OTA belt-tightening hurts TripAdvisor

TripAdvisor said third-quarter revenue rose less than analysts expected because hotels and OTAs reduced marketing spending at the travel-review site.

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 trend.

"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."

   

http://www.travelweekly.com/Travel-News/Travel-Technology/TripAdvisor-to-highlight-booking-capability-in-TV-ads

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