TripAdvisor’s First Quarter Results Might Not Impress Owing To The Persistent Weakness Of Its Instant Booking Platform
TripAdvisor is slated to release its Q1 2017 earnings on May 10th. Since its introduction in 2014, the company’s Instant Booking platform, touted to be a game changer previously, and mainly responsible for its hotel revenues (that accounts for 80% of its total revenues), failed to boost the company’s performance through increased traction until now. As a result, last year its revenues declined by 1% y-o-y to reach $1.48 billion, while its EBITDA declined significantly by 24% y-o-y to reach $352 million. However, despite a distinct lack of user demand, hotel suppliers seem to be interested in advertising on Instant Booking with the recent addition being InterContinental Hotels (IHG). It might also be possible that TripAdvisor is slowly changing its image to highlight its erstwhile metasearch capability and downplay Instant Booking, given the persistent lack of traction. For the first quarter, we do not expect the company to show a drastic improvement in its performance. Rather, the results might remained dampened due to its marketing and product development spends and the persistent decline in its revenues per shopper due to insufficient demand on the Instant Booking platform.
Will TripAdvisor Reposition Itself Again As Primarily A Metasearch Company?
Amidst rumors of TripAdvisor being taken over by a bigger OTA, it seems that hotel suppliers’ confidence in the Instant Booking platform is much higher than that of the travelers. As a result, last month IHG joined the Instant Booking platform. Hence, currently, the world’s two largest OTAs, Priceline and Expedia, along with the top ten international hotel chains are now present on the Instant Booking platform.
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However, despite the presence of these heavyweights, the company is finding it difficult to generate user interest. Earlier there were inconsistencies and some technical glitches on the platform which might have kept users at bay. But even after TripAdvisor’s repeated attempts at upgrading the platform and marketing it more aggressively, it seems users at large use TripAdvisor for its travel review and metasearch functionalities before turning on to OTAs or independent hotel websites to complete their bookings. TripAdvisor’s platform reached half a billion reviews recently. Currently, it is the world’s largest travel review website and most travelers rely on the reviews on its platform before making a hotel booking. It has recently been reported that TripAdvisor might be trying to downplay the Instant Booking functionality currently, and it might be attempting to project itself once again as primarily a travel metasearch company, the functionality for which it is already famous and used by most users.
In case this strategy is indeed applied by the company and it works out to revive the traction on its platform once more, it might be possible for the company to witness growth once again, though probably not in the current quarters.
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