E Tourism Origins The History

Published Date: 02 Nov 2017

The history of the online tourism practices is summarized by Kracht & Wang (2010) starting in 1970’s when the main airlines developed centralized systems as a tool for the global distribution of their products. Later they were able to connect travel agencies and some other touristic services suppliers enabling intermediaries to access the information in a flexible and customised way. The evolution of all these systems come with the implementation of e-business models into the tourism industry with a list of important launches and facts that started when the traditional suppliers started to develop their own websites to establish a direct connection with their customers, and avoid the disintermediation McCubbrey, (1999). The year 1996 was the key for the development of the e-tourism services because the pioneers in this field made their respective launches for their websites along this year. The first intermediary to appear on the scene was Pegasus Systems who in alliance with some hotel chains launched TravelWeb.com portal available to the general public in March 1996 (TravelWeb, 1996), almost immediately and during the same 1996, Sabre a GDS Company product of an alliance between American Airlines and IBM, debuted with Travelocity (Sabre Holdings, 2012). Also in 1996, Microsoft launched the online travel booking site Expedia and three years later 1999 was spun out of Microsoft becoming a publicly traded company on NASDAQ (Expedia Inc., 2012). In the early 1990’s the new business model implemented by Priceline was launched, they began by selling airline tickets using a "demand collection system" but in 1998 was turning point for the company with the implementation of a alliance with Delta Airlines and the diversification of their portfolio including hotels booking and car rental services (Reference for Business, 2012). Another important actor in the history is the travel agent lastminute.com who was founded in 1998 with the purpose of selling airline seats and hotel rooms that were otherwise likely to go unsold and seven years later was purchased for Travelocity in 2005 (lastminute.com, 2012). Finally in 2000, Trip Advisor the largest traveller and tourist’s community was launched with the effort of three founders who were frustrated with the lack of information for tourist and, four years later in 2004 was acquired by Expedia Barry Diller’s InterActiveCorp (IAC). Nowadays is independent and it is value on $4 billion capital. (Bussgang, 2012).

The different portals and companies mentioned previously have been associated with e-business models and combination of them which specify characteristics and levels of innovation, those business models are what make them to be different from the others companies. It has a relation with the position in the market place, the role of the different actors and the model of revenue according with the different definitions given by different authors and to be studied in a further section. But what is the impact of the business model in the performance and the strategy achievement. Is there any factor related to it, and is it affecting the different stages in the selection and implementation for the organization. In the next section the research focus is going to allocate the reader in the research purpose.

1.3 E-Tourism in the UK

The worldwide known website Tripadvisor is located in the position 60th of the Alexa (2012) ranking for the UK rank. Being the first position in terms of tourism related portals for this country. What is the formula implemented for this organization in business models matters, they certainly have implemented a mix of the models in the market adapting the better features of each one to the tourism industry and achieving the result. Through this paper the researcher is going to study in detail their strategy focused in businesses models matters.

Research Focus

Soteriades, Aivalis and Varvaressos; (2004) suggest that structural changes in the tourism industry involve the necessity to elaborate an appropriate response to communication and transaction needs within a given nexus of market forces and opportunities. Therefore, there is an urgent need for tourism businesses to actively select between business models or frameworks that can best support an effective online strategy.

This paper’s aim is to understand how the selection and implementation of a business model can affect the performance of the tourism industry, through the case study of Tripadvisor identifying the ways in which they have implemented and mixed the different models available and identifying the critical success factors that has positioned the in the mind of the tourists in the UK. The selection and implementation of the business models is a strategic decision for any company that is betting their future business in the online platform, companies nowadays might be concerned about how to take advantage of it.

Research´s Aim, Questions and Individual Objectives

Research Aim

The overall aim of this research is to highlight the importance of the critical success factors in the selection and implementation of a business model by using Trip Advisor as a case approach in the UK tourism industry.

Research Questions

What are the critical success factors for the selection of an e-business model in UK tourism industry?

