Tripit Business Model
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[ Travel Industry Background ]Before the advent of Internet, traditional travel agencies were pertinent to the success of travel industry, since customers had to rely heavily on travel agencies while booking a trip. In the 1970s, the travel industry’s CRS (computerized Reservation Systems) provided access to travel agents. Once the Internet emerged with adapted GDS (Global Distribution Systems), some OTAs (Online Travel Agencies) as Expedia and Travelocity declared their births. And the substantial growth in travel industry spurred an influx in new start-up OTAs, which enabled online travel become one of the sun-rising online categories. [ TripIt – the Traveler’s Agency ]TripIt, born in October 2006, is a free online travel organizer that aggregates traveler’s booking from the leading airlines, cruises, hotels, train providers, and travel websites. By utilizing TripIt, the customers can forward their reservations to the site, and receive an itinerary with travel guides, driving directions, weather reports and so forth. The users can personalize the itineraries, keep tracking those from their families and friends, sharing ratings and recommendations with other users via TripIt’s unique network platform. Its current revenue model was based on the spread between generating cost and referral revenue from itineraries, and advertising revenues from partners as travel suppliers and intermediaries.
[ The Market Opportunity ]The prosperous development of Internet ends the barriers due to asymmetric information. And this trend urges the modernization and transformation of travel industry from traditional model to online sales. Since 1998, online sites have accounted for 49% of the market, and a 6.2% decline in offline travel purchasing can be captured (Applegate, Piccoli, & Broman, 2007). In 2007, for the first time in history, online travel purchases exceeded offline ones to the tune of $137 Billion to $129 Billion. Unlike its comparable competitor-Rearden Commerce, who positions themselves as a one-stop travel agency serving the managed corporate accounts, TripIt targeted the unmanaged customers or leisure travelers. Research indicates that the unmanaged customers grew from a $66 Billion worth and a 28% market share in 2006, to a $94 Billion worth and a 35% market share in 2008. Moreover, among the online sales, 69% of car, 69% of flight, and 59% of hotel bookings were claimed to stem from unmanaged customers (Applegate, Piccoli, & Broman, 2007). With an overwhelming majority of the online booking customers, the spreading market opportunity with even more potential growth can be observed.[ Distinctive Superiorities ]Proprietary Software-Itinerator: It is an innovative software which can reliably and accurately parse, decode, and then recode the information contained in travelers’ email conformations from suppliers and intermediaries. Customized Customers: Through software TripIt To Me (email-based command interface) and TripIt Mobile (mobile interface), TripIt can solicit, store, aggregate, and analyse travel information rather than simply receiving email travel conformations.Expanding Network Effect: Via MyNetwork, Who’s Close and TripIt Alerts, an effective and efficient functional platform were created. According to the survey, TripIt user who used the social network functionality, invited 1.5 people on average to join TripIt, of which 50% decided to become members.