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If everything goes as Tripadvisor hopes in 2020, it will be a landmark year because for the first time its experiences and dining revenue would surpass that of the company’s until-now core hotel metasearch business.

That’s the target and it’s part of Tripadvisor’s goal, as articulated in its fourth quarter earnings call Thursday. The ambition is to redirect its business away from its hotel auction, where Google, stingier online travel agency marketing budgets, and traveler spending inclinations are creating pressure.

Instead of its hotel price comparison service, where online travel agencies and hotels bid for placement in its hotel listings, Tripadvisor will be focusing revenue growth efforts on experiences, dining, hotel business-to-business, and media efforts.

Tripadvisor co-founder and CEO Steve Kaufer told analysts the company expects “our non-hotel auction revenue will drive the lion’s share of our future growth. We expect E&D (Experiences & Dining) revenue alone will exceed the hotel auction in 2020. And over the coming years, the relative sizes of these revenue lines will reduce the hotel auction’s influence on our overall results.”

Fourth Quarter by Segment

In the fourth quarter, Experiences & Dining revenue grew 16 percent to $109 million while Hotel, Media & Platform revenue fell 6 percent to $194 million, and Other revenue, including short-term rentals, cars and cruises, dipped 30 percent to $32 million. Total revenue in the fourth quarter dropped 3 percent to $335 million.

With cost-cutting efforts, including a reduction in selling and marketing expenses, at play in the fourth quarter, Tripadvisor’s net income rose 114 percent to $15 million.

Looking at adjust earnings (Earnings Before Interest, Taxes, Depreciation and Amortization), the Hotels, Media, & Platform segment, likely driven by hotel business-to-business and media, saw 4 percent growth in the fourth quarter to $73 million while Experiences & Dining declined 22 percent to $7 million.

Experiences Strategy

Kaufer detailed the company’s differentiated strategy regarding Tripadvisor experiences, found on the homepage under Things to do, versus its Viator experiences brand following the the company’s restructuring of its experiences unit.

He said Tripadvisor experiences would be geared toward consumers who might book a hotel or restaurant reservation on Tripadvisor, and might be looking to add an attraction to their trip. Viator, on the other hand, would be positioned more for the traveler looking simply book a standalone experience in the destination.

When Tripadvisor acquired Viator the focus had been on building Viator’s supply and leveraging the consumer demand on Tripadvisor, Kaufer said. Tripadvisor had never been in the experiences business before that, he added.

“With several years now of getting that into our DNA, we’re now able to split it off and say, ‘For TripAdvisor, we’ve got the merchandising down. Let’s now tackle how an experience as part of a key considered trip,” Kaufer said, adding that the company will now build up the Viator brand as a pure-play experiences point of sale.

Dining Acquisitions

During the fourth quarter, Tripadvisor allocated $110 million toward two dining acquisitions, UK-headquartered Bookatable, and SinglePlatform, an New York City-based restaurant listings platform. Tripadvisor bought SinglePlatform mostly for its dining reservations sales force.

TripAdvisor Chief Financial Officer Ernst Teunissen said Bookatable adds about 14,000 restaurants in the UK, Germany, Austria, Finland and Norway, “reinforcing our position as the world’s largest online booking platform” with 84,000 restaurants.

Membership Focus

Tripadvisor added some 50 million members — consumers who log onto the site — in 2019; its roster stood at more than 380 million in the fourth quarter.

Lindsay Nelson, the company’s chief experience and brand officer, was bullish on the membership ranks because Tripadvisor can connect and communicate with them directly. They also tend to be repeat visitors who book direct, officials said.

“And CRM (Customer Relationship Management) as a channel has been very fast-growing for us, not only in volume, but efficacy and we expect to double the revenue contribution from that channel this coming year,” Nelson said.

Advertising Plans

Tripadvisor plans to reduce its brand advertising spend in 2020. Nelson said starting in April Tripadvisor will launch out-of-home advertising in a targeted city campaign “in major transit hubs like airports and subways and train stations.”

Targets

Looking ahead, Tripadvisor said it expects its adjusted earnings to be flat in 2020 compared with 2019.

While Tripadvisor expects that revenue growth in its Hotels, Media & Platform segment will decelerate in the first quarter of 2020 when measured against the fourth quarter of 2019, the company is somewhat bullish about Experiences & Dining.

For restaurants and experiences, Tripadvisor expects revenue growth to accelerate in 2020, and adjusted earnings to improve.

In a note to investors, Michael Olson, an analyst at Piper Sandler, said of Tripadvisor Experiences & Dining: “The key question for E&D will now be whether the segment can achieve its true growth potential without the company investing aggressively and, instead, looking to better optimize for profitability.”

Photo Credit: A tour at Tower Hill in London on May 12, 2019. Tripadvisor is betting that its experiences and dining businesses will help offset slowness in its hotels business. Danny McL / Flicker.com