Here’s How TripAdvisor Can Be Impacted By “Google Trips”
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According to our estimates, Unique Visitors To TripAdvisor’s sites per month is a key driver of TripAdvisor‘s (NASDAQ:TRIP) valuation. While we expect this metric to increase steadily over our forecast period, competition from other players could arrest this growth.
Our valuation of TripAdvisor (which is currently slightly higher than its market price) is sensitive to this number. We currently expect unique monthly visitors to TripAdvisor’s sites to grow from around 380 million in 2016 to nearly 600 million by the end of our forecast period. However slower growth in this number can lead to a significant downside in our price estimate for TripAdvisor. For instance, if this number reaches only 500 million by the end of our forecast period (due to significant gains by competitors), there can be a 15% downside to our price estimate.
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Google recently launched its travel app called “Google Trips” which could prove to be a threat to TripAdvisor. The app has the capability to combine travel planning (flight, hotel and restaurant reservations) with custom itineraries (suggesting popular destinations based on the duration of stay) and guides which focus on shopping, museums or other activities. App users can add reviews of places visited which will then be visible to other users. With over 1 billion users already using Gmail and Google Maps, this app can be compelling for this audience since it leverages Google’s ability to tap into the data stored in Gmail to automatically gather reservation information and organize it into trips. Similarly the app leverages Google Maps to show the user nearby destinations if a planned sight-seeing destination is added – creating a customized itinerary for the day. Users of Gmail and Google Maps might automatically transition to Google Trips and this has the potential to become the default app for travelers and their reviews, bypassing TripAdvisor.
However, TripAdvisor is immensely popular among travelers and its mobile app has been downloaded more than 340 million times. It already has 385 million reviews and opinions from travelers around the world and its instant booking platform allows users to make a hotel booking directly from its platform. While Google Trips does not have a booking facility yet, its capability to leverage Gmail and Google Maps and ability to provide customized itineraries based on history of other travelers can work in its favor.
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