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TripAdvisor plans to fairly aggressively invest in the global expansion of its restaurant reservations business over the next three to five years, and it’s an opportunity that CEO Stephen Kaufer labels as “phenomenal.”
In years covering the evolution of TripAdvisor, I don’t ever recall hearing Kaufer as bullish about a new business line.
Fresh off TripAdvisor’s May acquisition of the French restaurant reservations platform, LaFourchette (The Fork), and the integration of dining discounts into TripAdvisor’s apps and websites, Kaufer labeled TripAdvisor’s restaurant prospects as a “great opportunity,” one that goes way beyond being in the mere “bet category.”
He didn’t call it a sure thing, but Kaufer might as well have designated it so.
Kaufer said TripAdvisor already lists 2.3 million “places to eat.”
Speaking during TripAdvisor’s second quarter earnings call July 23, CFO Julie Bradley said TripAdvisor will expand its investments in the restaurant reservations business globally in the second half of 2014, and officials said this will adversely impact earnings in the relatively short term.
Kaufer talked about the huge number of travelers and locals making dining reservations on mobile devices in the years to come.
“For us, that’s a fantastic use of capital we built up in the core business,” Kaufer said, referring to investments over the next three to five years in the restaurant business.
Kaufer said the company is confident that it will continue to grow in its core markets, and it will reinvest those profits into new markets, including for the expansion of its restaurant reservations business through LaFourchette, “because it is such a good opportunity.”
As TripAdvisor places LaFourchette into new destinations beyond its current markets of France, Spain, parts of Belgium and Switzerland, the company will focus on “getting feet on the ground,” signing up new restaurants, and placing dining widgets on restaurant and TripAdvisor sites, Kaufer said.
All of this isn’t necessarily great news for tours and activities startups, some of which expected TripAdvisor to make a big push into bringing their sector online and on mobile apps this year or next.
When asked about new sectors such as tours and activities that TripAdvisor might get into over the next few years, Kaufer said that TripAdvisor’s focus for now is on restaurants.
CFO Bradley referred to TripAdvisor’s recent acquisitions of LaFourchette and VacationHomeRentals, adding that TripAdvisor is “actively looking for more” great products and teams “to add to the TripAdvisor family.”
In addition to its own available cash flow, TripAdvisor has access to a $200 million undrawn credit facility, Bradley said, which means it has plenty of resources for acquisitions.
While the Priceline Group waits for its $2.6 billion acquisition of OpenTable to close in the third quarter, TripAdvisor is actively making its own aggressive plans.