How do these factors contribute to strategy formulation and implementation in the case of Trip Advisor in the UK?

How to set the use of these critical success factors as a formula for success in the selection and implementation of the business model in an online tourism company in the UK?

Research Objectives

To identify and explore the factors effecting the selection and implementation of the business models in an online tourism company in the UK.

To determine the role of these factors in the strategy development of an online touristic organization in the UK market.

To measure the impact of those factors on the strategy development in an online tourism company in the UK.

To determine effectiveness of these factors in the selection of a successful business model in an online tourism company in the UK.

To make recommendations about the business models selection decisions from a strategic perspective in an online tourism company in the UK.

Research Worth

Many authors have conducted research in this area in the last years; most of them try to understand: what are the more frequently implemented business models for tourism purposes, and what the main differences between them are. On the other hand some other works have tried to find the relation between the design, content, easy to use concerns and accessibility relation and the impact of these variables in the customer satisfaction.

But in relation with the works consulted during the research there is not found any research previously developed which try to understand the critical factors for the selection and implementation of a business model as a strategic issue on the decision making process for the touristic companies in the UK.

For this purpose the researcher has selected the case of Tripadvisor in the UK, as it is the top company with the highest share in the market for destinations and accommodations websites according to Experian (2011) in their UK Travel Quarterly Review for the Summer 2011.

Throughout this paper the researcher shall be able to find and characterize the most popular business models implemented by them and what are the main factors affecting their performance. At the end the researcher will be able to suggest some recommendations for these types of companies to be more innovative in terms of business models for the achievement of the business goals.

Literature Review

E-commerce’s Tendencies and E-Tourism in the UK

In 2010, there were 2.04 billion of worldwide internet users according to World Bank statistics. The world trend is rising every year in a growth rate between 13% and 32% during the last 10 years (World Bank, 2011).

However, Goldman Sachs predicted in the JP Morgan’s annual "Nothing but Net: 2011 Internet Investment Guide on digital commerce"; that the global e-commerce sales will reach $963 billion by 2013, this means it will grow at a rate of 19.3% (Reid, 2010).

Online travel sales were estimated at 58.4 billion Euros in 2008 for the European market (Marcussen, 2009); where the UK represented 30% of the participation in this figure. Approximately 64% of these sales are represented for direct sales channels and the other 36% has been taken for intermediaries which operate in a different business models to be study along this research. Since 2000 the air tickets sales has represented more than the 50% of the online sales for the e-tourism market.

According to World Travel Market Industry Report (2010) in the UK market 36% of the tourist in 2010, used social media resources for the research during the planning of their holidays, identifying a high impact of TripAdvisor on the purchase habits of females and holidaymakers aged between 55-64 year old with eight out of ten saying the holiday reviews website has the greatest influence over their holiday choices.

Business Models Definitions

Business models is a concept that has been implemented since many years ago for the traditional markets but after mid 1990’s has suffered and intensive usage due to the emerging of the online business with the mass customization of the internet (Zott, Amit and Massa; 2010).

There are several definitions around the concept of business models but in strategic planning matters the most recognized authors highlight the one developed by Timmers (2008) which establishes a business model like "an architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue." This definition has been mentioned for several authors to make reference to this concept, it is consider relevant because it is very specific and is not limited to the design of the network of the participants and information flow it is also considering the role of the participants and their benefits.

Some other authors define it like the vehicle for delivering the purpose of the vision providing an explanation of an organization "recipe for success" and it contains those factors that essentially define the business: the product (or service), the market, and the "reasons to buy", (Thompson and Martin 2010). In this case the authors establishes a concept that is more defined in terms of a tool to deliver the success implementation of the result, but it is included new factors related to the market and the reasons to buy, focusing more in marketing concepts. In relation to this definition Timmers (1998) makes emphasis in the fact that the business model by its self won´t be able to explain how the mission of the business is going to be achieved.

Finally Strauss and Frost (2012) defines a business model like a method by which the organization sustains itself in the long term and includes its value proposition for partners as well as its revenue streams.

