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TRIP - Tripadvisor Inc.

kab60

By kab60
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rishig Newbie

rishig

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From PCLN's Q1'17 transcript:

 

"Brian P. Fitzgerald - Jefferies LLC

 

Thanks. And thank you, Dan, and congratulations also. Maybe a quick question on TripAdvisor, have you seen any impact to your performance there since Expedia has been added there? And then any – I think you said it's too small really to move too many needles, but any impact to the business from your Instant Book leads on TripAdvisor? Thanks.

 

Glenn D. Fogel - The Priceline Group, Inc.

 

Hi, Brian. No, what we said was when we got added to Instant Book, there was a lot of questions back then what was the impact and because of the relative size of TripAdvisor to our business, it wasn't a significant impact to our growth or our advertising efficiency. And so the same is true now as Expedia got added. It hasn't significantly impacted our growth trend for ADRs with TripAdvisor."

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ebdem Newbie

ebdem

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Got a small link bomb for you, guys:

 

Bearish

https://valueandopportunity.com/2017/05/30/travel-series-part-6-tripadvisor-trip-riding-a-dead-horse/

https://valueandopportunity.com/2017/06/05/travel-series-part-7-tripadvisor-trip-follow-up-more-thoughts-on-online-travel/

 

Bullish:

http://valuexvail.com/wp-content/uploads/2017/07/tripadvisor.pdf

https://www.gwinvestors.com/wp-content/uploads/TRIP-Original-Research-July-2017.pdf

https://www.gwinvestors.com/wp-content/uploads/TRIP-Presentation-Trani-2017.pdf

 

Have fun watching, reading and discussing!

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karthikpm Newbie

karthikpm

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Thanks. Just came back from Amsterdam . Booking.com has a big presence there but noticed so many tripadvisor logos across Europe attractions & restaurants ( Belgium & netherlands)

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Foreign Tuffett Newbie

Foreign Tuffett

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Countless investors have pitched TRIP in the last couple of years. Given how quickly the online travel space is changing, it's in my "too hard" pile. Just a couple of things that I think aren't highlighted enough by the longs:

 

1) Google has  attacked TRIP's position at the top of the online travel funnel. Google "hotel [insert random city]" and you'll see what I mean.

 

2) Google has many reviews for most hotels, as do  Booking.com and Trivago. I don't think that having the most hotel reviews is much of a moat. My personal experience has been that while TRIP does usually have the most reviews, many other sites have enough reviews for me to make an educated decision.

 

3) Much has been made of TRIP's non-hotel segments, but I think the market is saying "show me the money" with these. I'm inclined to agree. I can only speak for SE Asia, but my experience has been that booking tours or attraction tickets through TRIP isn't cost effective. 

 

I would love for a TRIP bull to decisively shoot down all my arguments so that I can get more comfortable with TRIP.

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oddballstocks Newbie

oddballstocks

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Countless investors have pitched TRIP in the last couple of years. Given how quickly the online travel space is changing, it's in my "too hard" pile. Just a couple of things that I think aren't highlighted enough by the longs:

 

1) Google has  attacked TRIP's position at the top of the online travel funnel. Google "hotel [insert random city]" and you'll see what I mean.

 

2) Google has many reviews for most hotels, as do  Booking.com and Trivago. I don't think that having the most hotel reviews is much of a moat. My personal experience has been that while TRIP does usually have the most reviews, many other sites have enough reviews for me to make an educated decision.

 

3) Much has been made of TRIP's non-hotel segments, but I think the market is saying "show me the money" with these. I'm inclined to agree. I can only speak for SE Asia, but my experience has been that booking tours or attraction tickets through TRIP isn't cost effective. 

 

I would love for a TRIP bull to decisively shoot down all my arguments so that I can get more comfortable with TRIP.

 

I've seen this pitched a lot recently, and I'm wondering if this is simply the idea du jour.  It actually has surprised me to see it pitched because as a consumer I feel like Trip Advisor's best days are in the past.  This site was hot a few years ago, but like you've said everyone else has entered their turf.

