How Is TripAdvisor Likely To Grow In The Next 2 Years?

by Trefis Team
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TripAdvisor (NASDAQ: TRIP) has seen a mixed performed over the past couple of years, with marginal annual growth in revenue and a 53% decline in the stock price in between 2015-2017. With a target of increasing its ties with travel partners and Online Travel Agencies (OTA), and increased investments, especially to enhance technological capabilities in order to improve customer engagement, the company’s growth outlook is improving. However, with strong competition from market leaders such as Expedia and Booking Holdings, the company’s top line growth is likely to remain restricted in the near term.

TripAdvisor generated $1.56 billion in revenues for 2017, and we expect its revenues to increase by around 6% annually over the next two years. We have created an interactive dashboard which shows our forecasts for the company’s revenues. You can modify the different revenue drivers to see how changes impact the company’s expected revenues.

TripAdvisor’s Segment Revenue Growth

TripAdvisor generates revenue from two primary segments: Hotel revenue and Non-Hotel revenue. The company generated $1.2 billion from the Hotel segment, including Click-Based and Transaction revenue, Display-Based Advertising and Subscription revenue, and Other Hotel revenue, and we expect it to remain around the same levels over the next few years. Increased visitors on the TripAdvisor website has driven more clicks and partnerships with advertisers (hotels and OTAs). However, declining revenue per shopper, amid increased competition, has put pressure on revenue growth. We expect this metric to further decline, putting further pressure on revenue growth.

The company generated $360 million in revenue from the Non-Hotel segment, and we expect it to grow by around 23% annually in the near term. The company is one of the few operators which facilitates researching and booking local activities at travel destinations, which should help boost the revenue from the division. Moreover, this segment also includes booking restaurants and vacation homes, which is in direct competition with Expedia and Booking Holdings.

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