According with the definitions studied above, in which the business models is categorized as a architecture, a tool and a method it is important to understand what are the most important concepts to the understanding of this definition.

In Timmers (1998) definitions the most relevant aspect is the network of information including not only the participants and their roles but in the same way how they are getting benefit in each side (such revenue model and online consumer experience). Complementing this with the value proposition selected for the organization mentioned by Strauss and Frost (2012) to assure a long term surviving which in the end become the vehicle to delivery the business results of an organization and its "recipe for success" (Thompson and Martin 2010).

The Role of the Business Model in the Strategy Development

Business models are differentiated from business strategy because they don’t describe how the objectives are going to be achieved (Chaffey, 2009), but it is possible to understand through the business model how a company is different to its competitors by the understanding of its stakeholder relations, organization and the market which is involved.

The transition of the traditional models implemented in the market to the e-businesses model is achieved with the implementation of information technologies (Strauss and Frost, 2012)

For the understanding of the way in which a business model is differentiated from the others Chaffey (2009) suggests that business models can be classified into three generic categories: (1) market place position perspective, (2) revenue model perspective and (3) commercial arrangement perspective.

Timmers (1998) suggest that possible architectures for business models are defined for two basic dimensions: the degree of innovation that is to say if basically the traditional model was implemented using electronic resources or the innovation degree has achieved to offer something that it wasn’t possible to implement in a traditional market. The other dimension is related to integration of functions ranging from single function business models to fully integrated functionality for example the value chain integrator. The next section is going to summarize how the authors that had study this subject and classified the different model into categories and levels.

Business Models Categorization and Levels

The figure below descripts the categorization established by Timmers (1998) and its classification in terms of degree of innovation and degree of integration.

Figure 1. Business Models Classification by Timmers

Degree of Innovation

Same as before

Extended

New

Degree of Integration

Single function

E-shop

E-procurement

E-auction

Value Chain services

Trust Services

Information Brokerage

Integrated functions

E-mall

Third-party

Marketplace

Virtual Communities

Collaboration Platforms

Value Chain Integrator

Adapted from: Timmers 1998

E-shop: This is the simplest model implemented online identified in Timmers (1998) work and consists in the implementation of a portal with the information related with the promotion of commercial activity of a specific company. In a complete version of this model it is possible to make orders and payments. It offers some advantages for both parts in the case of the organization lower costs than in the traditional market and possibly of advertising. In the customer size some benefits like 24 availability, wider choice, potential lower prices and better information of product and services.

E-procurement: According to Timmers (1998) this business model is mainly implemented by government institutions and big companies to make more efficient the procurement process through a wider selection of suppliers, incrementing quality and reducing cost for procurement. The benefit of the suppliers lies in more tendering opportunities with lower costs.

E-auction: The implementation of the bidding mechanism on an electronic platform is implemented in this business model (Timmers, 1998). Utilizing the multimedia presentation of the products, and integrating some other process like contracting, payment, delivery and advertising. For companies and customers there is a time saving, global sourcing advantage.

E-mall: Timmers (1998) defines it as a collection of e-shops which is under a common umbrella that can be a brand name, payment method or even a collection of guarantee policies. The benefits in this case for the organization are sought in services, advertising, and the enhancement of the supporting industries or e-shops integrated. The revenue model consists in membership’s fees and in some cases transactional fees.

Third Party Market Place: when a company prefers to leave the web marketing duties to an external party, this model is suitable. The third party execute the different tasks like branding, payments, ordering, and security processes. In this case like in the last model the revenue model may consists in a membership fee.

Virtual Communities: In this business models the content is constructed by customers and partners. Revenues sources can be memberships and advertising in this model. This model is sometimes added as a feature in some others business models using it as a loyalty tool to provide customer feedback. Papazoglou and Ribbers (2006) define them as a virtual space where people with common interests, such as profession or expertise, interact to share information, thus they add value for their members and so become important for marketing purposes (Zott, Amit and Massa; 2010).

