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Morningstar | TripAdvisor's Network Advantage Intact, Amid Near-Term Macro and Marketing Headwinds

Despite intense competition, we expect TripAdvisor’s network advantage to remain in place over the next decade, supported by a solid global position, low penetration of travel advertising spending allocated online, and continued marketing spending. We expect TripAdvisor's sales growth to slightly exceed the high-single-digit annual booking rate we forecast on average for the industry over the next 10 years.The company has built a leading network of user-generated reviews and travel content (experiences, vacation rentals, restaurants, and hotels), which continues to drive robust levels of traffic. We see this network effect remaining intact, driven by ongoing investment, offset by increasing competition in the metasearch marketplace (where barriers to entry are lower than in the online travel agency bookings space) and against online travel agencies that plan to increase TV spending the next few years. We are encouraged that the company has allocated capital toward the restaurant and experiences markets, as we see TripAdvisor and these markets having strong growth opportunities within the online travel space. However, competition is increasing, driven by Kayak, Trivago, Booking, Expedia, and Google, leading to elevated marketing costs over the next few years. Additionally, in China, Qunar and CTrip are leading in terms of review, revenue, and advertising growth, which presents some challenges for TripAdvisor in this very important market.The company’s network advantage should remain and positions TripAdvisor well for the increasing global shift to booking via mobile applications. TripAdvisor is a top-10 travel iOS mobile application in 18 markets around the world, versus nine and 15 for Kayak (owned by Booking Holdings) and 16 Trivago (owned by Expedia), respectively (as of May 7, 2019).