TripAdvisor’s (TRIP) average monthly unique visitors grew by 13.2% YoY (year-over-year) to 351 million users, as compared to 2Q15. This is much slower than the 22% average growth seen in the past four quarters. Keep in mind that from 3Q15, the company started using its own log files to calculate unique visitors, as compared to using Google Analytics previously.
Average monthly hotel shoppers grew by 3% YoY to 139 million. This is significantly lower than the 16% growth seen in the past four quarters. Slowing growth is a huge concern for TRIP because hotels make up almost 80% of its total revenues. Eight large hotels including Marriott (MAR), Wyndham (WYN), Choice (CHH) are already on TRIP’s IB platform.
It’s important to look at the growth of unique visitors in the online business, because the higher the growth in visitors, the greater the potential for future sales and increased word-of-mouth publicity.
TRIP’s revenue per shopper also continued to decline, which is another disturbing trend. For 2Q16, revenue per shopper declined by 19%. This is slightly better than the 24% decline seen in 1Q16. This was mainly due to three factors:
The company boasts of having the largest user community in travel, which contributed to its success with about 385 million opinions and reviews on 6.6 million places to stay, places to eat, and things to do. While reviews continue to grow, TRIP is at near stagnation in terms of the number of hotels listed on its website.
Notably, TRIP makes up 1.9% of the First Trust Dow Jones Internet Index Fund (FDN).
TripAdvisor’s unique visitors are expected to continue to grow as more and more users shift to booking travel online and through mobiles. For 2016, the company’s management will focus on growing revenue per hotel shopper—a key business metric. Management expects revenue per hotel shopper to increase due to the Instant Booking rollout in 2016.
However, TripAdvisor will need to be able to translate these improving metrics to revenue growth—which we’ll discuss in the next part of this series.