor family as CEO until the transition is complete.”

The announcement of Kaufer’s departure takes place after a recent about-face in a product it had — or still has — lots of hope for, Tripadvisor Plus. The program, which offered up-front hotel discounts to subscribers for $99 per year, ran into stiff opposition from big hotel chains about rate parity issues, and is currently transitioning to offering what some might characterize as less-attractive, and likely smaller, cash-back payments after stays.

Tripadvisor dilemma was that it needed to show some of these hotel discounts to travelers to entice them to sign up for the program, and hoteliers objected to openly displaying these usually hidden, or opaque, rates to consumers without the stiff protection of a paywall.

Critics said Kaufer — and Tripadvisor — should have known about these issues when launching the program, and undoubtedly they did.

Tripadvisor’s stock price plummeted on the news about the changes to Tripadvisor Plus as the company had been extremely bullish about its potential. Subscription programs, including one from eDreams in Spain, have been gaining ground in the travel industry and beyond, namely with Amazon Prime as the best example.

In an interview with Skift Research’s Seth Borko at Skift Global Forum at TWA Hotel at JFK several days after the program change in September, Kaufer said: “Sure. We knew rate parity — because we’ve been in the business a long time — is an issue. You also know that suppliers have agreements that allow them to do whatever they want when our different rate is shown behind a closed user group. So we had a closed user group aspect. Very closed, not just a free membership. But a $99 pay wall that would work. And it did work for a number.”

The issue was that not all of those discounted hotel rates were shown behind a concrete paywall, and it angered some hotel chains.

Kaufer noted that Tripadvisor Plus had notched several partnerships with hotel chains and wholesalers. “But to be clear, we’re in the travel internet space,” Kaufer said. “We’re moving as fast as we can. I am never going to apologize for making a shift to a better product quickly.”

Tripadvisor Plus was only the latest product miss for Tripadvisor, which grew to be a household name brand around the world based on its user reviews of hotels and restaurants. But it struggled to gain ground from there after making that mark, and Google, with its market dominance, stole a lot of Tripadvisor’s traffic.

Tripadvisor, which at one juncture was a must-have marketing platform for online travel agencies and hotels, several years ago tried to transform itself into a site that offered lots of hotels bookings on Tripadvisor itself without having to refer travelers metasearch-style to other websites to complete their bookings. Tripadvisor called its online travel agency-like feature Instant Book.

Before that — and currently — Tripadvisor is mostly engaged in metasearch, which in essence means leading travelers to online travel agency and hotel websites to complete their hotel bookings.

But travelers weren’t accustomed to considering Tripadvisor as another Expedia, Priceline or Booking.com, where they can book hotels. So Tripadvisor largely abandoned Instant Book to search for a new success formula.

Tripadvisor had many wins over the years, especially in its earlier days. When owned by Expedia before being spun off into a standalone pubic company in late 2011, it was an all-star in Expedia’s brand portfolio.

In Skift’s oral history of online travel, now-former Expedia CEO Dara Khosrowshahi described what he thought of Kaufer and why Khosrowshahi’s IAC agreed to acquire Tripadvisor in early 2004.

“[I was attracted by] the depth of technical knowledge about the product, the passion that they had for their business and the absolute conviction that speed wins,” Khosrowshahi, who’s currently CEO of Uber, said in 2016. “Which is something that Steve was always talking about. The combination of those three, which was technical knowledge, passion and Steve really convinced me that this could be a winning team. There are very few people who can take a company from founding to true scale. Those are special people and Steve is one of those.”

Khosrowshahi said in 2016 that when he first took the reins of Expedia in 2005, after its spinoff from Barry Diller’s IAC, that having Tripadvisor and Kaufer in the fold saved Khosrowshahi as he struggled to find his footing as a public company CEO.

But Tripadvisor, even before the pandemic, had substantial issues in trying to reinvent itself.

In early 2020, Skift published What’s Wrong at Tripadvisor?, citing its problems combatting Google’s inroads; the company’s aborted pivot to becoming more a booking site in addition to comparison shopping; an ill-advised transition, which it also reversed, to becoming more of a travel inspiration site with a revamped news feed; and the issues inherent in being a controlled company where insiders rule the day.

But while a shakeup may be called for after 20 years with Kaufer at the helm, the real issue is one of strategy: How can Tripadvisor regain its mojo in a hyper-competitive environment where Google wields so much power.

 

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Tags: steve kaufer, tripadvisor plus, user reviews

Photo credit: Tripadvisor CEO Steve Kaufer (right) spoke at Skift Global Forum in New York City in September 2021. Skift

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