When TripAdvisor reports its second quarter earnings next month, the bulk of investor attention will be focused on its hotel-booking feature, Instant Booking, and whether TripAdvisor can reverse the ugly revenue-per-hotel shopper decline that came along with pivoting from reliance on advertising clicks to a mix of clicks plus commissions for bookings.

But a new report from PiperJaffray argues that Wall Street is downplaying the importance of and profit potential from TripAdvisor’s attractions, restaurant reservations and vacation rental businesses — in other words, all of its non-hotel business — and the research suggests that they could increase 118 percent from 2015 to 2018 and turn into a $500 million business.

TripAdvisor is the largest online travel site in the world and, according to PiperJaffray, 58 percent of visitors to its platforms research or book something other than hotels.

“While investor focus has been heavily weighted toward the evolution of Instant Book, trying to solve for the near-term financial direction and the ultimate opportunity in hotels, we believe long-term investors should examine the opportunity that exists in attractions and restaurants,” PiperJaffray states.

PiperJaffray’s numbers, if they turn out to be valid, would have TripAdvisor’s non-hotel revenue as a percentage of total revenue becoming more important as it rises from15 percent in 2015 to 21 percent in 2018.

Regarding the potential of tours and activities, restaurants and vacation rentals, PiperJaffray states that this traffic currently under-monetizes at just one-tenth the rate of hotel researchers on TripAdvisor even as the site’s Viator tours and attractions business, which reaps margins of 20 to 30 percent, has been rapidly growing its inventory since TripAdvisor acquired the company in 2014.

PiperJaffray revisited an Internet survey it initially conducted in December 2014 and it recently asked 1,523 online users whether they research and book attractions and restaurants on TripAdvisor. There was encouraging news concerning the uptick of this type of research on TripAdvisor in the 2016 survey results.

piperjaffray survey

The survey showed that 10.5 percent of respondents research attractions on TripAdvisor in 2016, up from 6 percent about a year-and-a-half earlier in December 2014, while 13.3 percent of people surveyed indicated they researched restaurants on TripAdvisor, up from 8.6 percent.

Despite the upsurge in research about both attractions and restaurants, the percentage of users reporting that they actually book tours or make restaurant reservations on TripAdvisor remained relatively stable at 2.4 and 3.6 percent, respectively, according to the latest survey.

Still, PiperJaffray sees the trend boding well for TripAdvisor profitability in attractions and restaurants over the next couple of years. The report states: “We believe this is consistent with a company in the early stages of aggregating bookable supply and expect increased consumer engagement and improving booking tools to lead to growth in monetized attractions traffic.”

Photo Credit: PiperJaffray argues that TripAdvisor side businesses -- attractions, restaurant reservations and vacation rentals -- could turn out to be huge profit-generators in the next few years. TripAdvisor