TripAdvisor’s Star Performers In 2015

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After witnessing robust growth in 2014, TripAdvisor (NASDAQ:TRIP) has continued its quests on the same note in 2015, as well. For the first nine months of 2015, the company clocked in revenues of $1.2 billion, reflecting 23% growth. TripAdvisor’s average monthly unique visitors increased by 24% to 314 million during the same period. [1] The company’s tryst with restaurant reservation continued in 2015 with a host of acquisitions. The company’s tours and entertainment platform, Viator, witnessed huge growth. However, Instant Booking was the show stealer. Not only did Instant Booking bring in 7 of the top 10 global hotel chains on its platform, but recently, it also got the backing of the global OTA leader, Priceline. With all its segments displaying healthy growth on the back of organic growth, strategic investments, and alliances, we believe that not only will TripAdvisor end 2015 on a strong footing, but will also continue 2016 along the same line.

Our price estimate of $80 for TripAdvisor is slightly lower than the current market price.

See Our Complete Analysis for TripAdvisor Here

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Instant Booking Is Going Places

TripAdvisor’s Instant Booking platform, introduced in the first half of 2014, had been gradually expanding after an initial lukewarm response.  7 out of the top 10 global hotel chains are present on the platform, currently. Chains such as Marriott have entered into exclusive agreements with TripAdvisor where some of their rooms can only be booked through Instant Booking. Instant Booking’s competitive advantage was the lower commission that TripAdvisor charges, which is almost half of what its OTA peers such as Expedia or Priceline charge. [2]

The biggest milestone for Instant Booking in 2015 was the participation of Priceline’s Booking.com. Both Priceline and Expedia had erstwhile shown reluctance towards the platform, as the branding exposure for these companies was limited in the beginning. Also, Instant Booking assists in completing all the steps of the travel booking process, and users are not directed to the OTAs for the final booking completion step. Consequently, OTAs lose out on the chance to build a loyal customer base. Hence, Instant Booking acts like a direct competitor for OTAs. However, Priceline is said to have received exclusive privileges and branding opportunities, before agreeing to the deal. In case the returns on investments are worthwhile, Priceline’s other websites might also participate on Instant Booking in the future. Big names such as the InterContinental Hotels Group, Hilton Worldwide, and Starwood will feature on TripAdvisor after the participation of Booking.com. The total number of hotel properties on TripAdvisor after the Booking.com integration is expected to be around 436,000. [3] Finally, Priceline’s support was important for TripAdvisor as almost 50% of TripAdvisor’s revenues in 2014, were contributed by Priceline and Expedia.

Along with the increased inventory base, Booking.com will provide TripAdvisor with added features which might increase the latter’s international appeal, such as rich content in non-English languages, competitive rates, and the ability of users to book hotels through local currency or credit cards. Hence, TripAdvisor is currently planning an early global rollout of the Instant Booking platform.

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TripAdvisor’s ‘Fancy Dining Experiences’ With TheFork

Over the last few quarters, TripAdvisor acquired multiple restaurant reservation websites, namely LaFourchette, the leading online restaurant reservation website in France and Spain, mytable and restopolis in Italy, Iens in The Netherlands, Portugal-based Best Tables, and Australia’s largest restaurant booking website, Dimmi. Currently, its restaurant booking business spreads over 12 countries, which was achieved in less than a year’s time. TripAdvisor has been re-branding its restaurant platform as TheFork, which caters to reservations in over 28,000 restaurants. [4]

In September, Priceline acquired Australia based restaurant booking site, AS Digital, with an aim to expand its own restaurant booking site, OpenTable, into the international arena. OpenTable currently holds the leadership position in North America with around 50% market share in the region. Priceline’s international expeditions might provide tough competition to TheFork in the future.

Viator’s Successful Tourism Ventures

TripAdvisor launched a tourism and entertainment related supplier platform called Marketplace in February, with the help of its 2014 acquisition, Viator – an online service provider of over 20,000 tours and attractions. Marketplace helps more suppliers list their entertainment related businesses on TripAdvisor’s platform, and also facilitates the user’s booking process. As a result of the enhanced features, in Q2 2015  Viator’s listing of attractions almost doubled, as compared to all of 2014.

 

 

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Notes:
  1. TripAdvisor 3Q 2015 Supplemental Financial Information []
  2. Hotels Fight Back Against Sites Like Expedia and Priceline, The New York Times, August 31, 2015 []
  3. Booking.com Finally Joins Major Hotel Chains in Book on TripAdvisor, Skift, October 14, 2015 []
  4. TripAdvisor’s Q2 2015 earnings Call Transcript, Seeking Alpha, July 23, 2015 []