Tripadvisor’s Experience Segment Thriving, but Its Core Business Continues to Struggle

Intense metasearch competition blocks Tripadvisor TRIP from holding a network advantage over the next decade, despite the continued rise in industry online penetration and the company’s ongoing investment in experiences (Viator) and dining (TheFork).

The company has a network of user-generated reviews and travel content (experiences, restaurants, and hotels) and an industry-leading experiences and restaurants position. As a result, Tripadvisor is a top-10 travel iOS mobile application in two markets around the world, versus 152, 100, and 25 markets for peers Booking, Airbnb, and Expedia, respectively, according to App Annie as of Aug. 3, 2023. Nevertheless, we believe its core metasearch platform (where barriers to entry are lower than in online travel agency bookings) faces growing competition from Alphabet and, in the future, Amazon and Meta, which we believe will keep marketing costs elevated over the next few years and cause its hotel branded business to lose revenue share. Still, we think that the company might reengage exploring an initial public offering of its experience platform and that it continues to allocate capital toward the vertical, as we see Tripadvisor and this market having strong growth opportunities in the online travel space. Tripadvisor’s leading global experience position is witnessed by Booking and Expedia moving away from building a presence in the vertical organically and instead partnering to use Tripadvisor’s content. Meanwhile, Tripadvisor’s online restaurant booking platform, TheFork, is also the market’s leading international network, rivaled only by Booking’s OpenTable, which leads in the United States. We think Tripadvisor is also considering an IPO of this asset.