In its earnings report for the second
quarter of 2018, TripAdvisor reports its non-hotel segment revenue grew 22%
year-over-year - from $98 million to $120 million - a sizable increase but a
deceleration from the first quarter when it posted gains of 36% over Q1 2017.
The positive results for non-hotel
revenue helped the site grow total revenue 2% in the second quarter, to $433
million, with adjusted EBITDA growth of 8%.
The Experiences category of non-hotel
revenue was the brightest spot, with the platform nearly doubling the number of
bookable experiences to 121,000, up from 61,000 in Q2 2017.
In
a call with analysts to discuss the quarterly report, CEO Steve Kaufer says,
“We have quite a few different tracks of investment in our Experiences
business.”
Kaufer
says they are investing in user experience research on both the TripAdvisor and
Viator points of sale, growing the supply, and creating support for more
languages.
“We
are still overall at the tip of the iceberg. So when we look at how this
attraction business, this Experiences business, can compare to the trajectory
of bringing hotel booking online 20 years ago, we still see remarkable
parallels, similar market structure. And it starts with collecting demand and
supply and bringing it together, and that’s exactly what we are doing now.”
Also boosting non-hotel revenue: the restaurant platforms. The company says TripAdvisor restaurant pages have more than 200 million visits per month, and the TripAdvisor media ad products launched last year have substantial room for growth since currently only 1% of the 4.7 million restaurants on the platform are participating.
Rental properties also showed growth, with the addition of 55,000 listings to the platform - to a total of 855,000 - compared
to the second quarter of 2017. Eighty-five percent of those listings are bookable online.
“The rentals business is a good business for us.
It’s an important business for us to be in for our users,” says chief financial
officer Ernst Teunissen.
“It’s
not a business where we are incrementally putting a lot of investment dollars
behind it compared to what we are doing in Experiences and restaurants. And the
most important reason is we see a lot of blue sky and green fields in the Experiences
space, and we have an early head start so we’re making most of our push there.
Same on the restaurant side. In the rental side it’s a very competitive space,
and we are playing it slower.”
Hotels
TripAdvisor’s hotel revenue came in at
$313 million in the second quarter, down 4% compared to the same period of 2017.
That’s still slightly better than the first quarter, when revenue was down 5%
year-over-year. And the segment’s adjusted EBITDA grew 6%.
But the company remains
optimistic, noting positive signals from mobile engagement. Mobile hotel
shoppers grew 17% and accounted for nearly 50% of total hotel shoppers in Q2; mobile
click-based revenue grew more than 30%; and mobile revenue per hotel shopper
reached an all-time high.
“We feel good about the trajectory of
the hotel business now,” Teunissen says.
“If you unpack that a little bit, one of the important
initiatives has been rationalizing our marketing portfolio and particularly weeding
out some marketing spend that we felt was not as efficient as we thought
before. That has resulted in some shopper headwinds. We saw negative 3% shopper
growth in the quarter which… in light of
the marketing efficiency we took was actually a pretty good result and setting
us up well for the future.”
Kaufer
added, “We don’t want
it [hotel shopper growth] to decline. Does it need to get back to double-digit
growth for us to be successful, no it really doesn’t. When we look at the
decline this particular quarter and perhaps for the next quarter… we do point
very specifically to our paid marketing channels... We’re obviously cutting back
we think in a pretty smart way as in we are cutting back on the least
profitable of these hotel shoppers for us.”
While TripAdvisor
has cut back its online paid marketing in the hotel category, it is ramping up
its TV expenditure. And Kaufer says future TV campaigns may be used to build
awareness beyond the site’s hotel price comparison to include the broader scope of its trip planning services.
Regarding
content on the site, the number of user reviews grew 24%
year-over-year in Q2, reaching 661 million and covering about 7.7 million
places to stay and eat and things to do. That figure includes 1.2 million
hotels, inns, bed-and-breakfasts and specialty lodging, 855,000 rental properties,
4.7 million restaurants and 975,000 activities and experiences.