Tripit: The Traveler's Agent

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Recommendation

I believe that TripIt should use their capital in a way so that they can achieve both increased monthly unique visitors and increased trip yield. As seen in the chart in appendix 1, an increase in both of these metrics will increase the profitability of the firm very quickly. I would recommend doing this with two avenues: using some of the money to partner with a select few OTAs and using the rest of the money toward a mobile application that will increase the social aspect of Tripit.

The Pareto Principle, or the 80/20 rule, applies to the OTA market. 80% of the market share is made up of a cluster of large firms, and I believe that TripIt should partner with only these top firms right now. Examples of these firms include: Expedia, Southwest Airlines, Travelocity, Orbitz, Priceline, Yahoo! Travel, Cheap Tickets, Priceline, Hotels.com, American Airlines, Delta, and Kayak (Exhibit 5.1). If TripIt allocates resources dedicated to an “Add to TripIt” button on these websites, then they can see an extraordinary increase in unique visitor activity. Furthermore, since this increases the ease of use they may see increased user activity resulting in more trips booked through TripIt. Additionally, since they are not catering to hundreds of OTA websites they can take the time to customize the functionality at each of the aforementioned websites, insuring a smooth and reliable connection.

With the additional capital TripIt should develop a mobile application that increases the social aspect of TripIt. In a study done by Thorsten Hennig-Thurau, Kevin P. Gwinner, Gianfranco Walsh, and Dwayne D. Gremler, it was found that social benefits, concern for others, and economic incentive are the top reasons that people post their experiences of services online (“Electronic Word-of-Mouth Via Consumer-Opinion Platforms: What Motivates Consumers to Articulate Themselves on the Internet?”, 2004). With social benefit being the leading incentive in this study, it is important for TripIt to capitalize on this opportunity, as it will increase their WOM advertising. Additionally, according to the Pew Research Center use of the internet on mobile devices by adults grew from 24% in 2007 to 32% in 2009 (Horrigan, 2009). TripIt needs to focus on this new technology in order to get ahead of potential competitors who may be considering a mobile itinerary option. A mobile application could allow such features as a “Check-In” at various locations which increases the social aspect of the application.

It is hard to say the financial impact of these options, although I believe coupling OTA partnerships with a mobile application focused on social integration will result in both increased unique visitors as well as increased trip yield. If they can quickly implement these projects they could see substantial cash flow by Q4, with profitability in late 2008 or early 2009.

The Future of TripIt

As the company starts to implement some of the aforementioned ideas they will want to take a look at their revenue model. Currently they derive their revenue from advertisements and “click throughs”. As they establish their website and generate cash flows to cover their expenses they should look into a model that will encompass both advertising and subscription revenue streams. When they generate enough cash flow to enhance the features of the software they should think about setting up a subscription fee for premium services. This premium access can be a fixed fee that allows the user to access such features as the weather, maps, directions, suggestions, and more. In Kent Anderson’s article about subscription models, among other things he noted that the subscription model can offer a company steady streams of cash. (Anderson, 2014). This can be a great supplement to their current revenue model, and increase the profitability while keeping the ease of use to those who do not want to use the additional services.

An investment in TripIt can be a very profitable one if the leadership team allocates their resources in a responsible and effect manner. The key to the company’s success is a quick implementation of key services, such as social media and OTA partnerships, so that they can create an established brand before they not only run out of cash, but also before competitors try to replicate this service.

Appendix

Exhibit 1

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Works Cited

Anderson, K. (2014, June 30). Hiding in Plain Sight — Is the Subscription Model the Optimal Business Model for the Digital Age? Retrieved May 23, 2016, from https://scholarlykitchen.sspnet.org/2014/06/30/hiding-in-plain-sight-is-the-subscription-model-the-optimal-business-model-for-the-digital-age/

Gretzel, Ulrike. (2007). Online Travel Review Study: Role & Impact of Online Travel Reviews. Laboratory for Intelligent Systems in Tourism. Texas A&M University

Hennig-Thurau, T., Gwinner, K. P., Walsh, G. & Gremler, D. D. (2004). Electronic Word-of-Mouth Via Consumer-Opinion Platforms: What Motivates Consumers to Articulate Themselves on the Internet? Journal of Interactive Marketing, 18(1), 38-52.

Horrigan, J. B. (2009, July 22). Internet access on the handheld. Retrieved May 23, 2016, from http://www.pewinternet.org/2009/07/22/internet-access-on-the-handheld/

Piccoli, Gabriel. Essentials of Information Systems for Managers. United States: John WIley and Sons Inc, 2016. Print