) scored a nice win last month when the online provider of travel
reviews got the word it would be the only travel app to be
pre-installed in the new Samsung Galaxy S4 smartphone.
Samsung Electronics is also using TripAdvisor content to
power its own travel apps.
Samsung plans to announce the Galaxy S4 release date in coming
The pact may not move the needle much on TripAdvisor's
financial front, say watchers. But it should help TripAdvisor
expand its presence in the fast-growing mobile channel and up its
smartphone user base.
"In general, a continued improvement in the company's mobile
presence is a positive," said Piper Jaffray analyst Mike Olson.
"Getting onto one manufacturer's device is a small positive and a
step in the right direction. But ultimately, we need to want to
see a broad adoption of TripAdvisor's app on mobile devices to
see a material impact on revenue and earnings per share."
TripAdvisor expects the rate of growth in smartphone and
tablet users will continue to exceed the growth rate of its
overall users for the foreseeable future.
It's not that TripAdvisor needs a lift. Its branded websites
make up the largest travel community in the world, the company
says, with more than 200 million unique monthly visitors, and
over 100 million reviews and opinions. Its sites operate in 30
Links To Customers
Beyond travel-related content, its websites provide links to
the websites of its customers, including hotels and other
businesses, allowing travelers to directly book their travel
TripAdvisor, which was spun off from online travel firmExpedia
) in December 2011, has seen solid sales gains in its first year
as a public company. Profits have picked up the past two quarters
with double-digit increases in each. In the most recent fourth
quarter, earnings rose 21% to 29 cents a share. Revenue grew 23%
to $169.4 million.
Followers expect the company to keep up the pace when it
reports first-quarter results May 7 after the close. Analysts
polled by Thomson Reuters see earnings growing 21% to 46 cents a
share. They see a 22% rise in sales to $224.07 million.
"Our expectation is it's going to generally be an in-line
quarter," said Olson. "But there's the potential for 2013
guidance to move higher, given the transition to metasearch
appears to be tracking better than expected."
TripAdvisor is in the process of moving away from its
historical model to a metasearch display, which it says is an
easier model to navigate. A metasearch display is an interface
that shows hotel or flight availability and pricing information
from multiple sources, without requiring the user to visit
another website. Its current model relies on pop-ups to get ads
in front of users.
TripAdvisor has offered a flight metasearch product since
2009. In 2012, it built a hotel metasearch product for its
smartphone platforms. It plans to roll out the hotel metasearch
product on its desktop and tablet platforms over the next few
Needham & Co. analyst Laura Martin says she expects a
stronger first quarter than the Street assumes.
And she has recently raised her full-year 2013 estimates for
sales and earnings.
The reason: "We are raising our FY '13 estimates to reflect
continued mobile adoption resulting in higher click-based revenue
and higher margin," Martin wrote in a report.
Macquarie Securities analyst Tom White says the metasearch
display should be a big improvement from the way users can search
on-site today. "But the switch to metasearch makes me somewhat
nervous over the next couple of quarters as the change will
temporarily disrupt the primary monetization engine of
TripAdvisor's content," he said.
In addition to its flagship TripAdvisor brand, the company
manages and operates websites under 19 other travel media brands,
such as bookingbuddy.com.
The company added to its lineup with the March acquisition of
Tiny Post, an app that lets you write over photos and turn them
into stories. And this month it bought Jetsetter.com, a
members-only private sale site for hotel bookings.
Its largest source of revenue is click-based advertising,
which includes links to partners' booking sites, which are mainly
online travel agencies and direct suppliers in hotel, airline and
cruise product categories. It gets payments from advertisers
based on the number of users who click on each type of link. The
rest of its revenue is generated through a combination of
subscription-based offerings and selling room nights on its
transactional sites SniqueAway and Tingo.
As Martin notes, TripAdvisor's mobile presence, which includes
apps for theApple iPhone, Android,Nokia (
) and Palm smartphones, has been growing at a rapid clip. In the
fourth quarter, smartphone and tablet app downloads doubled to
more than 31 million and its 45 million monthly mobile unique
visitors was up 190% year over year, said founder and Chief
Executive Steve Kaufer on the fourth-quarter conference call.
The company's primary growth driver comes from an increasing
volume of users coming to its site, says Martin.
In the fourth quarter, total monthly unique visitors to
TripAdvisor branded sites grew roughly 45% with Asia Pacific
leading the way at more than 75% growth. More than 60% of its
traffic originated from outside of its core U.S. and U.K.
TripAdvisor boasts a number of strong points, analysts
Among them, says Martin, is it's a natural advertising base
for the online travel sites such asPriceline.com (
) and Expedia as well as hotels.
"The real asset is the content," adds White. "They have a
massive head-start and lead in terms of high-quality
user-generated reviews on resorts, hotels and restaurants."
Its rivals includeGoogle (
),Yahoo (YHOO) and Baidu (BIDU), and online travel agencies such
as Expedia and Priceline.com.
Followers expect the company to keep up its momentum. Analysts
polled by Thomson Reuters see full-year earnings rising 13% to
$1.74 a share. They expect a 24% gain in 2014.
The climate for its business is good. A TripAdvisor survey by
research firm StrategyOne found 42% of U.S. travelers plan to
increase travel spending this year and 79% of U.S. hoteliers are
optimistic about increased profit this year, leading the world
average of 68%.
According to the IDC New Media Market Model, the global online
advertising market is growing and is projected to exceed $130
billion by 2014, as more and more advertisers continue to shift
their spending from offline to online channels, says a company
SEC filing. For travel specifically, IDC estimates that annual
expenditures for global mobile Internet travel advertising in
2013 will be close to $15 billion.
On Dec. 11, Liberty Interactive bought about 5 million shares
of TripAdvisor's common stock from media mogul Barry Diller and
the Diller-von Furstenberg Family Foundation.
The transaction gave Liberty control of about 22% of
TripAdvisor's common stock and 57% of its voting stock.
Concurrently with the transaction, Diller resigned as chairman
and senior executive of TripAdvisor, but will continue to serve
as a director.