Value Chain Service Provider: according to Timmer (1998) is a supplier specialized in one of the functions of the value chain. The revenue model consists in a fee or a commission scheme according to the benefits, or the transaction value for the customer.

Value Chain Integrator: in this model the organization integrates multiple steps of the value chain and obtains revenues from a consultancy o transaction fee.

Collaboration Platforms: This model consists in space content with tools and useful information for the collaboration between enterprises. In most of the cases the functions are specialized in one specific area. The revenue model consists and charge fee for the usage of the content provided or selling the tools offered.

Information Brokerage: The value for this model emerges from the need for the managing of the huge amount of information available on the open networks, like in the case of Search Engines portals.

Trust: is a special category of the brokerage business model where the dynamic consists in provide "trust" services by certification authorities and electronic notaries and other trusted third parties.

The business models descript above according to Timmer (1998) framework are nowadays implemented in a wide range of industries, organizations can choose one or more models to use in the strategy to accomplish the enterprise goals.

On the other hand the models are classified by Strauss and Frost (2012) according to its level of commitment to E-business. They indentified four levels according to its impact on the electronic business. The levels are: activity, business process, enterprise and pure play.

Activity Level: in the lowest level of the pyramid and implies a low risk for the business, achieving some interesting savings through making the operational level more efficient. Some of the tools implemented at this level are: online purchasing, order processing, e-mail, content publishing, business intelligence (BI), online advertising and public relations (PR), online sales promotions, pricing strategies and social media communication.

Business Process Level: This is the second level in which the companies are arranged to change their process nature to achieve the effectiveness. In this cases the tools are more integrated to the nature of the business some of the more popular are: customer relationship management (CRM), knowledge management (KM), supply chain management (SCM), community building, affiliate programs, database marketing enterprise resource planning (ERP) and mass customization.

Enterprise Level: at this level the companies are convinced that their future relies on the e-business activities and they are committed to unified systems in the organizations. The type of business activities that can be find at this level are: e-commerce, direct distribution, portal, social networking, online brokers and online agents.

Pure Play: This is the level of the businesses models that starts and internet and the key for their success in offer of grater costumer value. This is the highest level of innovation in terms of businesses models because they wouldn’t be possible without the use of the internet.

Critical Success Factors

This concept appears for the first time in the early 60’s but it became more relevant a decade later when Dearden and Vancil’ utilized the concept in the design of a management control system (Leidecker and Bruno, 1984).

Rockart (1979) mentioned by Leidecker and Bruno, (1984) defines critical success factors (CSF) like the area in an industry in which the achievement satisfactory results will insure successful competitive performance. On the other hand Hofer and Schender (1978) also mentioned in Leidecker and Bruno, (1984) works makes reference to those factors in which decision making of the management can affect the overall position of the company. They also mention that these factors vary according to the industry influent by variables related to economic and technological issues of every sector.

According to Leidecker and Bruno, (1984) CSF can be a characteristic such a price advantage, it can also be a condition such as capital structure or advantageous customer mix; or an industry structural characteristic such as vertical integration.

Types of Critical Success Factors in E-Business Models

Chaffey (2011) identified 11 elements for a successful business model implementation with a list, they are:

Value proposition

Market or audience

Revenue model and cost base

Competitive environment

Value chain and market place positioning

Representation in the physical and virtual world

Organizational structure

Management

In the further section is going to be analyzed the first four factors mentioned above as the critical success factor to be evaluated along the research, the rest of the are consider important as well but not key for the tourism industry.

Value Proposition

Chaffey, (2011) defines online value proposition (OVP) as the statement of the benefits of online services, which reinforces the core proposition and differentiates from an organization‘s offline offering and those of competitors. Typical benefits of the OVP can be summarized in the 6 C’s customer’s value:

1. Content: The richness of the information supports any transaction that the users want to execute on the site, giving them confidence and encouraging them to keep visiting the website.

