TripAdvisor’s Q2 2016 Results Remain Subdued But The Company Is Eyeing Long Term Growth

In line with expectations, TripAdvisor’s lackluster performance continued in the second quarter. The investments across its hotels, non-hotels, and most notably the Instant Booking platform kept the growth constrained in the first half of 2016. However, we expect TripAdvisor to be poised for long term growth and the company had been undertaking initiatives towards that end. Currently, the TripAdvisor platform includes over 385 million reviews for 6.6 million businesses and the platform enjoys 350 million average monthly unique visitors.

Instant Booking Is Expected To Be The Biggest Growth Driver

The hotel segment is the greatest revenue generator (over 80%) for TripAdvisor and the biggest driver in this segment is Instant Booking. Instant Booking completes the next step of TripAdvisor’s metasearch, i.e, booking hotels on the same platform. The company continues with its expansion of partnerships with hotel chains and OTAs. We feel that Instant Booking does have the capability of being a major game changer in the online travel scenario. With the presence of the top global hotel chains and the major OTAs, Instant Booking seems to possess the potential to upgrade TripAdvisor’s stock valuation to a great extent in the future.

The Non Hotel Segment Will Significantly Boost Future Growth

The attractions, restaurants, and vacation rentals segment is also growing well. The number of bookable property on Viator grew by 45% since the beginning of 2016. TripAdvisor’s Marketplace has 690,000 listed businesses currently and the restaurant platform has 4.1 million listings. Post its HouseTrip acquisition it has 815,000 vacation rental properties. A recent report suggests that the non-hotel business, including attractions, restaurant reservations, and vacation rentals might grow by 118% between 2015 to 2018 to amount to a $500 million business. While TripAdvisor’s Instant Booking platform is the center of investors’ attention right now, with all its promising growth opportunities and future earning potential, it is important to note that TripAdvisor has been pretty aggressive with the building up of its attractions, vacation rentals, and restaurant booking websites over the last couple of years. We currently expect TripAdvisor’s Subscription and Other business’s revenue (which comprises attraction, restaurant, and vacation rental bookings) to grow for the next five years at a CAGR of ~8% and the segment’s EBITDA to grow at a CAGR of almost 10%.

Have more questions about TripAdvisor? See the links below.

• What Is TripAdvisor’s Fundamental Value On The Basis Of Its Forecasted 2015 Results?
• Advertising Vs Subscription: What’s TripAdvisor’s Revenue and EBITDA Breakdown?
• How Has TripAdvisor’s Revenue And EBITDA Composition Changed Over 2012-2016E?
• TripAdvisor Year 2015 In Review
• Where Can TripAdvisor’s Growth Come From In The Next 5 Years?
• What Drove TripAdvisor’s Revenue And EBITDA Growth Over The Last Five Years?
• TripAdvisor Q1 2016 Earnings Preview
• How Is TripAdvisor Gearing Up For Competition In The Vacation Rental Space?
• How Can Instant Booking Stir Up The OTA Space And Be A Game Changer For TripAdvisor?
• TripAdvisor’s Expected Revenue And EBITDA Growth For 2016: Trefis Estimate
• Why Might TripAdvisor Be An Attractive Acquisition Target For Priceline?
• What Has Been The Immediate Impact Of The Brexit Decision On The Online Travel Companies?
• How Is TripAdvisor’s Non-Hotel Business Expected To Grow?
• What Might Be The Long-Term Impacts Of Brexit On The Online Travel Agencies?
• What Is The Significance Of TripAdvisor’s Upgraded Flight Search Platform?
• TripAdvisor’s Q2 2016 Earnings Preview

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