 

If there are more than a handful of reviews I will skim them regardless of the site.  If it's Google then it's more convenient.  A few years ago hitting Trip Advisor was key, but now we rarely do it.  The last time I mentioned it my wife said "eh, most reviews are fake."  I'm not sure if that's true or not, but based on the Peter Lynch spouse factor if my wife has this view them I'm sure it's someone common or popular.

 

I've also found that Hotels are becoming hostile to third party booking sites.  On recent trips I've booked directly because I can change reservations or cancel for free.  Beyond that direct has had the same or slightly better price than booking sites.

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Jurgis Newbie

Jurgis

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One thing I thought about while reading TRIP pitches is how Yelp did not do well. Somehow it seems the review sites are very good at attracting traffic, but quite bad at monetizing it. Perhaps people associate them with reviews, but not with services. So the OTAs are in better spot, since people go there for services and perhaps leave reviews too (like they do on Amazon, etc.).

 

Anyway, this might be superficial insight for people who did deep DD on this.

 

Disclosure: I have very tiny sliver of LTRPA, small position in LEXEA (both from spinoffs), and tiny position in PCLN.

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KCLarkin Newbie

KCLarkin

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Countless investors have pitched TRIP in the last couple of years. Given how quickly the online travel space is changing, it's in my "too hard" pile. Just a couple of things that I think aren't highlighted enough by the longs:

 

1) Google has  attacked TRIP's position at the top of the online travel funnel. Google "hotel [insert random city]" and you'll see what I mean.

 

2) Google has many reviews for most hotels, as do  Booking.com and Trivago. I don't think that having the most hotel reviews is much of a moat. My personal experience has been that while TRIP does usually have the most reviews, many other sites have enough reviews for me to make an educated decision.

 

3) Much has been made of TRIP's non-hotel segments, but I think the market is saying "show me the money" with these. I'm inclined to agree. I can only speak for SE Asia, but my experience has been that booking tours or attraction tickets through TRIP isn't cost effective. 

 

I would love for a TRIP bull to decisively shoot down all my arguments so that I can get more comfortable with TRIP.

 

1) Google has decimated TRIP's organic search results. But this is already reflected in earnings. It seems likely that EU anti-trust will eventually force Google to revert some of it's anti-competitive activities.

 

2) The massive number of mobile installs of TRIP indicate that the moat is intact. One problem for OTA reviews is that they will be less trustworthy since the hotel is the OTA's customer.

 

But I think you miss the real bear thesis. TRIP is not able to adequately monetize its traffic. So it can't compete with OTAs for customer acquisition. And Trivago is buying a bunch of unprofitable traffic. So Trip will lose market share over time.

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atbed Newbie

atbed

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I am starting to plan a vacation on TRIP. Obviously, this is anecdotal, but I am seeing the lowest pricing for instant book.

 

While network effects for reviews work for TRIP, there does seem to be flywheel effect for monetization as well. TRIP is obviously behind its competitors in the latter, and it's hard to see conversions improve overnight. But improvements do seem to be happening. An area they could do better in is improving room info and descriptions.

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kab60 Newbie

kab60

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I think anecdotes are fine and all, but the number of visitors is still growing massively (from 223m in Q1 '14 to 383m in Q1 '17) despite Google being a PITA and Trivago doing what I think can only be done in a zero rate environment. No matter where you travel, Trip is getting a ton of free advertising from hotels and restaurants displaying the sticker on their most prominent location meaning they get a lot of free traffic. They need to monetize it better, but it seems like they've already turned the page somewhat. I tend to agree review sites like Yelp, Trustpilot etc. can be difficult to monetize, but this is a big market, and they're in a unique spot. With an EV of some 4,5B while they did some 400m EBITDA in 2014 I think it's getting interesting. Add in some growth plus a couple of free kickers from attractions etc. and it could turn out pretty well (plus Liberty and M&A will probably protect the downside).

