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How Did TripAdvisor Perform In The Year 2016?

TripAdvisor is the largest travel review website in the world with over 435 million reviews for 1.9 million accommodations, 4.2 million restaurants, and 730,000 attractions, and the platform enjoys 390 million average monthly unique visitors. TripAdvisor is known for its aggressive shopping spree across all its platforms. Though its non-hotel segment has being performing well currently, TripAdvisor's hotel segment, accounting for around 80% of its revenues, seems to be lagging behind on account of Instant Booking's lack of traction among hotel bookers. However, with the latest development of Expedia joining the Instant Booking bandwagon, the future does look promising for TripAdvisor's Instant Booking and in turn its hotel segment.

Instant Booking's Lack Of Traction And The Company's Subsequent Weak Performance

TripAdvisor's Instant Booking platform, that started its journey in mid-2014 in the U.S. and was gradually rolled across the globe, is yet to show significant user traction. This has led to a sharp decline in TripAdvisor's revenues per hotel shopper to the extent where most of its peers are earning almost 4-5 times more revenue per shopper . This has led to a massive erosion of The company's stock price. TripAdvisor's transition from a metasearch and reviews platform to an online booking site is taking time as people mostly browse through the hotels on its websites and go to other OTA sites or independent hotel websites to complete their bookings. Coupled with this is the problem of mobile conversion, i.e., though more people visit the website through mobile, the conversion to a confirmed booking from mobile is far less than that of those from desktop sites. The company is still rolling out the Instant Booking with better user experiences and roping in more hotels, which means the additional investments will continue keeping its margins dampened in the near future.

…And Enter Expedia!

However, Instant Booking might be a game changer for TripAdvisor after all! TripAdvisor's year is ending on a positive note with Expedia joining its Instant Booking platform (currently only on desktop sites in the U.S.). Along with expanding the list of accommodations available on the platform, Expedia's inclusion is also expected to increase Instant Booking's credibility in the eyes of online travel bookers. Given the fact that Priceline was already a part of Instant Booking as were the top hotels across the world, Expedia's presence might grow Instant Booking's user acceptance to a significant extent. The presence of two OTA leaders might provide Instant Booking with the advantage of providing the lowest prices along with more options to choose from, and hence attract a larger number of travel bookers. Most importantly, after the inclusion of Expedia, TripAdvisor gained a unique advantage that no other website offers to travelers yet: the options to book from both Priceline and Expedia, as well as from a host of hotels who directly feature on Instant Booking. This might be a key driver towards boosting Instant Booking's popularity in the long run.

How TripAdvisor Continues To Grow Its Non-Hotel Segment

In December, TripAdvisor decided to be the lead investor in the Series B funding round worth $5.2 million for Traxo, a company that collects data in the business travel domain. Traxo helps travel service providers in tracking off-platform bookings and provides insights into travel spends by consumers. Through this move, TripAdvisor might further expand the array of booking options on its Instant Booking platform with the presence of services for business travelers.

In August, it acquired New York-based Citymaps, a map-based guide for things to do in a city. TripAdvisor had boosted its tours and attraction offerings after forming Marketplace with the help of its 2014 acquisition, Viator. Citymaps might further help with the growth of Marketplace. The company believes that attractions can be its next billion dollar revenue generating segment. The market is in a fragmented state and it provides for an $80 billion market potential in the U.S. and the U.K. alone.

In July, TripAdvisor upgraded its flight metasearch option with the launch of a new airline review platform, an enhanced flights search service, and the beta launch of "flyscore" - a 1 to 10 rating system for every flight based on traveler reviews, to measure the quality of flight experiences, the in-flight amenities, and the duration of the travel. Similar to its hotels' ranking and reviews, travelers booking flights can make an informed decision based on a comparison of different options.

TripAdvisor's Non-Hotel Segment Is Growing And Has The Potential To Grow Further

TripAdvisor's non-hotel business revenues might provide a major boost to TripAdvisor's revenues in the future. According to some experts, TripAdvisor's non-hotel business, including attractions, restaurant reservations, and vacation rentals has the potential to grow by 118% between 2015 to 2018 to amount to a $500 million business. TripAdvisor's vacation rental business might also have the potential to surpass market leaders such as Expedia's HomeAway and Airbnb. Its attraction booking website, Viator, and restaurant booking website, TheFork, are among the largest aggregators in the world. TripAdvisor's continued acquisitions of vacation rentals, restaurant booking sites, and other attraction related services helps the continuous growth of its non-hotel business. Due to its wide array of offerings, along with reviews for a particular service or product, a prospective buyer can also find reviews of other services or products. The platform has the ability to cross-sell the other complementary products such as flights, local attractions, restaurants, etc. The traveler gets the convenience of booking everything on the same platform after checking out their reviews. Finally, TripAdvisor's millions of reviews provides it with unique knowledge of the popular trends and consumer behavior across regions when it comes to travel booking and gives it a competitive advantage in the area of big data.

Have more questions about TripAdvisor? See the links below.

  • What Is TripAdvisor's Fundamental Value On The Basis Of Its Forecasted 2015 Results?
  • Advertising Vs Subscription: What's TripAdvisor's Revenue and EBITDA Breakdown?
  • How Has TripAdvisor's Revenue And EBITDA Composition Changed Over 2012-2016E?
  • TripAdvisor Year 2015 In Review
  • Where Can TripAdvisor's Growth Come From In The Next 5 Years?
  • What Drove TripAdvisor's Revenue And EBITDA Growth Over The Last Five Years?
  • TripAdvisor Q1 2016 Earnings Preview
  • How Is TripAdvisor Gearing Up For Competition In The Vacation Rental Space?
  • How Can Instant Booking Stir Up The OTA Space And Be A Game Changer For TripAdvisor?
  • TripAdvisor's Expected Revenue And EBITDA Growth For 2016: Trefis Estimate
  • Why Might TripAdvisor Be An Attractive Acquisition Target For Priceline?
  • What Has Been The Immediate Impact Of The Brexit Decision On The Online Travel Companies?
  • How Is TripAdvisor's Non-Hotel Business Expected To Grow?
  • What Might Be The Long-Term Impacts Of Brexit On The Online Travel Agencies?
  • What Is The Significance Of TripAdvisor's Upgraded Flight Search Platform?
  • TripAdvisor's Q2 2016 Earnings Preview
  • TripAdvisor's Q2 2016 Results Remain Subdued But The Company Is Eyeing Long Term Growth
  • Reasons Behind Our 12% Downward Revision Of TripAdvisor's Stock Price
  • How Is TripAdvisor's Top Line Trending?
  • TripAdvisor's Third Quarter 2016 Earnings Preview
  • TripAdvisor's Third Quarter 2016 Remains Dampened As It Keeps Waiting For Instant Booking's Success
  • TripAdvisor's Instant Booking Is Expected To Receive A Significant Boost With The Inclusion Of Expedia's Websites

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for TripAdvisor

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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