In playing the ‘long game,’ TripAdvisor incurs some short-term pain

TripAdvisor’s shift of its marketing dollars to brand-building channels, such as its television advertising campaign, “has contributed to softer topline results,” chief executive officer Stephen Kaufer said, “but we believe this is the best path towards driving profitable revenue growth over the long-term.”

That reallocation caused third-quarter click-based and transaction revenue and revenue per hotel shopper to decline by 5% and 11%, respectively, leading to negative 3% hotel segment revenue growth.

“Reigniting our near-term hotel revenue growth has proven more challenging than we expected this quarter and this year,” added chief financial officer Ernst Teunissen.

“But our product and marketing initiatives continue to deliver early positive signs, and we are optimizing our marketing mix for maximum long-term benefit.”

The focus on the long term earned TripAdvisor a bit of punishment on Wall Street, which tends to prefer immediate gratification.

Hotel revcnue was down 3% year over year, to $312 million.

Following the release of the results, shares dropped 6.68%.

Brighter news came out of the non-hotel sector, comprising attractions, restaurants and vacation rentals, where “strong momentum continues” and revenue was up 26%, Kaufer said.

Such products deepen traveler engagement with the TripAdvisor platform, he said.

“In both segments, we have a lot more work to do, but we play the long game and remain focused on building for the long-term,” Kaufer said.

In remarks accompanying the company’s earnings release, TripAdvisor said television advertising accounted for a significant part of the $48 million year-over-year decline in third-quarter hotel segment adjusted EBITDA.

The company has been able to make return-on-ad spend improvements in this channel, a trend that it expects to continue as it further optimizes the campaign.

In summary, the company said:

“We are making progress against our 2017 initiatives. Product and marketing have shown early positive signs, and we are optimizing our marketing mix for maximum long-term benefit.

“The near-term will remain volatile, but we are confident that we are on the right path. In the meantime, we are managing our investment levels to mitigate near-term bottom line impacts as we pursue our long-term goals.”

TripAdvisor reported third-quarter net income of $25 million, down 55% from the same period of 2016. Total revenue was up 4%, to $439 million.

Share on FacebookTweet about this on TwitterShare on LinkedInEmail to someone
 
 
Michele McDonald

About the Writer :: Michele McDonald

Michele McDonald is a senior editor at Tnooz. She has worked as a journalist covering the travel industry for more than two decades.

She is a former managing editor of Travel Weekly (US) and former editor-in-chief of Travel Distribution Report.

In 2002, she founded Travel Technology Update, a newsletter for distribution professionals. She remains editor and publisher of Travel Technology Update. She also contributes to Air Transport World.

 

Comments

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

  1. Colin Brownlee

    Not sure what’s up with TA, but looking at my business listing stats, clicks from TA dropped 50% over 2 years. We have remained in number one position in these years and for the past 7. Also again, according to TAs own stats, the destination has been more popular.

    It’s such a racket. You do all this brand marketing, and then potential guests check your reviews, only to have TA try and snag them in their OTA offerings. And if that is not enough, they want to charge you exhorbitant rates to have an upgraded listing so your client can get back to your site.

    Not that I like paying OTAs, but I was sure happy to see, Booking, Expedia, Google and Facebook take away some of this clout they possessed. I used to respect them until they decided to become an OTA.

     
 
 

Newsletter Subscription

Please subscribe now to Tnooz’s FREE daily newsletter.

This lively package of news and information from Tnooz’s web site provides a convenient digest of what’s happening in technology that drives the global travel, tourism and hospitality market.

  • Cancel