In line with its strategy of continuous investment in the growing mobile space, TripAdvisor (NASDAQ:TRIP), a leading online platform for travel-related reviews, bought GateGuru, a flight and airport information app, this month. The terms of the deal including the acquisition price were not disclosed.
What travelers gain from the app?
The GateGuru app provides users real-time information on flight status, weather forecasts and estimated security wait times. It provides a detailed map of the airport showing restaurants, amenities, and gate locations. The app also has itinerary viewing and rental cars comparison/booking features. Such features offer value and convenience to travelers while they are on the move. In addition, user reviews on the app allow travelers to make informed decisions while choosing airport restaurants and stores.
How TripAdvisor stands to benefit from the app?
According to IDC, mobile travel spend is expected to cross $2 billion by 2014, registering more than 40% y-o-y growth. Additionally, mobile ad spending in the U.S. is expected to grow at a CAGR of more than 70% from $1.5 billion in 2011 to close to $21 billion by 2016. At the end of Q1 2013, TripAdvisor reached 62 million monthly unique mobile device visitors, a y-o-y increase of 300%. We feel that TripAdvisor will benefit from expansion into mobile space as mobiles and tablets combined account for approximately 30% of the company’s global traffic and the company derives close to 90% of its revenue from click and display advertising.
Since the emergence of its mobile platform, TripAdvisor has persistently made additions to its mobile portfolio through the acquisitions of SeatGuru in 2007 and Tiny Post and Jetsetter apps in 2013. The number of downloads for apps, such as TripAdvisor and SeatGuru, more than doubled from previous year to 31 million in 2012. GateGuru has even greater potential to reach mobile users as it has won many accolades, including CNN’s “Top 5 Air Travel App” award, and witnessed more than a million downloads since it was created in 2009.
Also according to TripAdvisor’s 2013 annual air travel survey, 56% travelers used smart phones to check flight status during their trip, up significantly from 30% in 2011. The inclusion of GateGuru in its portfolio will help TripAdvisor enhance its user base as the flight information app is available on all major platforms, including iOS, Android and Windows Phone.
Our price estimate of $53.73 for TripAdvisor is at a discount of slightly less than 15% to the current market price.