Can TripAdvisor Turn Things Around? The Debate Rages
Skift Take
Can TripAdvisor, with all its content and global reach, become another Booking.com-like success story or will TripAdvisor's prospects fade? There are plenty of possibilities within that range, too, but much depends on TripAdvisor's transition into a booking plus metasearch site. That's the $9 billion question -- and there's a wide range of opinion on the outcome.
There's a debate under way among investors -- and quietly within the travel industry, too -- on whether TripAdvisor can make its booking feature, TripAdvisor Instant Booking, work from a financial standpoint and get back on course after a disappointing second quarter in which Instant Booking and other factors dragged down results and the company missed earnings and revenue expectations.
Anyone who tells you they definitively know the answer as to whether TripAdvisor has made a mistake in its quest to become a booking site to supplement its metasearch, or lead-referral, business might also try to sell you the Chesapeake Bay Bridge-Tunnel. [It's not for sale.]
However, if you consider TripAdvisor's track record when it transitioned in 2012 to 2014 from reliance on browser windows popping up in hotel search to side-by-side comparison-shopping, or metasearch, on TripAdvisor, then there is some cause for guarded optimism.
TripAdvisor CFO Ernst Teunissen said in February that he expected TripAdvisor's growth in revenue per hotel shopper, which takes into account both metasearch and Instant booking, to decelerate later in 2016, as it subsequently has done, but the company expected "growth will improve similar to what we saw in our metasearch rollout in 2013.”
So let's take a look at TripAdvisor's revenue per hotel shopper, which it has identified as a key metric to track the company's performance, since 2012. These numbers trace the beginning in 2012 of its transition from pop-ups to metasearch, which was fully rolled out in June 2013, and now to Instant Booking plus metasearch. TripAdvisor Instant Booking became globally available on all devices as of the second quarter of 2016.
TripAdvisor Changes In Revenue Per Hotel Shopper 2012-2016
2012
2013
2014
2015
Q1 2016
Q2 2016
YTD 2016
Revenue Per Hotel Shopper
N/A
N/A
$0.56
$0.54
$0.46
$0.48
$0.47
Percentage Change Y/Y
-8%
-13%
7%
-4%
-21%
-19%
-19%
Source: TripAdvisor, SEC filings
You can see see that revenue per hotel shopper declined 8 percent in 2012 when TripAdvisor introduced metasearch and fell 13 percent year over
