TripAdvisor (NASDAQ:TRIP) has been investing heavily in its mobile platform to leverage increasing opportunities in the mobile space. It announced the launch of its mobile website in March 2010 and has since added apps for the iPhone, Android, Nokia, Palm smartphones, as well as the iPad. Last month, TripAdvisor entered into a partnership with Samsung (PINK:SSNLF), making it the only travel application to come pre-installed onto the new Samsung Galaxy S4. Additionally, Samsung will use TripAdvisor’s content to power its own travel application. (Read More Here) The Samsung Galaxy S4 sales pre-orders in the UK are already four times that of the Galaxy S3.  Collaboration with Samsung will not only grow TripAdvisor’s market reach, but also increase its penetration in the rapidly expanding mobile user base.
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With over 100 million reviews and opinions, TripAdvisor is a leading online platform for travel-related reviews that helps its users make more informed travel decisions. With more than 74 million unique monthly visitors, the company covers 2 million tourism businesses in over 116,000 destinations across the globe.
Smartphone adoption around the world is skyrocketing and is fundamentally changing the way people get travel advice. To stay in tune with the changing consumer trend, TripAdvisor has been focusing on increasing its avenues to make its mobile platform more accessible to users. We expect the company’s expanding mobile platform to contribute significantly toward rising traffic flow on its websites.
Mobile Platform Offer Long-Term Growth Opportunities
With the rapid adoption of smartphones and tablets, mobile devices are increasingly becoming a preferred and more convenient option for online searches and shopping. According to IDC, mobile travel spend is expected to cross the $2 billion mark by 2014, registering y-o-y growth of above 40%. Additionally, mobile ad spending in the U.S. is expected to grow from $1.5 billion in 2011 to close to $10.8 billion by 2016.
As per a study last year commissioned by Expedia and conducted by comScore, around 48% of the users use a tablet or smartphone to fully plan their trips while 44% used a mobile device to search for information regarding a future trip. Of the 44% who use mobile devices to plan their travel, 44% preferred using an application to do so.
As mobile penetration is slated to increase in the future, we expect to see a higher proportion of online travel searches done using mobile devices. If TripAdvisor in unable to keep up with rapid innovation in this space, it faces the risk of losing out a growing user base of online travel searches via mobile devices.
TripAdvisor’s Mobile User Base
As of Q4 2012, TripAdvisor had around 45 million monthly unique mobile device visitors, a y-o-y increase of 190%. At the end of the quarter, it reached over 31 million cumulative smartphone and tablet application downloads for the TripAdvisor application. Additionally, TripAdvisor launched 20 news free City Guides across iOS and Android which increases its coverage to 80 cities.
During Q4, TripAdvisor worked on improving its smartphone user interface and introduced a new meta-display for smartphone traffic. It intends to roll out hotel meta display to all of its mobile users to further fuel growth in mobile traffic. Similar to the flight product, hotel meta display shows partner prices and availability in line, allowing an easy comparison of booking options. (Read: TripAdvisor’s Meta Display And Global Expansion Boost User Growth)
While smartphones currently account for less than 5% of TripAdvisor’s click-based revenues, tablets account for approximately 10%-15% of revenues. We expect the proportion to increase in the future.
Last month, TripAdvisor acquired Tiny Post, which is the developer of an iOS application that allows users to add captions to their travel photos before sharing them on social networking sites. The company believes that by making reviews more engaging and sharable, this feature can enhance the user experience on its social and mobile platforms.
Our price estimate of $43.89 for TripAdvisor is at a discount of over 10% to the current market price.Notes:
- Samsung Galaxy S4 UK Pre-orders Four Times That Of The Galaxy S3, Geeky Gadgets, March 20, 2013 [↩]