2. Customization: It is also known as personalization and it refers to how the content is customized through e-mail alerts and recommendations.

3. Community: Is the action by which consumers are incentivized to discuss through forums, blogs and social media.

4. Convenience: It refers to the availability of the product or the service used at any time, minimizing accessibility restrictions to the online offer.

5. Choice: This value makes reference to the diversification of the products offered in the portal giving a wider choice opportunity to the consumers.

6. Cost Reduction: The price differential expectation of the online users in relation to the traditional markets, encouraging them to use online services.

Market or Audience

In e-business model the market can be defined in two schemes one of them describes the type of transaction between the stakeholders. To say from which type part (consumer, business, government) to which type of part is going to be the business generated. In the Figure 3 it is described how what are the nine types of transactions found. On the other hand it also considers geographical and segmenting and targeting issues as in the traditional market.

Figure 2. Transaction Alternatives between Business, Consumers and Governmental Organizations

Consumer or Citizen

Business (Organization)

Government

Consumer or Citizen

Consumer to Consumer

C2C

Business to Consumer

B2C

Government to Consumer

G2C

Business (Organization)

Consumer to Business

C2B

Business to Business

B2B

Government to Business

G2B

Government

Consumer to Government

C2G

Business to Government

B2G

Government to Government

G2G

Adapted from Chaffey 2011

Revenue Models for Online Businesses

Revenue Model is defined by Laudon and Traver (2007) like the method in which a company earn revenues, generate profits and produce a superior return on invested capital. In the online business environment there has been identified five different revenue models, that can be use either by itself or in a combination with some others models. They are:

Advertising revenue model: This is one of the most popular models in which the portals offer contents, products and services and at the same time provides spaces for advertising getting fees from the advertisers.

Subscription revenue model: In this case the website as in the previous model offers content and products in the website, but charges a subscription fee for access some or all the information its offering. In this case the content must be perceived as a high value added for the success of this model.

Transaction fee revenue model: In this model the organization charges a fee for enabling or executing a transaction. Their revenues will depend on the volume of the transactions generated.

Sales revenue model: This model is very popular too in the online environment and basically on it the companies get revenues by selling goods, information or services to the customers.

Affiliate revenue model: In this method the sites that steer business to an affiliate receive a referral fee or percentage of the revenue from any resulting sales.

Competitive Environment

This element is related to the others organizations selling similar and operating in the same marketplace. Direct and indirect must be consider during the analysis, and the business models that they have implemented too.

The benchmarking tool is the most useful known method this must include different perspectives (Chaffey, 2011) which are mentioned as follows:

Review of internal capabilities

From core proposition through branding to online value proposition (OVP)

Customer life cycle related with customer behaviour issues

Determine quantitative and qualitative research and analysis to determine characteristics of the competitor environment.

In sector and out of sector: the benchmark must be conduct in direct and indirect competitors within the sectors and reviewing other sectors that are more advanced to see what is new that can be useful in my industry.

Financial and non Financial Measures: financial comparisons are very important, but in the same way some others aspects of the company can be relevant like the information related with capability, innovation, learning.

From user experience to expert evaluation: to say using the perspective from the customer reviews and at the same time from the perspective of an expert.

Consumer Behaviour

This field is defined by Solomon (2013) as the study of the processes involved for the activities of selection, purchase, use, or dispose of products and services, ideas and experiences by individuals or groups to satisfy their needs and desires. It is included in this field the process of exchange which makes emphasis in the complete consumption process including the stages before, during and after the purchase. According to this author is not only about: why the people buy? Is also important how marketers influence consumers and how consumers use the products and services sell.

On the other hand The American Marketing Association mentioned by Peter and Olson (2008, 5) defines it as "the dynamic interaction of affect and cognition, behaviour and the environment by which human beings conduct the exchange aspect of their lives". In their own words the authors Peter and Olson (2008) comment that is the process that involves, thoughts, feelings, actions and environment during the consuming process.

