TripAdvisor Adds Wanderfly To Its Social Portfolio

With a focus to develop in the area of social travel planning, TripAdvisor (NASDAQ:TRIP) announced its acquisition of Wanderfly, a travel inspiration site, earlier this week. According to the company, Wanderfly is well-versed with the values in social travel planning and understands the importance of “different recommendations for different travel needs”. Wanderfly enables its users to select attributes such as “budget”, “family”, “adventure” etc., before making relevant recommendations. Additionally, it offers a Pinterest-type sharing feature where users can bookmark their favorite restaurants, attractions, add photos and post contents that their friends can follow and comment on.

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TripAdvisor, which spun off from Expedia (NASDAQ:EXPE) last year, has been tapping growth opportunities in alternate platforms such as social media to expand its user base. The company entered into a partnership with Facebook (NASDAQ:FB) in December 2010, and launched a setup that allows users to receive “Instant Personalization” when visiting the site with an active Facebook account. However, with the acquisition of Wanderfly, it seems that TripAdvisor is looking to integrate the social networking feature with its own offering.

Consumers are increasingly using online social media as a means to communicate and exchange information, including travel information and opinions. According to PhoCusWright, users referred to travel booking sites via social networks are more likely to book travel than those referred to via search engines such as Google (NASDAQ:GOOG). Wanderfly is a relatively new entrant in the online travel space and is yet to make any significant indent in the market.

Nevertheless, we think the acquisition reiterates TripAdvisor’s focus on staying in-line with changing consumer trends. Since TripAdvisor’s business model is primarily driven by the number of unique visitors to its websites, we think its focus on expanding avenues to increase penetration and making its platform more accessible to users is a good long-term strategy. Its global community is growing strong as it aggregates around 75 million reviews and opinions and attracts close to 56 million unique monthly visitors.

TripAdvisor did not disclose the details of the acquisition nor divulge any information on whether Wanderfly will operate independently from it or otherwise.

Our price estimate of $35.18 for TripAdvisor is at a premium of close to 10% to the current market price.

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