TripAdvisor surpasses half of hotel sales on mobile, revenue per shopper climbs again

TripAdvisor’s revenue grew 4% in the third quarter of 2018, reaching almost half a billion dollars in that annual period for the first time.

Overall revenue across the company was $458 million, with total adjusted EBITDA growing 54% year-over-year to $146 million.

In the brand’s hotel segment, revenue was down slightly - 2% - to $305 million compared to the third quarter of 2017, but hotel adjusted EBITDA nearly doubled to $99 million.

While the number of hotel shoppers dropped, the site’s revenue per hotel shopper growth improved for the third consecutive quarter, accelerating to 5%.

In a statement with the results, TripAdvisor says; “Progressive marketing optimizations since Q3 2017 have reduced low-quality traffic and, as expected, caused hotel shoppers to decline 5% in Q3. Traffic quality improved, however.

"We grew the number of hotel shoppers that we directed to partner websites, demonstrating that product and marketing efforts are driving increased price shopping behavior and generating more bookings.”

The company is touting its increased operating efficiency – while the hotel segment’s adjusted EBITDA grew 94%, consolidated direct selling and marketing expenses decreased 23%.

When asked specifically about the effectiveness of SEO strategies, Kaufer says, “We never give specific commentary on the SEO, but we are certainly always watching and noting how Google is interrupting the search results with their own products. We continue to point out that that’s not particularly fair for a dominant search engine to do, but we are accepting it as reality in several countries and all of our modeling takes that into account.”

One channel where TripAdvisor has ramped up spending is TV. It launched a new campaign for its Experiences business in October – spending $35 million in the third quarter, and a total of $92 million through the first nine months of 2018.

TripAdvisor CFO Ernst Teunissen says the company is on track to spend between $100 and $130 million on TV advertising in 2018, and he expects that number to increase in 2019.

“TV is performing very nicely for us. The return that we see from it has been increasing and improving,” he says.

“In all likelihood we’re going to diversify the message from just a purely hotel shopping experience focus to a broader focus including Experiences and including other things.”

Mobile activity related to hotel shoppers is also growing. Mobile click-based revenue grew 40% in the third quarter, which the company attributes to its “mobile-centric product design and increased test-and-learn velocity.”

The number of mobile shoppers also grew by 12% and for the first time surpassed 50% of total hotel shoppers

“The product is obviously getting better, and shoppers are getting more comfortable booking on the phone so the referrals we send downstream to our partners are booking better,” Kaufer says.

“While to be clear it’s still a headwind compared to desktop, it’s lessening, and you see that in the results of having grown overall revenue per shopper this quarter.”

Non-hotel segment

Revenue growth also accelerated in TripAdvisor’s non-hotel segment, which was up 20% to $153 million, an increase of $26 million compared to the third quarter of 2017.

The company says Experiences and Restaurants were the bright spots in the non-hotel segment - growing at an even faster pace than the overall segment rate of 20% - while growth was down for Rentals.

In Experiences, TripAdvisor says it has 140,000 bookable products on the site, nearly double the number it had a year ago, and both bookings and gross booking value grew by more than 30%.

Kaufer says he is very pleased with TripAdvisor’s investment in Bokun, although it is a long-term play, not an immediate return in terms of revenue.

“The name of the game for us and every other attraction OTA in the biz is to get more and more of the supply online and bookable. If it comes through Bokun, if it comes through some other platform, it’s all good,” Kaufer says.

“Of course there are lots of players interested in tapping into what some call the last big sector in the travel space that hasn’t really migrated online. We are one of the leaders with several other players, but the total volume of booked online versus what’s currently booked offline is still really small comparatively.

When asked about other distributors in the experiences sector, Kaufer says, “To the degree that TripAdvisor and all of the competitors that also book experiences continue to grow, my view is that as the pie grows, consumers’ habits change and we all benefit. I’m much more interested in changing that consumer habit, I’m much more interested in teaching people  that they can book all those experiences online through us than I am worried about any particular competitors taking share in the space.”

TripAdvisor also says it will be rolling out its new social user experience, what it calls the “New TripAdvisor,” across all 49 markets on all platforms next week. It will include a new homepage layout and options to follow friends and influencers.

“It’s an additive feature if you will to our robust ecosystem,” Kaufer says.

“It’s not getting in the way of anything they [our users] were doing… but it’s now inspiring and offering more reasons to come  back. After it rolls out next week, then we’re really going to be able to start looking at cohorts of users, how many new members do we get, what’s the regular weekly repeat, monthly repeat and all the rest of the metrics that we hope will be driven in a positive direction from this.”

Looking ahead, TripAdvisor says it expects full year 2018 consolidated adjusted EBITDA growth in the mid-twenties percent range and improving growth in consolidated revenue and revenue for the hotel and non-hotel segments in the fourth quarter.

“We believe we have turned a corner, we have strengthened our consumer and partner offerings, and we are just at the beginning of unlocking exciting, long-term growth opportunities across our global platform,” the company says.