Another Entrepreneur Talks Up His Book

Got here from Ben Casnocha. I don’t believe this for a moment:

TripAdvisor, the leading hotel and travel reviews site, will be spun out from its parent Expedia this month, andshareholders are giddy. With 50 million reviews and counting, the site is shaking the travel industry to its core. Underlying TripAdvisor’s success is a powerful long-term trend: ratings websites threaten to make many brands irrelevant.

I actually see the opposite effect, which is to reinforce brands’ power by making their experiences more consistent and reducing their monitoring costs.

Feedback is NOT disruptive technology for branded hotel chains or restaurants. Branding only works because it sets expectations, which are then either met or not met. If they are unmet, then the brand takes a hit. TripAdvisor just speeds up this process.

It’s an ugly bit of self-indulgence for marketing-types to think that brands are built by marketing. They’re built by experience. Motel 8 didn’t get its image by buying ads, it got it by whipping small franchisees into competent low-end hotel owners and delivering some kind of central reservation system. And maybe tomorrow they get good at hiring summer interns to pump up the reviews of their in-chain hotels.

And never forget TripAdvisor’s business model: selling ads. To the branded hotel chains. It’s in TripAdvisor’s best interest to maximize its value to these core clients.

TripAdvisor is helping to kill some businesses, though: rating organizations as they previously existed and old media advertisers.

Advertisers have lost a client. This is one less ad at the Superbowl because online ads are much more targeted and real information about the quality of an establishment is more easily sourced. And if their brand is powerful enough and their reviews are good enough, maybe they don’t even bother with advertising on TripAdvisor either.

And as I said before, TripAdvisor is an excellent new tool for big chains to use.

Let’s say your job is to monitor the Super 8 Brand across the US. You travel to hotels, perform inspections, chit-chat with the hotel owners and move on. That job is now dead. All an executive has to do now is sign up for a feed of reviews about its hotels flag underperformers. Any organization that has the resources to actually take advantage of these tools will win and small franchisees are buying those resources.

Branded chains don’t care about mom & pop shops unless they can scale. And if they can scale, they’re a branded chain.

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