Since February, TripAdvisor's market cap has soared by about a third to $13.4 billion, despite a dip after second quarter earnings were announced yesterday.
NB: This article has been updated since publication yesterday.
Investment analysts have largely credited this surge to TripAdvisor's successful rollout of instant booking for hotels.
About a third of TripAdvisor's ecommerce-enabled hotel listings can now be booked instantly, without visitors leaving the TripAdvisor user experience or having to visit a supplier or third-party website.
In the past three months, the company added Hyatt, one of the top ten largest global hotel chains, to its new direct booking tool, its CEO Steven Kaufer revealed yesterday. [Transcript, here.]
Earlier this quarter, TripAdvisor said it was adding Marriott to its new direct booking option.
The rollout will be slow. Some Hyatt hotels are visible, but no Marriotts yet. Every chain that has signed up has wanted their content instantly bookable on all platforms, but the company faces technical hurdles to achieving that.
The addition of Hyatt may signal a turning point for instant booking, which aims to position TripAdvisor as an OTA-lite, or a cheaper booking option than intermediaries such as Expedia and Booking.com for hotels to use.
Kuafer said he is in discussion with a variety of hotel chains and groups, and that it is "working with six out of the ten top global hotel chains" -- which were left unnamed.
"I don't want to set expectations that we'll get all the rest of the top ten globals within the next quarter. Some chains move faster than others....
Unlike an OTA, if Hotel A is not directly connected with us in instant book, I still have all of their properties through an OTA like [TripAdvisor-owned online travel agency] Tingo or GetARoom or many of our other OTA partners.
So we still have the ability to do an instant booking with those folks. The margin may not be as good to us when we go through the intermediary but we can still offer that service. Or choose not to enable instant book on that property, and consumers can still have full metasearch experience....
Thanks to these intermediaries, there are now 235,000 properties available via instant booking, or about a third of the e-commerce-enabled properties on its platform. Kaufer said:
"I don't want to set expectations that once we get 10 out of 10 we would roll out instant booking everywhere. That's not at all how I think about the equation."
TripAdvisor has not done enough testing yet to know if having the hotel chain's brand name in the instant book button performs differently for conversions than a generic "Book with TripAdvisor" button, the company says.
Kaufer says TripAdvisor is exploring "new vehicles" by which to push the subscriptions-based Business Listings product out. He says it is "underpentrated in the market," and that it has:
"quite a few plans going forward to deepen our relationship with the individual hotelier that is not just based around instant book but is also around all the different ways for them to take advantage of TripAdvisor traffic."
Rising costs
Quarter-over-quarter, TripAdvisor's operating expenses rose 46% to $326 million, including a 51% hike in TV and other digital marketing costs. Year-over-year costs have risen, too, partly led by a continued rise in costs in developing its instant booking tools.
The cost of acquisitions was a minor factor. During the six months ended June 30, TripAdvisor completed three acquisitions for a total purchase price consideration of $28 million. (The companies were ZeTrip, a personal journal app, and BestTables and Dimmi, two online reservations platforms.)
As a percentage of revenue, operating expenses (excluding cost of revenues) continued to soar in the first half of the year to $588 million, up 75% from $336 million in the previous comparable period, using non-GAAP numbers.
The rise is accelerating, which means it is cutting into profit margins within the broader context of the company facing foreign-exchanged based headwinds due to shifts in the value of the dollar against other currencies.
The company's profit fell 15% for the quarter.
Tours and activities
In the past year, Viator, TripAdvisor's recently acquired tours-and-activities company, has opened a marketplace platform, which is used by tours and activities suppliers to upload their content to the site.
In the second quarter, it doubled the number of suppliers that it added compared with all of the ones added in calendar year 2014.
Transaction growth has been accelerating, the company says.
Restaurants
More than 28,000 restaurants are now available across TripAdvisor's restaurant network.
Mobile
TripAdvisor says that this quarter it expects to cross the $100 million annual revenue run rate on phone.
ANALYSIS: What TripAdvisor’s instant booking means for hotels
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