TripAdvisor’s Instant Booking Is Expected To Receive A Significant Boost With The Inclusion Of Expedia’s Websites

December 21st, 2016 by Trefis Team
+11.07%
Upside
13.86
Market
15.39
Trefis
TRIP: Tripadvisor logo
TRIP
Tripadvisor

After months of conjecture whether Instant Booking will be a game changer for TripAdvisor or whether it will spell doom for the company eventually making it an acquisition target, it seems TripAdvisor’s confidence in its Instant Booking platform is not overrated. Even though the platform is still lagging behind when it comes to user acceptance, hotel owners and the leading online travel platforms seem to have ample faith in Instant Booking’s growth potential. Hence, after the presence of  eight of the top ten global hotel chains, and the OTA leader, Priceline’s Booking.com on its platform, Expedia too has now joined the Instant Booking foray. Currently, some of the Expedia brands will be available on Instant Booking platform in the U.S. desktop sites. We can expect the agreement to be expanded further beyond the U.S. in the future. What is significant to remember here is that Expedia had once stated that it was not interested in Instant Booking and the company had been recently focused on making Trivago, the metasearch engine where it owns the majority stake, a publicly traded company. With Trivago’s further building of metasearch capabilities, it wasn’t an expected move by Expedia to join Instant Booking, but it seems that the true potential of Instant Booking is much higher than the users have so far gauged. It can now be safely said that despite TripAdvisor’s short term troubles of profitability due to increased investments across its platforms and mainly because of Instant Booking’s weak performance, the company seems to be going on the right track and making a turnaround might just be a matter of time now.

How Has Instant Booking Fared So Far?

TripAdvisor’s Instant Booking platform, introduced in the U.S. in mid-2014 and gradually across the world, has still not been able to lure travel bookers. After browsing through hotels, shoppers can complete their hotel booking on TripAdvisor’s website itself and TripAdvisor’s partners such as a hotel (Accor or Best Western International) or an OTA (Priceline or Expedia) will look after the customer service. TripAdvisor remains the largest travel review website in the world with over 435 million reviews (50% y-o-y growth in Q3 2016) for 1.9 million accommodations, 4.2 million restaurants,  and 730,000 attractions, and the platform enjoys 390 million average monthly unique visitors. However, it seems that most users are still comfortable with using TripAdvisor solely as a metasearch engine where they compare hotel prices before going on to a different OTA or hotel website to complete their bookings. The problem is that 80% of TripAdvisor’s revenues come from hotels and Instant Booking is the largest driver to grow this revenue. Hence, despite TripAdvisor’s huge success with its non-hotel division, the company’s performance has been persistently hampered due to Instant Booking’s failure till now to pick up on user bookings. As a result, TripAdvisor’s stock has been trading around its 52-week lows. The company has witnessed a persistent decline in its revenue per hotel shopper after the introduction of Instant Booking and due to the increased browsing through mobile devices that leads to lesser completed bookings than desktops.

Relevant Articles
  1. Why Has Tripadvisor Stock Slumped 35% This Year?
  2. Gaining 20% This Year, Will Tripadvisor Stock Rally Further After Q1 Results?
  3. Up 26% Already This Year, What Is Next For Tripadvisor Stock?
  4. Up 21% Since 2023, How Will Tripadvisor Stock Trend Post Q4 Results?
  5. Down 18% This Year, How Will Tripadvisor Stock Trend Following Q3 Results?
  6. What’s Next For Tripadvisor Stock?

How Can Expedia Help Instant Booking?

  • Along with the presence of the OTA leader (in terms of market capitalization), Priceline, the participation by Expedia as well guarantees an even wider range of accommodations for the travelers to choose from.
  • The prices offered through Instant Booking might be even more attractive with the presence of the OTA majors and the stalwarts from the hotel industry. This might provide Instant Booking with the advantage of providing the lowest prices along with more options to choose from, and hence attract a larger number of travel bookers.
  • Most importantly, TripAdvisor is now gaining a unique advantage over its peers. No other website will offer travelers the options to book from both Priceline and Expedia, as well as from a host of hotels who directly feature on Instant Booking. This competitive advantage might go a long way in boosting Instant Booking’s popularity in the long run.

Overall, we are hopeful about Instant Booking and it does seem that when TripAdvisor’s CEO said that the downgrading of the company’s stock was just a short term phenomena, he sure knew what he was talking about!

Have more questions about TripAdvisor? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for TripAdvisor

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology