Tripadvisor up despite ‘challenging’ trends


Shares in Tripadvisor rose by 8% after the company’s fourth-quarter results beat estimates as it looked outside its core hotel business.

CEO Steve Kaufer told analysts that “challenging 2019 hotel auction trends persisted in the fourth quarter, though our financial results were in line with our lowered expectations”.

The company has continued to broaden its offering, reducing its reliability on hotel auctions. M&A has helped to bolster its product and the company closed two acquisitions adding to its restaurants business.

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

Kaufer said: “As previewed last quarter, we have taken action in a number of important areas. We grew revenue outside our hotel auction; we have adjusted our cost structure to preserve strong profitability; and we returned more capital to shareholders. We repositioned our flagship Tripadvisor brand, and we reorganised internally to align with customer-focused initiatives to deepen customer engagement on our platform, which we believe will lead to increased monetisation over time.”

The CEO said that experiences and dining segment revenue scale approached that of the hotel auction in the second half of 2019, with the group expecting that E&D would pull ahead of auction revenue in 2020.

The hotels, media and platform segment revenue made up 60% of consolidated revenue for the full year. HM&P revenue declines narrowed in the fourth quarter to 6% year-over-year, with Kaufer commenting: “We lapped the bulk of marketing optimisation impacts in Tripadvisor-branded hotels revenue; however, hotel auction headwinds persist”.

He added: “We noted stronger-than-expected SEO channel headwinds in our Q2 and Q3 earnings commentary, as Google continues to siphon off high quality traffic that would otherwise have visited Tripadvisor. Hotel auction revenue declined by double digits year-over-year in Q3 and Q4, which was softer than trends observed in early 2019 and second half 2018. As a result, Tripadvisor-branded hotels revenue decreased 9% in Q4, despite double-digit hotel B2B revenue growth.

“Hotel auction softness has continued into 2020. Thus far in Q1, Tripadvisor-branded hotels revenue year-over-year performance has decelerated compared to Q4, which we believe is partly due to a continuation of these second half 2019 trends, but also could be due to a softer travel spending environment.

“Hotel auction performance remains only partly within our control, and we will continue to work to stabilise results. At the same time, we will continue to aggressively build our non-auction revenue streams, delivering customers more value in areas where we can bring Tripadvisor‘s unique assets to bear.”

The group said that it believed potential hotel auction headwinds would be more than offset by growing revenue lines in the years to come.

Tripadvisor continued to look to its users, with 463 million average monthly unique visitors in the 2019 peak summer travel season, leading it to describe itself as having “the world’s largest travel audience”. The company added over 50 million new Tripadvisor members in full-year 2019, with the CEO commenting: “This significantly increased the number of active members on our site. Members visit directly more, cross-shop more, come back more frequently and generate more revenue than the average Tripadvisor user.

“There remains not only an enormous opportunity to continue to grow our member base, but also to deepen member engagement by making membership more valuable, building communities and leveraging our valuable content to further personalise trip-planning features.”

Full-year total revenue was down 3% on the year to $1.560bn, with full-year total adjusted Ebitda down 4% to $438m. Full-year hotels, media & platform segment revenue was $939m, a 6% decrease on the year.

Kaufer concluded: “Tripadvisor turns 20 years old in 2020. Over two decades, we have built an iconic brand, attracted a massive global audience and generated significant influence in the $1.7 trillion dollar travel industry. We are focused on building direct, durable relationships, and more effectively converting Tripadvisor’s travel influence into increased repeat, intentional, engaged usage and monetisation.”

 

Insight: Twenty years is quite the feat for a technology company, particularly one where its strategy still seems very much up for grabs despite it being almost old enough to take a drink in its home town. Size matters and 463 million users is quite the size. Enough that you can say: “our financial results were in line with our lowered expectations” and your share price goes up and not down.

The OTA/meta market is feeling its age a little, as the hotel sector is relieved to note. The total dominance, that teenage conviction of immortality is waning, as we are seeing with Expedia Group. Without wishing to labour a point, those wise old veterans at the global hotel brands are eager to point out that the upstarts still have much to learn about how to sell hotels as they enter sage old adulthood.

Expedia under Barry Diller is turning away from Mark Okerstrom’s vision of the only travel platform you’ll ever need, to focus on its core, while the global operators were each looking to become the only hotel group you’ll ever need. Tripadvisor wants to market itself as all the opinions you’ll ever need (and please book through us and not that awful Google). Meanwhile, the customer continues to be the fickle beast and refuse to exhibit the loyalty they all want. Tripadvisor’s future? Being bought by Google.

 

 



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *