TripAdvisor’s Progress Chart Looks Bleak, Is Acquisition A Possibility?
TripAdvisor’s several attempts to revive its growth are not yet working for the company. Its revenues declined by 1% y-o-y in 2016 and its margins had been declining after reaching its peak in 2009. The company had been trying several things like making its hotel shopping more mobile friendly, introducing metasearch, and then launching Instant Booking and making it the focal point of its offerings. However, after heavy investments on the Instant Booking platform still didn’t rev up margins, TripAdvisor has recently started refocusing on its metasearch capability while keeping Instant Booking on the sidelines. The company’s revenue per shopper has been especially dampened since the introduction of Instant Booking in 2014. Though TripAdvisor is trying to revive its performance through aggressive marketing, if all doesn’t go well there might be a chance of the company getting acquired. Recently, the company’s decisions to make its management’s exit packages more lucrative in case of a take over does raise the question whether TripAdvisor might indeed become involved in talks with another entity about a strategic deal.
Though TripAdvisor’s Chief Shows Optimism Towards Its Future, Things Are Yet To Look Up For TripAdvisor
Though its President and CEO still insists that some of the crucial drivers for the company are actually working in its favor and that will be evident in the future, most industry analysts have shown their pessimism towards TripAdvisor’s future. A few of them have also conjectured that the company might be better off if one of the bigger OTAs such as Priceline or Expedia acquires it.
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TripAdvisor’s management also mentioned earlier that its non-hotel segment is growing at a much faster rate but the problem lies in the fact that over 80% of its revenues is contributed by the hotel segment and so even if its tours and activities or the restaurant segment perform impressively, the impact they have on the overall company’s performance is not enough to pull it up from its current state of weakness. Also, the commissions earned in hotels are much higher than that earned through these segments. In June, TripAdvisor entered the world of television advertisement after two years of absence. It will be spending around $70 million on its TV ad campaigns this year.
And yet in August, the company started sweetening its exit package deals for its management in case the company gets acquired by another entity which also opens up the possibility that strategic talks about it getting acquired might occur.
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