Support Skift’s Independent JournalismMake a Contribution Now
The bulk of TripAdvisor’s business, despite outsized growth in experiences and restaurants, is still in hotel search, but the company’s heart, if corporations can have a heart, might be in the tours and activities crowd.
CEO Steve Kaufer, in answering questions from analysts Wednesday, said consumers who buy experiences from TripAdvisor book right on TripAdvisor sites, and often become members while travelers shopping for hotels tend not to do so. That’s because, with the demise of the company’s push for instant booking for hotels on TripAdvisor sites, travelers complete their bookings on online travel agency and hotel websites.
Kaufer said the lifetime value of bookers of experiences — whether it might be for a tour or an attraction ticket — is potentially much more meaningful for the company than that of hotel shoppers. He added that these experience bookers, after that initial booking, may also buy another one or two tours and activities in their destinations during their trips.
Hotel shoppers haven’t opted to register and become TripAdvisor members in the way that bookers of experiences have, Kaufer said.
He said the company sees big future opportunities in its experiences business, particularly because TripAdvisor is the leader in such online bookings in many geographies. “We continue to double down on supply and reach going forward,” Kaufer said.
CFO Ernst Teunissen confirmed that the company is leading into performance marketing for experiences and restaurants, which are getting a higher priority than marketing its hotel business. The company is investing heavily in its experiences and restaurants businesses, too, he added.
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 company’s non-hotel business accounted for 27 percent, or $458 million, of TripAdvisor’s $1.61 billion in total revenue in 2018.
TripAdvisor’s alternative accommodations business, currently part of its non-hotel segment, saw a revenue decline in 2018, and that downturn is expected to accelerate in 2019, Teunissen said. He added that its alternative accommodations business is profitable.
“We are picking our battles very clearly and we are picking where we can win, and very clearly it is experiences and restaurants,” Teunnissen said, adding that it’s still important for travelers to see alternative accommodation choices on TripAdvisor.
Inspiration Didn’t Kill Booking
In other TripAdvisor news, Kaufer said the fear that “new TripAdvisor” — meaning the redesign of its homepage to highlight travel content contributions from publishers and influencers — would deter consumers from shopping and booking “did not materialize” in tests and during the product rollout.
That has been an issue with many travel inspiration startups which have failed over the years. Many were too divorced from booking transactions to make money and build viable businesses.
But Kaufer said TripAdvisor’s new travel feed, which he characterized as “a foundational change,” had “no negative impact on the KPIs (Key Performance Indicators) we watch. For example, membership growth has improved since the rollout in November, he said.
Kaufer said the company is considering a variety of ways to bind users to TripAdvisor, and heighten loyalty.