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TripAdvisor’s financials suffered considerably during the second quarter as the user review and booking site missed analysts’ expectations on several fronts, but one area of its ever-expanding business is on the rise: tours and activities.
TripAdvisor reported that hotel revenue decreased by 8 percent year-over-year to $316 million, yet “non-hotel” revenue increased by a notable 21 percent to $75 million due in part to its ramping up tours and activities through its Viator unit. TripAdvisor generates its non-hotel segment revenue from vacation rentals, restaurants and attractions.
The company’s total revenue, which overwhelming comes from the hotel side of the ledger, fell 3 percent to $391 million in the second quarter compared with the same period a year earlier.
One of TripAdvisor’s biggest challenges is that it is transitioning into a booking site and its Instant Booking feature monetizes lower — for now, at least — than its hotel comparison-shopping, or metasearch, feature.
Attractions have taken off following TripAdvisor’s 2014 acquisition of Viator.
As in hotels, TripAdvisor is doing Instant Booking for tours and activities, which means consumers can book an attraction ticket on TripAdvisor without leaving the site or app. Previously, consumers had to navigate to a tour company or other third-party site to buy a ticket.
During the company’s second quarter earnings call August 4, officials seemed to be saying that attraction owners have been quicker to participate in TripAdvisor’s booking feature than many hotels.
“I just haven’t ever heard of an attraction owner saying ‘no, I don’t like the notion of Instant Booking because it takes away from that branded experience,’” said TripAdvisor CEO Stephen Kaufer. “… The attraction is much less likely to be a repeat visit than the hotel so the attraction is much less interested in building that direct loyalty.”
TripAdvisor’s 2014 acquisition of Viator accelerated the parent company’s move into tours and activities, and highlighted its long-term goal of being all things to all travelers when they are doing their trip-planning and during the trip. Viator is TripAdvisor’s primary channel for selling tours and activities.
The contraction of TripAdvisor’s hotel revenue can also be attributed in part to a challenging summer across the travel industry due to terrorism, Brexit, Zika, and other macro events.