Expedia's Trivago Unit To Follow the TripAdvisor Game Plan

Expedia Inc.'s Trivago hotel-metasearch business is on a roll, and the parent company expects it to follow the sort of successful path that TripAdvisor blazed before being spun out from Expedia in late 2011.

In its third quarter earnings announcement, Expedia said Trivago contributed 6 percentage points to Expedia Inc.'s year over year revenue growth, and the Germany-based company is on track to being profitable in 2013.

Speaking to analysts and the press during Expedia's third quarter conference call, CEO Dara Khosrowshahi said TripAdvisor, when it was in the Expedia fold, operated fairly independently and that enabled it to innovate very fast.

"The plan is for Trivago is the same," Khosrowshahi said.

Expedia took a majority stake in Trivago in March 2013.

Khosrowshahi said TripAdvisor managed to expand globally fairly rapidly, adding "we expect [Trivago] to do the same going forward."

He said Trivago is very strong in Europe and other Expedia Inc. brands are learning from Trivago.

In the U.S., Expedia Inc. brands intend to bid aggressively in Trivago as it gains stronger in the U.S., Khosrowshahi said.

TripAdvisor created a lot of value for shareholders, and Expedia is expecting a similar pattern from Trivago, Khosrowshahi said.

It isn't difficult to see the value that TripAdvisor created for shareholders. TripAdvisor's market cap is currently around $12.5 billion compared with $6.8 billion to its former parent, Expedia Inc.