The first definition shown above makes reference to the consumer behaviour as a study field, while the authors in the second concept mentioned it as a process. If the best of both definitions is taken to clarify the concept is possible to establish that it involves the study and process of the consumption process including selection, purchase, use or dispose of the products and services and how it is affected by the thoughts, feelings, actions and environment during the different stages.

With the emerging of the e-commerce this concept had to be adapted to the new online environment, needs and parties and the concept of online consumer behaviour is adapted for this field.

Online Consumer Behavior

Laudon and Traver (2007) state that the stages for online consumer behaviour are not different in relation to the traditional concept but it is necessary to consider some new factors to understand its evolution.

They propose a model in which the traditional factors such as brand, market, and communication as it is important to include some others factors like users and product characteristics and website features. See figure below with the scheme developed for this model.

Culture

Social Norms

Psychological Factors

Demographic Factors

Mkt Communications Stimuli

Firm Capabilities

Website Features

Consumer Skills

Brand

Product Characteristics

Purchasing Attitudes

Perceived Behavioral Control

Intervening Factors

Clickstream Behavior

Purchase

Figure 3. Model of Online Consumer Behavior

Adapted from: Laudon and Traver, 2007

In relation to a traditional model proposed for these authors, the new ingredients are website features, consumer skills, product characteristics, attitudes toward online purchasing, perception about control over the web and click stream behaviour.

According to the authors of the model (Laundon and Traver; 2007) website features include latency, navigability and confidence in a website security; security skills makes reference to the experience that consumers has conducting online transactions and product characteristics concerns to the adaptability of some products to the internet marketplace because of their features (such as books, software, music and some types of services).

The combination of the factors mentioned above with the traditional factors conducts to a specific attitude about the purchasing on the web experience and determinate if the perception of control of the customer over the website.

Finally the model descript a factor denominated "click stream behaviour" makes reference to the sequence of movements that the consumer makes from the search engine and through the conversion funnel to finally conduct to a decision to purchase.

In relation to the demographic factors the authors (Laundon and Traver; 2007) mentioned that the most of the studies conducted in this area has conclude that it account in less than 5% in the online users and is not a predictive factor.

The tends for the online shopping behaviour is classified in two groups small ticket and big ticket items which include travel reservations being the largest figure in terms of online sales for 2004 reaching $52.4 billion dollars according to the information from E-marketer mentioned by Laundon and Traver (2007) the second largest category is apparel and accessories with a huge difference in the transactional amount being less than the quarter of the size of the first on with only $11,7 billion dollars.

Finally in concern to the trust and utility concepts in a research conducted by Ba and Pavlou (2002) and mentioned by Laundon and Traver (2007) they determined that are factors highly influential in the shopping online decision making. According to the authors utility means consumers want good deals, bargain, convenience and speed of delivery. And trust is achieved through a strong reputation of honesty, fairness and quality product offered.

Online Customer Experience

What are the keys drivers to the achievement of a satisfactory online customer experience?

Meyer and Schwager (2007) define customer experience as "the internal and subjective response that customers have to any direct or indirect contact with a company"

OCE is defined like a psychological state manifested as a subjective response to the e-retailer’s website (Meyer and Schwager 2007). The customer engages in cognitive and affective processing of incoming sensory information from the website, the result of which is the formation of an impression in memory.

Rose, Moira Clark, Phillip and Hair (2012) mentioned from previous research that OCE has three identified outcomes for OCE they are: satisfaction, trust, and repurchase intention.

Satisfaction is based on attributes, and how the customer perceives and evaluates the performance of the website (Jin and Park; 2006) mentioned by Rose, Moira Clark, Phillip and Hair (2012).

Consumer trust is directly related with the feeling of vulnerability based on the online interactions. This value is looked for through the expenditure of guarantees, third party certifications, or testimonials given by former customers.

Khalifa and Liu (2007) mentioned for Rose, Moira Clark, Phillip and Hair (2012) suggest the importance of the relation of both of these aspects cited previously with the repurchase intention, which has been evident in a previous work developed by Jin and Park (2006).

