NB: This is a guest post by Uwe Frers, founder of TripsByTips, a German online travel guide and network.
The latest edition of the biggest German tourism magazine FVW contains an article about the status quo of German travel communities, entitled Freier Fall von Wolke sieben (trans: Freefall from cloud nine).
The article describes how just five of the 16 providers that were in operation in 2008 have achieved significant growth.
I am very pleased to belong to this successful group of top five players as founder of TripsByTips. But I’d like to share my thoughts on these developments and others over the past few years...
Before the start-up boom
Between 2000 and 2003 the online world of German language travel information consisted mainly of thousands of forums and private websites.
Although TripAdvisor had already reached a relevant size in the USA, by 2003 there were no providers in Germany who approached content aggregation with a larger global perspective.
That was to change in 2003, with the commercial launch of Holidaycheck, which from the start clearly positioned itself as a hotel review portal.
A little later, in 2004, Trivago was founded. To my knowledge this was the first startup to bring the concept of the travel community to Germany.
The startup wave
The scene was kicked into action around 2006. Communities became a huge trend in the online sector; from football to cars to photography, new sites kept popping up everywhere online.
Newcomers to the German travel sector included:
- Cosmotourist (Autumn 2006)
- TripsByTips (May 2007)
- Tripflip (May 2007)
- Opodien (June 2007)
- Urlaubswerk (June 2007)
- Globalzoo (July 2007)
- Travello.com (December 2007)
- Geo-Reisecommunity (February 2008)
- Friendlyface (March 2008)
- Dodo (Mai 2008)
- Tripwolf (June 2008)
- Triphunter (June 2008)
- Triplib (July 2008)
Some company founders managed to stay financially independent, some secured external financing from the media sector (Burda, Gruner + Jahr, DuMont), and others were supported directly by other providers from the tourism sector (Opodo, Urlaubswerk, Gratistours).
Concepts and plans among the startups
Most of the startups had the following two basic concepts:
- Building up user-generated content. In order to successfully build up and market user-generated content there were two issues that need to be solved. Firstly, finding ways to motivate users to write often, and secondly, building a master database to collate the data gathered on either destinations, points of interest or hotels. This is the only way that opinions could be logically structured and ultimately be made profitable. These tasks turned out to be anything but trivial.
- Making tools available to facilitate the intensive exchange of experiences among community members: writing messages, becoming friends, sending drinks, etc. Many features were developed to enable active networking between community members. This topic has largely been rendered superfluous by another 2004 start-up: Facebook.
Of the 16 companies that were in the race in 2008, only five providers were able to establish themselves on the German-speaking market: Holidaycheck, Tripadvisor, TripsByTips, Tripwolf and Trivago (this is the subjective perspective of FVW, but can also be verified by examining the following criteria: revenue, number of employees and market reach in Germany, according to Google AdPlanner).
What differentiates these five companies from the other 11 who concurrently attempted to become well-known?
- Finances: established firms as investors
- Master data: database for destinations, points of interest and hotels
- Content: a considerable amount of content for all relevant world destinations
- Income strategy: how do I generate revenue from content
As similar as the success criteria may be, the positioning of the five providers on the market has been quite different.
A detailed look:
- HolidayCheck positions itself as a travel guide, although the focus is clearly on hotel reviews which have been made profitable by having an in-house travel agency
- TripAadvisor positions itself as a travel guide and the focus here is also on hotel reviews. In contrast to Holidaycheck, Tripadvisor offers significantly less German-language content (some is translated from English). This generates income through the click out model (hotel chains and booking platforms pay per click when customers arrive from the Tripadvisor advisor website).
- TripsByTips positions itself as a travel guide particularly for specific destinations and points of interest, pursuing a two-pronged business model: onsite via advertising and e-commerce, offsite as an aggregator and syndicator of user generated content (customers are mainly travel guides and tour operators).
- Tripwolf positions itself as a travel guide and generates most of its revenue from advertising and e-commerce. In contrast to the four other providers, Tripwolf offers little of its ‘own’ user-generated content (content comes mostly from publishers).
- Trivago positions itself primarily as a hotel price comparison service (the community element which was in the foreground at the time of the start-up has faded into the background). Revenue is generated from a click out model, similar to Tripadvisor.
Incredibly diverging models have emerged from the original community idea which was essentially to encourage interaction between travellers.
So how has Facebook changed things?
In a certain sense, Facebook has become a competitor for users’ online time (after all, personal communication today seems to more or less take place there).
However, as far as search functionality, content structure and content depth are concerned, Facebook cannot compete with the strengths of the specialised travel communities.
Moreover Tripadvisor and TripsByTips make good use of Facebook’s networking possibilities via their own Facebook applications, Facebook Connect and the “share” function, and the other three players use at least some of these Facebook extras.
Have holiday networks become outdated?
From my point of view, the FVW questions (There is no end to the Facebook hype. Are travel communities still necessary? Have holiday networks become outdated?) can be clearly answered.
Facebook stands for communication; the strength of the platform lies in connecting people, not in the structured presentation of information.
It is the term "travel community" which is outdated; I would talk instead of online travel guides.
These specialized sites score points particularly with structured user-generated content, which for 28% of all online bookers is essential reading material before making a final decision (Source: V.I.R-Reiseanalyse).
So, as users are searching for this kind of content and making bookings on this advice, these travel communities are essential.
NB: This is a guest post by Uwe Frers, founder of TripsByTips, a German online travel guide and network