Much of TripAdvisor's fourth quarter 2017 investor call came back time and again to hotel revenue and what the company is doing about declines in that direction. A reasonable amount it seems - from work on the user experience, to increased investment television advertising (somewhere between $100 million and $120 million) and product development.
Some words were also given over to growth in non-hotel - that is attractions and restaurants, and vacation rental.
Overall, TripAdvisor chief executive Steve Kaufer says that the market opportunity is huge, that the company has work to do and it's "encumbent on us to execute and unlock the growth potential"
Hotels
Some sort of reckoning at TripAdvisor perhaps around declines in the hotel segment and how that will be managed 2018 with comments from Kaufer around the tremendous growth opportunity and "holding ourselves accountable" for not being able to deliver to expectations.
Planned moves to stem the decline include cutting back on online traffic acquisition costs by stripping out unprofitable spend while increasing investment in TV. The company says it has cut direct marketing spend (excluding TV) down 20% and the cuts will continue into 2018.
Chief financial officer Ernst Teunissen says:
"As we have better information on attribution we're seeing some of the spend was not profitable so we started in the back half of 2017, to eliminate some of that but that reduces our growth rate from online channels across search and other online channels, reduces our spend, reduces our revenue, but improves our profitability because it takes out the least performing spend."
Adjusted EBITDA for the hotel segment was 5% down to $63 million for the three months ended December 31 and 25% down for the full-year to $286 million. Hotel revenue for the quarter dropped 3% to $244 million.
Investment in TV advertising was $74 million in 2017 and the company believes that increased spend in this area will help with its goal of changing the user perception to seeing it as somewhere to not only carry out research but also compare prices and find the best deals.
Simultaneously user-experience improvements in the price comparison elements should also help.
And, interestingly as mentioned in the previous earnings TripAdvisor is no longer pushing its Instant Booking initiative with Kaufer saying in Q4 that it's not a "strategic thrust for us to grow the channel."
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Attractions healthy for TripAdvisor[/caption]
Non hotel
The non-hotel element of TripAdvisor, particularly attractions is faring better, with revenue growth and more activities available to book.
Total revenue in the non-hotel segment increased 20% to $77 million for the fourth quarter and 24% to $360 million for the full year.
Going forward in 2018, the company plans to invest in making product available in more languages, mobile growth and product enhancements.
On the call, Kaufer talked about the "point of opportunity is in teaching folks that when they are on a trip they can book those attractions and that it might be smarter, cheaper and safer to book in advance or on a mobile when in destination."
He added that the attractions marketplace is exploding in terms of the shift from offline to online and that TripAdvisor is well positioned to take advantage of that.
Kaufer also tracked back to the idea of the whole trip - something which the company used to talk about a few years ago. During the Q4 call he talked of:
"leveraging this incredible footprint of the TripAdvisor community of travellers that has been under-invested in, in the past."
He added that the company is look to provide a consistent interface across the platform as well as "new vehicles to attract customers, a stickier part of the journey so you're not just shopping for a hotel or an attraction but planning out your entire trip because that is a piece of our differentiated experience that really no one else can touch."
Structural change
Making the planned changes happen will be the new presidents of the hotel business and the Core Experience unit. The company announced in early January that it was looking externally to fill these roles.
Kaufer said that the hotels president would be charged with delivering the best shopping experience and ensuring an appropriate marketing mix to enable the company to achieve its long-term growth plans.
The Core Experience unit also has its work cut out as highlighted above but Kaufer also teased new features in the pipeline that are not pertinent to hotel, attraction or flight shopping as such but more about providing the user with a better experience.
Vacation rental
Kaufer described the segment as important and said the company expects it to grow in prominence in terms of how it is featured across the site. The idea is that more travellers will see it in various places across the platform, e.g. where it feels it does not have the right mix of hotels, and rentals will be presented as an option more often.