TripAdvisor Hotel Bookings Continue to Slide as Non-Hotel Business Surges

TripAdvisor is finding success outside of the hotel booking space, even as expensive TV ads touting its hotel product continue to flood the airwaves in North America and Europe.

TripAdvisor’s non-hotel revenue in the third quarter surged 26 percent year-over-year, while its hotel revenue dropped 3 percent over the same period, according to financial results released by the company late Monday.

Hotels still represent 71 percent of the company’s consolidated revenue, and the ads have been apparently successful in expanding mobile usage, with a 29 percent increase in mobile hotel shoppers in the quarter.

To put TripAdvisor’s hotel revenue into perspective, it earned $340 million in the third quarter of 2015 and $312 million in the third quarter of 2017. Non-hotel revenue, meanwhile, has increased from $75 million to $127 million over the same period, offsetting the losses.

In fact, TripAdvisor’s hotel revenue has now fallen below 2014 levels ($315 million in the third quarter of 2014).

An advertising push for TripAdvisor’s hotel product seems to have fallen flat, with the company spending $42 million in the third quarter after spending $16 million on TV commercials during the second quarter. The company’s attractions, restaurant, and vacation rentals business has helped pick up the slack as the hotels business has stagnated.

Total revenue increased by 4 percent year-over-year, while total adjusted earnings before interest, taxes, depreciation, and amortization declined 17 percent, spurred by a 48 percent drop in hotel earnings from $99 million to $51 million.

TripAdvisor’s stock declined more than 10 percent in after-market trading.

“Partners increasing marketing efficiency on our channel, which we outlined on our August call, as well as our decision to continue to manage to greater efficiency on performance-based marketing channels, caused Q3 TripAdvisor click-based and transaction revenue and revenue per hotel shopper to decline by 5 percent and 11 percent, respectively,” TripAdvisor said in prepared remarks. “These softer than expected click-based and transaction results led to negative 3 percent Hotel segment revenue growth in the period.”

TripAdvisor’s user base continues to grow, despite its challenges in hotel booking. Average monthly unique visitors across all TripAdvisor sites grew 17 percent year-over-year to 455 million. User reviews and opinions grew 32 percent year-over-year.

“Our data shows that the quality of our leads has been increasing, another positive indicator from our product and marketing work,” the prepared remarks said. “Yet while the fundamental economic value of our traffic has improved, overall revenue per hotel shopper growth was negative 11 percent in Q3, decelerating from negative 2 percent in Q2, indicating that partners have increased their profitability targets on our channel.”

At the Skift Global Forum in September, TripAdvisor president and CEO Steven Kaufer criticized financial analysts who say innovation has slowed at the online review giant.