TripAdvisor’s total revenue rose 8% in the fourth quarter of
2018 to $346 million and grew 4% for the full year to $1.62 billion.
In prepared remarks, CEO Steve Kaufer says the
company “reinvigorated hotel segment profitability while growing experiences
and restaurants, two key strategic investment areas.”
Consolidated adjusted EBITDA in the fourth quarter was up
38% to $87 million and for the full year it grew 27% to $422 million.
Kaufer says they “expect double-digit consolidated adjusted EBITDA
growth in 2019, with differentiated revenue and profit focus by segment. We
remain bullish on our long-term prospects and will continue to leverage our
unique assets as we invest in profitable growth opportunities.”
Kaufer says 2018 was a “pivotal year” for the hotel segment,
as the company is seeing benefits from efforts to align its hotel product and
Hotel segment adjusted EBITDA grew 25% in the fourth quarter
and 24% for the full year.
TripAdvisor says it now has 2.2 million accommodation
listings on its site, including 1.3 million hotels, inns, bed and breakfasts
and specialty lodging and 875,000 rentals.
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The company continued performance marketing optimization
strategies for its hotel business in 2018. This reduced hotel segment sales and
marketing expenses by more than $100 million while the company increased television
advertising by $40 million year-over-year to $114 million.
Kaufer says, “We have more work to do to get the click-based
auction back to sustainable, profitable growth, but we’re pleased with our
progress and believe we’re on the right path.”
Looking ahead, Kaufer says they will look to “lay important
groundwork for driving more advertising opportunities and activating a bigger
and broader advertiser base.”
In a call with analysts to discuss the results, Kaufer says
they are pleased with the “New TripAdvisor” publishing platform that launched
in November, and it is a “foundational change” that is adding value to the
travel experience and will continue to develop with deeper content.
And in the coming year they will look to “serve members,
drive loyalty and increase monetization across our verticals.”
When asked how that might be done, Kaufer says, “Certainly
we are looking at a variety of different ways that can help bind people to
TripAdvisor. Number one was, is, will always be the fantastic product
“It’s a brand with a ton of trust and we don’t kind of have
to pay people to remember us with point schemes. That’s not to say that we
aren’t thinking about adding components to a TripAdvisor membership that a
would offer additional value than just hearing from us from time to time.”
As part of that, Kaufer says they will diversify the brand
advertising message to highlight TripAdvisor’s “holistic consumer value
proposition,” rather than focusing on its hotel price comparison capabilities,
but the TV advertising budget will remain about the same.
TripAdvisor’s non-hotel segment now includes one million
activities and experiences and 4.9 million restaurant listings.
The company says revenue from this segment grew 27% for the
full year 2018 to $458 million and now account for 28% of total revenue – up from
23% in 2017.
When rentals are excluded from this segment, non-hotel
revenue grew even more - 40% for the full year.
Much of that is tied to TripAdvisor’s acquisition of Bokun
in 2018. The TripAdvisor platform had 83,000 bookable experience products at
the end of 2017 and 159,000 at the end of 2018, an increase of more than 90%.
In his prepared remarks, Kaufer says, “We revamped our
supply platform and launched it in six new languages, making it easier for more
suppliers to access, onboard and manage inventory….
"We were excited to expand
three newer verticals – events, tickets and unique experiences – giving
consumers greater selection and resulting in consumer growth demand across all
channels: Viator and TripAdvisor, performance-based and direct, mobile and
desktop, English and non-English.”
Quoting Phocuswright research that the tours and activities sector
will grow to $129 billion in 2020, Kaufer says TripAdvisor is “stepping on the
gas in product, supply and marketing.”
As part of that, the company says it is adding development
and sales staff across the United States, Europe and Asia-Pacific and adding
non-English content and local payment options.
Kaufer says in the experiences category users are more
likely to be repeat buyers, which drives their marketing strategy.
“They can start to build that habit of buying whatever tour
or activity they are going on before the trip and then perhaps an opportunity to
buy another one or two things while they are on the trip,” he says.
“So we view the lifetime value as potentially much more meaningful
for us and therefore leaning into paid acquisition, leaning into acquisition of
any type, makes more sense.”
But TripAdvisor says it is not looking to make investments
to grow the rentals portion of the non-hotel segment, which saw a decline in
revenue in 2018 that the company expects to accelerate in 2019.
“It’s a nicely profitable business, and it’s an important
business for us to be able to offer to our users, but it’s not a business where
we have incrementally put new resources to work,” says Ernst Teunissen,
“If we compare our opportunities in the different parts of
our non-hotel segment, clearly a lot of opportunity in experiences and
restaurants… For alternative accommodations, for rentals, with the presence of
two really large competitors in that space, it’s been harder and harder for us
to allocate resources to it versus allocating to places like experiences and
restaurants. That’s our approach there. We are picking our battles very clearly,
and we’re picking where we can win, and we’ve picked experiences and
* Check out these two interviews with Kaufer during The Phocuswright Conference 2018 in Los Angeles.
Executive Interview: TripAdvisor
PhocusWire @ Phocuswright 2018 - TripAdvisor on a new social strategy and tweaking its activity stance