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ebdem Newbie

ebdem

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I think the story is about Trip about taking a better share from the growing market - not controlling it. Yes, there are a lot of competitors, but there also seems to be a huge runway. Google is definatly an watchable opponent, but Google has also to take care of regulatory issues. Google is also growing in tourism and in other sectors by using their market power - not only their innovation capability. This is an issue, that in my eyes is closly watched by the regulators.

 

To use a metaphor: I see Trip as the mobile guidebook for tourists. Or to say it in Greenwoods words: they are controlling demand and are having an island position here. As a user it's a quite convient way to use the mobile guidebook TRIP on vacation to do all the booking and vacation practices - all the things can also be done in other ways, but maybe not that convient and easy?

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glorysk87 Newbie

glorysk87

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Current sentiment does not reflect the quality of this business. I planned to buy a quarter position before earnings and a quarter after but Friday's jump made me pause. Hopefully, I can build a position while on vacation next week.

 

The little blip i circled in red made you pause? i can't tell if you're serious...

trip.thumb.JPG.42013afe3940550384dde2ae4a571401.JPG

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Astrea Newbie

Astrea

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I want to like TripAdvisor but I seem to have stumbled early on.

 

I just ran a few identical searches on Trip and on Trivago. I found Trivago to be much, much faster at returning results and those results were a little broader (i.e. more hotel choices) and, critically, cheaper than Trip.

 

I'd be very interested to hear what others find when they compare the two sites for speed, choice and price.

 

 

 

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glorysk87 Newbie

glorysk87

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I am serious. But you are looking at the wrong part of the chart. It is the drop from $110 to $35 that scares me. Don't feel any need to chase when it is still in a downtrend.

 

So the drop from $110 to $35 scares you, but the positive jump from $37 to $39 also scares you? So confused.

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Astrea Newbie

Astrea

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Yes and it is now up 2.5%... Does anyone know how much of a competitive advantage search technology is in the meta search world? What I mean is: from my experience, Trivago's search engine is a little better than Trip's right now (it returns faster, cheaper and broader results). And so assuming my experience is a correct reflection of reality, then I wonder how difficult it would be for Trip to improve to at least match Trivago's search performance? Are there proprietary or difficult to replicate elements in meta search technology that could keep Trip from getting there or should it be relatively straightforward for them? Sorry... as you can see I don't know much about tech... Thanks

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KCLarkin Newbie

KCLarkin

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I am serious. But you are looking at the wrong part of the chart. It is the drop from $110 to $35 that scares me. Don't feel any need to chase when it is still in a downtrend.

 

So the drop from $110 to $35 scares you, but the positive jump from $37 to $39 also scares you? So confused.

 

I won't say you are looking at this the wrong way. But you are certainly looking at this differently than I am.

 

A stock that drops from $110 to $35 is most likely to drop further. Or at the very least, bump around a bit while it tries to find the bottom. So, if you pay $39 versus $35. I look at this like a transaction fee. Is a 10% transaction fee reasonable? Maybe if you are planning to hold for 5 years.

 

I would look at this very differently if the stock had went from $35 to $110. Then, it is more likely to continue going higher. In that case, I might be more willing to chase a stock.

 

I know that momentum is considered voodoo around these parts but I have found it useful in guiding buy and sell decisions when coupled with value discipline.

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iambagman Newbie

iambagman

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They have 390 million unique visitors per month, a library of 500 million reviews, and guide the spending of $1.3 trillion of travel spend.  All of their engagement metrics have improved double digits per year for the last 5 years.  If you see no way this is worth more than an enterprise value of $5B - if you see no path to better monetization of this advantaged and growing business - you should by some dying business at 60% of book and hope to sell it at 85% of book and clip your return.  Maffei and Malone have done pretty well over the years - if the headwinds are temporary intrinsic value is far higher.

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