TripAdvisor has hotels but its activities business is burning bright. The conversation will continue to shift toward the non-hotel revenue line, as the company moves into the long game focusing on execution rather than transformation.
The following excerpt is from a much longer interview Skift Research conducted with TripAdvisor CEO Steve Kaufer as part of our Deep Dive Into TripAdvisor report, which is available to our Research subscribers.
Hotel revenue clearly remains critical to TripAdvisor’s long-term success. However, we believe that the non-hotel segment of the business has gone underreported. TripAdvisor’s Activities business is a bright spot both in terms of growth and profit potential. Content i.e. reviews and recommendations is the currency used to connect with travelers at the right time, the place, and the right product.
Here is Kaufer on what the non-hotel segment means for the company and how TripAdvisor leverages content to engage travelers:
Skift: Currently your non-hotel segment sits at 20 percent of total revenue. Where do you see that balance ﬁve years down the road?
Steve Kaufer: No. I understand the question. Internally of course, we don’t think of it that way at all. We think of it as how quickly can we grow our hotel business? How much more global can we be? How can we deliver better pricing and better value to our folks shopping for a hotel? Separately, look at all those people who are on TripAdvisor, every traveler wants to do something while they’re on vacation. How do we make it easier for them to ﬁnd and book the perfect tour attraction, et cetera?
So how big could the attraction space be? Well, I think there are folks who’ve quantified it as probably like half the size of the hotel. And who else is selling the attraction tours online? Well, I’m not sure but I think we’re probably the biggest in category. So therefore, oh my God. We’re a teeny tiny ﬁsh in a massively huge pond that really hasn’t gone to consolidate online booking yet. So massive opportunity. We’ll comment on that, at what point will it be whatever percentage of our overall business.
And then restaurants, look we’re a leader in reservations in Europe and Australia. A small portion of where all the restaurants in the world are located. So we have another ad product for restaurant tours that can subscribe for their restaurant anywhere in the world. And that’s starting resonate to us and how else can we take this massive source of trafﬁc, of eyeballs, of demand and, our core mission, help folks ﬁnd the place that they want to eat. And then on the business side, help monetize with either reservations or add products or other vehicles.
Skift: How do your non-hotel products play into longer-run proﬁtability for your group?
Kaufer: Right. We’re looking forward to proﬁtability in the non-hotel segment. And it would be fair to point to attractions as a very big and very interesting growth driver in that non-hotels category. Our restaurant business is growing. We like being in the space very much. We’re not taking on OpenTable or restaurant reservations in the U.S. They have a good product, a good service. We do something similar in Europe and Australia but we certainly … have a lot of restaurant demand … over years to go.
Skift: TripAdvisor revolutionized user-generated content in travel, which has really been your bread and butter in terms of driving trafﬁc to the sites. Now it seems like other players are making progress with review content, in terms of hotel reviews, Google, Booking.com. Where do you see the bigger challenges, longer term? Is it pushing further down funnel into bookings? Or is it maintaining your competitive edge advantage in the content?
Kaufer: Obviously a combination of both. I think, we have best in class content in decision-support information. Be it user-generated content or pricing or 360 degree photos or candid photos or room tips, the list goes on. Nobody else in the space can really touch us on that. Other folks are strong at transactions, other folks have started to collect reviews. Some reviews good, some less so depending on the travel site.
TripAdvisor’s opportunity is to just go through the check list. What do travelers want when they’re planning their trip? They often start with, in this country at least, they’ll start with the ﬂight. Right, we have the best in class ﬂight search engine. They go onto hotel and we have an awesome hotel search engine that now has terriﬁc pricing available at every turn. We’re smooth, we’re streamlining the hotel search process so that you can get out all the good stuff we have. Including the top-notch pricing, to save you money on the hotel you want to stay at.
You just follow on into the trip and you’re gonna play when you’re there and you’re gonna eat when you’re there. And TripAdvisor helps you better than any other site in both of those categories. And then if you want to share when you get back home, TripAdvisor’s the most likely spot that you would turn to to share your travel tips. And I haven’t even hit upon our travel forums or, the best of what makes the TripAdvisor magic so powerful. And what makes it such a loved and trusted brand all around the globe.
Right, to your question. The need to generate content, the decisions for information is second to none. From a price comparison, from the place to go when you’re ready to book. That’s where a ton of our focus is now to make sure that we’re always giving you the best possible price that we can. Always giving new travelers the most possible choices and to make it as easy as possible. So that’s our North Star and we’re pretty excited about what we have coming up.
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Photo credit: TripAdvisor co-founder and CEO Stephen Kaufer addressed Skift founder and CEO Rafat Ali and the audience at the Skift Global Forum in New York, September 28, 2016. Skift