Information Communication Technologies (ICT´s) and Tourism

The Internet has fundamentally reshaped the way tourism related information is distributed and the way people plan for and consume travel (Buhalis & Law, 2008).

The development of ICT´s during the last years has had profound implications for the whole tourism industry incorporating not only the traditional software, hardware and networks, but facilitation information management and telecommunications systems (Buhalis, 2003).

Hoffman (1995) mentioned by Buhalis (2003) has conclude that the most important drivers that make ICT´s an integral part of the tourism industry are:

Economic necessity, as global competition requires maximum efficiency on a worldwide basis.

Rapid advancements in technology and particularly the proliferation of the internet as well as the development of 3G mobile devices and interactive television

Improvements in ICT price /performance ratios, which yield better productivity for capital employed in ICT’s

Finally the rising customer expectations, as consumers become used to advanced products, expect further improvements to the service and anticipate communicating with the organization interactively.

Buhalis (2003) recognized three different dimensions in which ICT empower tourism organizations to take advantage of them. The improvement of their internal efficiency (intranet) is the first mentioned, to develop their effectiveness in their communication with their external world (extranets) and finally, to generate partnerships with trusted collaborators and stakeholders (internet).

On the other hand in his work (Buhalis, 2003) there are mentioned some motivators for the utilization of the internet in the travel business they are:

The richness of the information

Ease in identify information

Self-service and economical

Available at all the times

Discounted prices due to distribution savings transferred to customers

Using as references the reasons explained previously it is possible to conclude that ICT has become a essential key to survive in the market for the tourism industry, re-shaping the way that the business in this sector are done. To take advantage of this tool is a challenge for the managers in the head of the organization in the sector. That is the case of TripAdvisor which has been successful in the implementation of ICT’s.

Tripadvisor Background, Strategy and Business Model

Trip Advisor has its origins in 2000 as a creation of Steve Kaufer, Langley Steinert, Nick Shanny, and Thomas Palka. They developed the idea due to the frustration Kaufer suffered in a previous experience trying to get reference information for a touristic place (History of famous start-ups, 2009).

They started as massive database of travel information able to use it as a search engine for travel sites like Expedia and Travelocity with a initial investment $4 million of capital; but the drop of the tourism industry due to the 9/11 events, makes them to rethink about their business model, then they decided to pursue an advertising model which wasn’t very successful and made them decide to move into a pay per click model, hiring editors to develop travel articles and motivate users to post their own reviews, this model was well accepted by the users and the company became profitable in the blink of an eye. With these adjustments, TripAdvisor grew rapidly and successfully. The company agreed to be acquired by Expedia/IAC in 2004 for $210 million in cash but in December 2011, Expedia felt it wasn’t getting full economic credit for TripAdvisor buried within its financials and so spun TripAdvisor out as an independent company, where it now trades on the NASDAQ with a $4.8 billion market capitalization as of this writing (Bussgang, 2012).

Nowadays, TripAdvisor can be described as a comprehensive travel search engine and directory that assists consumers in their search for travel information via the web. By choosing a destination consumers are presented with a variety of destination relevant information such as articles, guidebooks, reviews, user comments on cities, hotels and activities, and booking facilities (Rabanser and Richie; 2010)

Trip Advisor became the world largest online travel site and operates in 30 countries, through their website and their other 19 branded sites in the different markets, attracting more than 74 millions of monthly visitors a year (Trip Advisor, 2012).

This organization is positioned in the 60th place in Alexa.com (Alexa.com, 2012) ranking for the UK, being the best ranked tourism website for the market according to this web information analyst organization.

Conclusions

The study and comprehension of the concepts and theories supporting the research purposes is a very important step in which the reader is able to understand the ideas and thoughts that inspired the author to develop this piece of work.

Once the main concepts has been explained the next stage is to define a plan including philosophy, strategy, resources and tools to be implemented to achieve the aim of the research.