TripAdvisor said third-quarter revenue rose less than
analysts expected because hotels and OTAs reduced marketing spending at the
Net income fell as the company made good on a promise
earlier this year to boost its advertising and marketing spending.
TripAdvisor's revenue, while rising 4.3% to $439 million,
lagged analysts' average estimate of $452 million. Net income fell 55%, to $25
million. Shares were down about 15% in early trading on Tuesday.
Revenue from hotel searches and reservations fell 3% from a
year earlier. Speaking on a conference call with analysts Tuesday, TripAdvisor CFO
Ernst Teunissen said spurring revenue growth from hotel bookings has been "more
challenging" than expected, though CEO Steve Kaufer said the decline was
part of an ebb and flow in marketing spending and didn't reflect a longer-term
"You've seen our partners' comments on increasing
marketing efficiency. They've tightened their efficiencies to do other things,"
said Kaufer. "We're doing all the things we can on our side to make
ourselves a better partner, and I don't detect any reluctance on the part of
our partners and hotels to invest in the meta channel."
TripAdvisor earlier this year debuted a multimillion-dollar
TV advertising campaign, looking to reignite revenue growth and brand awareness
by highlighting the ease of booking directly through the site. The company said
it would spend as much as $80 million on the campaign.
TripAdvisor's third-quarter selling and marketing expenses
jumped 17% from a year earlier to $247 million, or 56% of its revenue.
The company also said Tuesday that it would continue to
broaden its listings of alternative accommodations to take advantage of that
growing sector, and would make many of those listings instantly bookable
through the site.
"We have about 800,000 [alternative lodging] properties
on TripAdvisor, so that's a good mix," Kaufer said. "We're making no
claims that we'll become bigger than some of the other guys, but it does aid
our travelers' desire to have that alternative lodging choice on our site."