Instant booking is a long term play for TripAdvisor – but hits financial performance

It seems the impact of the rollout of TripAdvisor instant booking product is dampening the company’s financial results, now and for the near future.

All English-speaking markets are now live with the ability to secure a hotel booking without leaving the main TripAdvisor site, with countries in Latin America and Asia Pacific slated to arrive in the coming months.

But, in its latest earnings call, the company admits the rollout of instant booking negatively affected full-year revenue by $36 million ($9 million negative impact in the fourth quarter).

The company did not give much detail on why rolling out instant booking had meant a negative impact but did touch on negative click-based growth and a decrease in revenue per hotel shopper because of instant booking’s launch.

And the impact on growth is expected to be felt over the next couple of quarters but then lessen in the second half of the year.

Discussing Q4 2015 financial results, TripAdvisor’s chief financial officer Ernst Teunissen talks about getting the end-to-end instant booking product right and poses the question on why the company is willing to take the impact of the instant booking rollout.

And answers it by talking of the huge opportunity it represents to the company saying that, in the US, instant booking is already more than 50% of revenue on the mobile application but much lower on other devices.

He also touches on positive trends the company is already seeing with instant booking including improved conversion rates throughout 2015, an increase in average booking values of more than 10% over the year and early signs of repeat usage – 10% of instant bookings are from users who have booked before.

CEO Steve Kaufer talks about instant booking’s rollout as “masking the company’s growth this year” but that the company is following its “North star as we navigate a path to creating the best user experience in travel.”

That’s about TripAdvisor taking care of the research, booking and the in-trip experience as the company anticipates tours and activities will become its next billion dollar business.

Kaufer says it’s about “solving the inefficiencies of the travel journey” – the 15 to 20 sites visited to research and plan a trip and possibly the same again to book.

The strategy is to educate users to see the company go from being a trusted brand and place to find the best prices to a place to find and book the best prices.

Looking ahead to 2016 the company’s expenses are expected to “grow faster than revenue” as per 2015 and a neutral outcome for the year as a whole.

However, according to Teunissen instant booking “positions the business for significant long-term growth.”

TripAdvisor reported revenue for 2015 up 20% to almost $1.5bn and EBITDA of $466m for the year against 2014’s figure of $468m.

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About the Writer :: Linda Fox

Linda Fox is managing editor for Tnooz. For the past decade years she has worked as a freelance journalist across a range of B2B titles including Travolution, ABTA Magazine, Travelmole and the Business Travel Magazine.

In this time she has also undertaken corporate projects for a number of high profile travel technology, travel management and research companies.

Prior to her freelance career she covered hotels and technology news for Travel Trade Gazette for seven years. Linda joined TTG from Caterer & Hotelkeeper where she worked on the features desk for more than five years.



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