Business Operations Business Models

How Does Tripadvisor Make Money (Business and Revenue Model)

The Tripadvisor business model

How Does Tripadvisor Make Money?
Here’s what you should know:
  • What is Tripadvisor, and how does Tripadvisor work?
  • How does Tripadvisor make money?
  • Tripadvisor Plus (Paid Membership)
  • Selling Insurance (Trip Protection)
  • Commission and Booking Fees (From Host Listings)
  • Advertising
  • Listing Upgrades
  • Through Tripadvisors Subsidiaries and Acquisitions
  • Tripadvisor’s profit and revenue
  • What is the Tripadvisor business and revenue model?
  • Tripadvisor’s funding and valuation

So you use Tripadvisor and wonder “How does Tripadvisor make money?” Here is a full, in-depth, breakdown of their six (6) revenue streams and the different products and services they offer, as well as the Tripadvisor business model, their year-over-year revenue, and how Tripadvisor works.

What is Tripadvisor, and how does Tripadvisor work?

Tripadvisor is an online travel site that finds you the best deals and travel reviews. Their platform has over 8 million active listings including hotels, vacation rentals, restaurants, attractions, and experiences.

Founded in 2000 by Stephen Kaufer, Langley Steinert, Nick Shanny, and Thomas Palka, Tripadvisor went public on December 21st, 2011 and today has revenues upwards of $1.56 billion.

Some of Tripadvisor’s competitors include KAYAK, Expedia, and other online travel websites.

How does Tripadvisor make money?

Tripadvisor has more than 491 million active monthly users as well as over 8 million listings across 190 countries on their platform.

So, how does Tripadvisor make money off of their 491 million monthly users and those 8 million active listings?

Below is a breakdown of Tripadvisor’s revenue model, what services they offer, and how they make money off of each.

Here are the 6 ways of how Tripadvisor makes money (in 2021):

Tripadvisor has a revenue model that generates money in six (6) ways.

#1. Tripadvisor Plus (Paid Membership)

In February 2021, Tripadvisor added a new service to their platform called Tripadvisor Plus.

Tripadvisor Plus is a subscription service that offers savings on hotels, experiences, and perks to it’s paying members.

Membership Cost:

  • $99 per year
Tripadvisor Plus| Tripadvisor Revenue Model
Source: Tripadvisor

#2. Selling Insurance (Trip Protection)

Tripadvisor partnered with Allianz Global to offer trip protection insurance for travelers who book through their site.

In early 2020, Tripadvisor rolled out the beta version of this new insurance service; giving travelers the option to purchase insurance by the trip or annually for year-round coverage.

The annual protection is offered in two plans: Basic and Prime. Each with multiple tiers offering different perks and forms of protection.

Insurance Cost:

  • Single Trip: quote by trip
  • Annual Basic: $135 per year
  • Annual Deluxe: $275 per year
Tripadvisor Insurance | How Does Tripadvisor Make Money?
Source: Tripadvisor

#3. Commission and Booking Fees (From Host Listings)

Tripadvisor has over 8 million listings on their platform and collects commission and booking fees off of each transaction made through their site.

These 8 million listings are made up of listings including hotels, vacation rentals, restaurants, attractions, and experiences.

If hosts have a Free listing, they will pay a processing fee of 3% per booking. As well as additional commission fees depending on the listing type.

Commission and Booking Fees:

  • Booking fee: 3%
  • 8% to 16% on rentals
  • 20% on “experience” listings

#4. Advertising

Another revenue model for Tripadvisor is through their advertising.

Tripadvisor has multiple forms of advertising on their site. One is (1) through Ad Networks that display targeted third-party ads on their platform; the other is (2) advertising through Tripadvisor’s Media Manager directly.

When advertising with Tripadvisor directly, advertisers can choose between programmatic and non-programmatic advertising. If it’s programmatic, they use a pay per impression (PPM) model.

Advertising Cost:

  • Programmatic advertising: $25,000 budget minimum
  • Non-programmatic advertising: $12 to $24 per 1,000 impressions (CPM)
Tripadvisor Media Manager
Source: Tripadvisor

#5. Listing Upgrades

Tripadvisor offers a bunch of listing upgrades for hosts with listings on the site who want to “stand out from the rest and book more.”

Listing upgrades are individual services that hosts can “add-on” to their listings. Including things like adding an instant bookings feature, more detailed listings, sponsored placements, more listing reviews, and more.

These upgrades are to enhance a listing, which are not included features offered on their free listings.

Upgrades Cost:

  • Instant Bookings: 12% to 15%
  • Business Advantage: starts at $499 per year
  • Tripadvisor Premium: unknown
  • Reputation Pro: unknown
  • Spotlight: unknown
  • Sponsored Placements: unknown
Source: Tripadvisor

Note: The type of upgrade will determine the type of cost associated with it – Tripadvisor has both commission and subscription based models for their listing upgrades.

#6. Through Tripadvisors Subsidiaries and Acquisitions

Tripadvisor is the parent company to over 30 companies.

In 2019, Tripadvisor earned 33% of its total revenue from its more than 30 subsidiaries, including Expedia Group and Bookings Holdings. Some of their top-performing subsidiaries include:

  • TheFork: Book restaurants
  • Viator: Book tours and attraction tickets
  • Jetsetter: Get travel ideas
  • Cruise Critic: Read cruise reviews
  • Seat Guru: Get airline seating charts
  • FlipKey: Find vacation rentals
  • Holiday Lettings: Search for holiday rentals
  • Vacation Home Rentals: Find vacation homes
  • Reco Trip Designers: Plan and book trips

Note: Tripadvisor earned 33% of its total revenue from its subsidiaries in 2019.

Tripadvisor’s profit and revenue

Tripadvisor reported revenue of $1.56 billion with a $126 million net profit in 2019.

Note: Because Tripadvisor is a publicly-traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Tripadvisor’s publicly released financial reports through their 10-K annual report.

What is the Tripadvisor business and revenue model?

Tripadvisor has a few revenue models that they combine within their company, they are:

  • Software as a service (SaaS) business model
  • Advertising based business model
  • Commission based business model
  • Mergers & acquisitions (M&A) business model
  • Business-to-business (B2B) revenue model

Tripadvisor’s funding and valuation

According to Tripadvisor’s Crunchbase profile, Tripadvisor has raised $3.3 million over 3 rounds.

Note: Tripadvisor went public on December 21st, 2011.