TripAdvisor Inc. tapped into the power of social media right from the company’s start in 2000 by inviting travelers to write online reviews of hotels and attractions — long before the Internet became inundated with opinions from everyday consumers on Yelp, Facebook, and other websites.
The Newton company has since grown into the largest online travel service in the world, with 100 million reviews and 200 million unique monthly visitors to its websites.
TripAdvisor puts power in the hands of consumers, who can easily sort through unvarnished opinions and realistic photographs from fellow travelers. It displays hotels, vacation rentals, museums, and other tourist attractions in cities all over the world in order of their popularity among customers.
The company has had a profound impact on the hospitality industry, giving priceless exposure to tiny restaurants with no advertising budgets while holding hotel managers publicly accountable for lumpy beds and rude front-desk clerks.
“TripAdvisor has literally helped to reshape the industry,” said Henry Harteveldt, a travel analyst with the consulting firm Hudson Crossing. “They were the first to understand how consumer comments, consumers’ reviews, ratings could provide something useful, entertaining, and compelling and add value to the travel shopping and planning process.”
TripAdvisor, which had been part of Expedia since 2004, was spun off in late 2011. Last year, its first full year as an independent public company, TripAdvisor said revenue rose almost 20 percent, to $763 million. It earned $194 million in 2012.
That performance propelled TripAdvisor to the number 11 spot on this year’s Globe 100, the company’s first appearance in the annual rankings.
Chief executive and founder Stephen Kaufer attributes TripAdvisor’s success in part to the fact that his company was a pioneer in the industry.
“By virtue of getting in early, we’ve developed the scale in the reviews so that it’s been difficult for anyone else to try to copy our model,” he said.
Kaufer came up with the idea for TripAdvisor while planning a trip to Mexico. He started to hunt around online for any comments posted by travelers about three resorts that interested him. He finally came across a candid photo of one of them.
“It’s the proverbial back of the hotel that showed the rusted beach chair as opposed to the pristine windswept beach that was in the official brochure,” Kaufer said. He and his wife decided to stay elsewhere, and a company was born.
TripAdvisor wasn’t just first, Harteveldt said, it was also smart. It invested in technology and talent, creating a global presence that gave it maximum exposure. Three-quarters of TripAdvisor’s traffic comes from outside the United States, and hundreds of millions more view TripAdvisor content on other websites each month. The TripAdvisor app, which has been downloaded nearly 30 million times, will be preinstalled on new Samsung Galaxy S4 phones, giving the company an even wider audience.
TripAdvisor’s biggest source of revenue is click-based advertising, which charges hoteliers and other partners when users click on a “show prices” button that takes them to a booking site. Display advertising and subscriptions also generate revenue.
The 1,600-employee company continues to expand its reach by making acquisitions such as Jetsetter.com, a members-only site that publishes discounts on hotel bookings; Tiny Post, an app that lets users write words on photos; and Wanderfly, a site that recommends destinations for people based on their interests. In all, 21 travel websites are operated by TripAdvisor.
A few competitors have emerged over the years, including Google, which recently launched a hotel search engine and started posting users’ travel reviews. But, Harteveldt said, no site comes close to touching the original. “TripAdvisor really has locked this up,” he said.