Traffic Share Gains Good News for TripAdvisor

Metasearch channel uncertainty has increased the past few weeks after

While we maintain our view that competition remains and that online travel agent models (narrow-moat Priceline and Expedia) have higher barriers to entry than metasearch (because the former control hotel relationships), we are encouraged by our checks that point to TripAdvisor gaining industry traffic share, supporting its narrow-moat network advantage and perhaps signaling that recent efforts (new user interface and TV campaign launched this summer) are beginning to bear fruit. TripAdvisor shares are trading at an attractive discount to our unchanged $63 fair value estimate.

TripAdvisor has seen recent traffic share gains, according to our analysis of SimilarWeb data. In the six months through August, traffic for our tracked online travel universe (10 companies) has risen 14% on average. During this time, four companies have gained traffic share: booking.com (537 million visitors in August, up 30%), TripAdvisor (483 million, up 20%), Airbnb (175 million, up 18%), and Trivago (103 million, up 23%).

Since June, only booking.com (11% growth) and TripAdvisor (13%) have outpaced the industry’s 8% lift, as Trivago lost volume share in July and August, growing just 1% since June. That said, we don’t have insight into the profitability of this traffic, and there has been cautious pricing commentary from Trivago and TripAdvisor recently. Still, we believe sustained volume share should help support economics over time.

Metasearch as a channel for OTAs appears relatively stable in our view, implying that the competitive environment is not intensifying, and we still see TripAdvisor’s network advantage allowing it to mitigate ongoing threats. According to SimilarWeb, booking.com and expedia.com received 19.96% (up 133 basis points month to month) and 22.85% (down 127 basis points) of their total August traffic from referrals, respectively.

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