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What Do TripAdvisor’s Key Metric Trends Suggest?

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TripAdvisor’s unique visitors’ growth flat

TripAdvisor’s (TRIP) average monthly unique visitors in 4Q16 grew 10.5% year-over-year (or YoY) to 323 million users compared to 3Q15. This is much slower than the 23% average growth seen in 2015 and 2Q16 and similar to the 10.5% growth seen in 3Q16. For fiscal 2016, monthly unique visitors have grown 14% YoY to 351 million users.

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Hotel shoppers increased

TripAdvisor’s average monthly hotel shoppers grew 8% YoY to 120 million in 4Q16, and they grew 6% YoY to 137 million in 2016. This is significantly slower than the 13% growth seen in 2015. This slowing growth is a notable concern for TRIP, as its Hotels segment forms almost 80% of its revenues.

Revenue per shopper

TripAdvisor’s (TRIP) revenue per shopper also continued its downward slide, which is another concerning trend. For 4Q16, its revenue per shopper fell 7%. This is slightly better than the 24% decline seen in 1Q16, the 19% decline seen in 2Q16, and the 12% decline seen in 3Q16.

For fiscal 2016, TripAdvisor’s revenue per shopper fell 15% to $0.46. This was due to lower monetization on Instant Booking and phone, as well as the change in its revenue recognition method, or recognizing revenues at the time of stay rather than at the time of click.

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Stagnating content

TripAdvisor has the largest user community in travel, which contributed to its success with ~465 million opinions and reviews on nearly 7 million places to stay, eat, relax, and be active.

Reviews and opinions are growing at a strong pace, while places to stay are growing slowly. However, growth rates for both categories are on a downward trend.

Outlook

TripAdvisor’s (TRIP) unique visitors are expected to grow as more users shift to booking travel online and through mobile devices. For 2017, its management plans to focus on growing revenue per hotel shopper, which is a key business metric. However, this seems to be easier said than done.

However, revenues have started showing some green shoots. Both transaction and click-based revenue per hotel shopper in the US increased throughout 3Q16 and 4Q16. However, this growth continues to be negative globally.

TripAdvisor forms 2% of the holdings of the First Trust Dow Jones Internet Index ETF (FDN), which also invests 2.6% of its holding in Expedia (EXPE), but not in Priceline (PCLN) or Ctrip (CTRP).

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