TripAdvisor Introduces New Feature Via Viator

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TripAdvisor (NASDAQ:TRIP) leveraged Viator’s tour inventory and pricing information to introduce a new feature on its platform on November 13th. TripAdvisor acquired Viator in September 2014 in order to extend its reach in the entertainment sector, which is TripAdvisor’s third largest source of demand after hotels and restaurants. Viator is an online service provider of over 20,000 tours and attractions.  These range from walking tours to whale-watching trips in 1,500 destinations worldwide. The newly introduced feature facilitates the comparison and reservation of tours and tickets for over 7,900 attractions from all around the globe. Any attraction chosen by travelers will generate up to three tour options, namely, small group, private or skip-the-line options.  And for each it offers a complete description and pricing information. Travelers can book their chosen option through Viator. The feature is available on the desktop and mobile versions of TripAdvisor’s English language websites. The company plans to expand the feature to the other language websites in the future. [1]

Currently, TripAdvisor is frequently launching new features on its platform. In October 2014, TripAdvisor introduced a new feature called “Just for You”, providing personalized hotel recommendations to its users based on their customized preferences and prior travel search activity on the website. [2] TripAdvisor  aims with this feature launch to increase the value-add for users and advertising partners. This in turn will boost its own business by accelerating traffic growth, which will help in booking conversions as well.

TripAdvisor launched its Instant Booking feature  in Q1 2014, in order to reduce the friction associated with mobile bookings. Instant Booking provides an improvement in both the user’s and the partner’s experience. The user can complete the entire booking transaction on TripAdvisor website itself. All steps of the booking process from selecting a room to inputting personal and credit details are provided in Instant Booking, thus offering a frictionless booking experience.In Q3 2014, during its earnings call, the management observed that users appear to prefer the Instant Booking feature, and are using it for bookings more than the metasearch option. The rate of user conversion to booking seems to have accelerated. Instant booking is currently available across the U.S., with a broader rollout to other important markets expected later this year.

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Our price estimate of $94 for TripAdvisor is at a considerable premium to the current market price.

See Our Complete Analysis for TripAdvisor Here

The Entertainment Sector And Viator

According to a March 2014 study by PhoCusWright, a travel research firm, Europe alone accounted for 545 million customers per year in the tours and activities sector, with a  gross booking of 37 billion euros. In 2009, the size of the US travel activities market amounted to $26.8 billion. While that accounted for only one quarter of the size of the air and hotel market, it was almost double the size of the car rental segment and was larger than the accumulated size of cruise and packaged travel segment. [3]

Viator operates in 1,500 destinations spanning across 160 countries. However, in terms of marketing efforts, it focuses on the U.S., the U.K. and Australia. Viator is a prominent player in the tours and activities sector with its main competitors being GetYourGuide and Peek. Analysts consider that Viator’s competitive advantage over its peers lies in its “curation model”. Viator lists a small number of tours and activities for each location, whereas its rival GetYourGuide provides a complete market view including each and every available tour or activity. Peek too follows the GetYourGuide’s path but has added a business to business offering recently. Viator claimed to have 8 million website visitors every month and its mobile application download stands at over 1 million. It receives referrals from over 3,000 affiliates, including those from 17 online travel agencies, 18 hotel brands, and 33 airlines. Direct marketing efforts include more than 700,000 “opt-in” subscribers to its email newsletter.In an effort to improve its on-demand availability for customers, Viator has made 80% of its product line bookable within 24 hours, and 90% bookable within 48 hours. [4]

A 2013 Special Report by Skift found that the tours and activities market is in a fragmented state, with high barriers for entry, and operators requiring big brands to achieve scale. [5] Hence, TripAdvisor’s acquisition might give Viator the scale it required to achieve further profitability and expansion in the tours and activities sector.

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Notes:
  1. TripAdvisor Introduces New Feature to Help Travelers Research, Compare and Book Tours, TripAdvisor.com, Nov 2014 []
  2. TripAdvisor launches new personalised hotel recommendations, Travel Daily News, October, 2014 []
  3. WHEN THEY GET THERE (AND WHY THEY GO): ACTIVITIES, ATTRACTIONS, EVENTS AND TOURS, PhoCusWright, Feb 2011 []
  4. TripAdvisor acquires Viator, the tours and activities agency, for $200M, tnooz, July 2014 []
  5. Special Report: Why the tours and activities market is more hype than the next big thing, Skift, February 2013 []