Tripadvisor's Steve Kaufer was a remarkable success, turning a small company that used to be a pizza shop in Massachusetts into a household name and a global brand. Tripadvisor's problem isn’t necessarily about Kaufer’s replacement, but rather what innovative solutions will be needed to bring the company back to life.
Steve Kaufer, who has been CEO and co-founder of Tripadvisor for more than 20 years, will be retiring in 2022. The company announced Monday.
Tripadvisor Chairman Greg Maffei said that Steve has been Tripadvisor's driving force since its inception in 2000. His contributions to the travel experience of the consumer are incalculable, and his vision has led to the Tripadvisor that we now know.
The company began a search to find a successor. This search will include both internal and external candidates.
Kaufer stated in a statement that "We reach the end of 2021 in an excellent position. Travelers are returning as we exit pandemic. We continue to leverage our strengths and evolve Tripadvisor for future." Given our strong position and the talent of our teams, and having spent over 20 years with Tripadvisor, now is the right time to announce my plans for leaving the company. I am so grateful to all the people who made this company what they are today and will continue to lead the Tripadvisor family until the transition is complete.
After a recent change in the product Tripadvisor Plus, Kaufer's departure is announced. The program offered $99 per year hotel discounts, but was met with stiff resistance from major hotel chains over rate parity issues. It is now transitioning to cash-back payments that are likely to be less attractive and possibly smaller.
Tripadvisor's dilemma was that it had to offer some hotel discounts to its customers to get them to sign up. Hoteliers opposed to openly showing these rates, which are often hidden or opaque to consumers, without the strict protection of a paywall.
Critics suggested that Kaufer and Tripadvisor should have known these issues before launching the program.
Tripadvisor stock fell after the announcement about Tripadvisor Plus changes. The company was extremely optimistic about its potential. Subscription programs have gained ground in the industry, including one from eDreams, Spain.
Kaufer stated, "Sure." In an interview with Skift Research's Seth Borko at Skift Global Forum @ TWA Hotel at JFK a few days after the September program change. Rate parity was something we knew because we have been in business for a while. It is also known that suppliers have agreements which allow them to do what they wish when the different rates are shown behind closed user groups. We had a closed user groups aspect. It was very closed and not just a free membership. It would be worth $99 to pay a pay wall. It worked for a number of people.
It was unfortunate that not all the discounted rates were displayed behind a paywall. This angered some hotel chains.
Kaufer pointed out that Tripadvisor Plus has formed partnerships with wholesalers and hotel chains. Kaufer stated, "But to make it clear, we are in the travel internet sector." "We are moving as fast and as fast we can. I will never apologize for moving to a better product faster.
Tripadvisor Plus was just the latest product failure for Tripadvisor. The company grew to become a household brand around the globe based on user reviews of restaurants and hotels. It failed to gain momentum after that mark was made, and Google with its market dominance stole much of Tripadvisor’s traffic.
Tripadvisor was once a top-of-the-line marketing platform for online hotels and travel agencies. However, it tried several years ago to become a site that provided lots of hotel bookings directly on Tripadvisor without having to refer people metasearch-style, to other websites to make their bookings. Tripadvisor's online travel agency-like feature Instant Book was called by the company.
Tripadvisor was primarily engaged in metasearch before that, and now. This basically means that Tripadvisor leads travelers to online hotel agencies and websites to make their hotel reservations.
However, travelers were not used to Tripadvisor being another Expedia, Priceline, or Booking.com where they could book hotels. Tripadvisor abandoned Instant Book in search of a new formula for success.
Tripadvisor won many awards over the years, particularly in its early days. It was a star in Expedia's brand portfolio when it was owned by Expedia, before being spun-off into a standalone public company in late 2011.
Skift's oral history on online travel features Dara Khosrowshahi, Expedia's former CEO, describes what he thinks of Kaufer. Also, why Khosrowshahi’s IAC decided to acquire Tripadvisor early in 2004.
Khosrowshahi, currently the CEO of Uber, stated that he was attracted to the company's technical knowledge, passion for the business, and the conviction that speed wins. This is something Steve always talked about. Combining those three elements, technical knowledge, passion, and Steve, convinced me that this team could win. Few people can bring a company to true scale. Steve is one such person.
Khosrowshahi stated in 2016 that Expedia's spinoff from Barry Diller's IAC in 2005 saved Khosrowshahi when he took over the reins in 2005.
However, Tripadvisor had significant problems in reinventing itself even before the pandemic.
Skift published "What's Wrong with Tripadvisor?" in early 2020. It cited the company's problems fighting Google's inroads, its failed pivot to become more of a booking site and comparison shopping site, as well as the company's ill-advised shift to becoming more of an inspiration site for travel, which it later reversed.
After 20 years of Kaufer as the CEO, a shakeup is necessary. But the real problem is one that involves strategy. How can Tripadvisor get its mojo back in a highly competitive environment where Google holds so much power?
