Fickle investors, meaning those without a long-range view, didn't necessarily appreciate the breadth of the TripAdvisor platform in the past. The company isn't the biggest player out there, but its strong positions in tours and activities, as well as restaurants, is injecting momentum.
Several years ago, TripAdvisor’s experiences and restaurants operations were growing strongly, but they were still a relatively small portion of the company’s overall business, which focused on hotels.
But in 2018, as the company disclosed Tuesday, those two businesses, along with alternative accommodations, which the company hardly mentions these days, accounted for 27 percent, or $458 million, of TripAdvisor’s $1.61 billion in total revenue. That’s up from 23 percent of TripAdvisor’s total revenue in 2017.
For the fourth quarter, TripAdvisor saw non-hotel earnings climb from a non-material amount to $8 million on a 38 percent revenue jump to $106 million. Non-hotel earnings for the full year stood at $45 million, up 47 percent year over year.
TripAdvisor’s non-hotel segment currently consists of experiences, restaurants and alternative accommodations, with the latter not being a strategic focus given the hyper-competition in apartments and vacation rentals from Airbnb, Booking.com and other players.
When TripAdvisor excludes alternative accommodations from the mix, its non-hotel business actually grew at a 40 percent clip in 2018, the company reported.
The fact that alternative accommodations is dragging down the rest of the non-hotel segment has led to TripAdvisor considering a new way of reporting its earnings in the near future, according to the company. It wants to be able to isolate the robust growth of experiences and restaurants as a transparency matter for investors.
In its experiences business, following the acquisition of the Bokun tours and activities tech solution in 2018, TripAdvisor saw 60 percent growth in experience providers and a 90 percent jump in bookable products to 159,000 in 2018, the company said. Bookings increased 40 percent in the fourth quarter, TripAdvisor added.
In the fourth quarter, TripAdvisor’s dining reservations business, LaFourchette, increased its roster of bookable restaurants 23 percent to some 56,000, the company said. Its seated diners’ tally jumped 26 percent.
“We continue to operate Experiences and Restaurants offerings with a long-term investment horizon,” the company said. “Over time, we fully intend to realize their attractive profit potential and aligning product, supply and marketing in the near-term will maximize our long-term returns.”
TripAdvisor’s television advertising spend grew 54 percent to $114 million in 2018, and it plans “a similar investment level” in TV this year, the company said.
TripAdvisor has focused on efficiencies in performance advertising when it comes to its hotel business, which led to a 2 percent drop in fourth quarter hotel revenue to $240 million, and a 3 percent decline to $1.15 billion for full-year 2018.
“We have more work to do to get the click-based auction back to sustainable, profitable growth, but we are pleased with our progress our progress and believe we’re on the right path,” the company said.
The New TripAdvisor
TripAdvisor redesigned its homepage in November, to emphasize travel inspiration as it opened its pages to travel-content publishers (including Skift) and influencers. In 2019, the company said in prepared remarks about its fourth quarter and full-year results, its Core Experience team, which built the new homepage and handles the company’s brand advertising, plans programs to “drive loyalty and increase monetization across our verticals.”
Not everyone has been happy with the redesign. One influencer, Gary Arndt, a travel photographer and founder of Everything Everywhere, characterized the new “social TripAdvisor” as a disaster. He charged that publishers can’t drive traffic to their own sites from TripAdvisor unless the company verifies the publisher, and that many publishers have therefore opted out from contributing content.
“This is a platform that has zero incentive for any content creator to use it,” Arndt wrote on Facebook. “There is no benefit, either from a traffic or SEO standpoint, for putting your content on their platform.”
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Photo credit: Pictured is the entrance to TripAdvisor headquarters in Needham, Massachusetts. TripAdvisor is having success building its Experiences and Restaurants business. TripAdvisor