TripAdvisor shakes up business with aggressive hotel metasearch integration

TripAdvisor just shook up its business in a way that it hasn’t done for years. After introducing hotel metasearch on smartphones during the fourth quarter, the company said today it will introduce hotel metasearch across tablets and desktops, and complete the project within six months.

Priceline, which is in the process of acquiring Kayak, and Expedia, which is taking a majority stake in Germany’s Trivago, will undoubtedly take note and weigh the repercussions.

Known primarily for its hotel reviews and cost-per-click advertising from hotels and online travel agencies, TripAdvisor, with the introduction of hotel metasearch, likely will send fewer CPC leads to advertisers because the comparison-shopping will take place on TripAdvisor, CEO Stephen Kaufer acknowledged

However, the economics should balance out and be “revenue neutral” because TripAdvisor will be sending companies participating in metasearch more qualified leads, with resulting higher conversion rates, Kaufer added.

New model

Speaking during TripAdvisor’s fourth quarter conference call late today, Kaufer said most of TripAdvisor’s hotel metasearch revenue will be CPC-based, but there will be some revenue-sharing with clients when it’s appropriate for both parties.

He claimed TripAdvisor’s clients are on board with the metasearch push, although it will take time for them to adjust to the new business model, which includes property-level minimum-bidding functionality.

Ironically, Priceline and Expedia, both with pending metasearch initiatives, are major TripAdvisor customers.

Kaufer acknowledged that the idea of direct-booking on TripAdvisor, as opposed to sending leads to third-party sites for booking, has been discussed for years.

Agnostic and not religious

“We are not hearing that travelers want to consummate a booking on the TripAdvisor site,” Kaufer said, adding that TripAdvisor doesn’t have “religion” on the subject.

Asked how TripAdvisor’s push into hotel metasearch — it has offered flight metasearch for years — will impact its competitive position in relation to Priceline and Expedia, and their hotel metasearch efforts, Kaufer says it’s understandable that they would want more traffic under their own control.

Kaufer added, though, that he’s comfortable with TripAdvisor’s position in the advertising/media space.

A “price offering” alone, Kaufer said, referring to competitors’ metasearch solutions, isn’t enough for travelers, and he argued that it is doubtful that competitors would try to replicate TripAdvisor’s business given its huge lead in hotel reviews.

Major offline adverising campaign

In other developments, Kaufer indicated that TripAdvisor will mount an “aggressive” offline global marketing campaign, beginning in third quarter of 2013, adding that the time is ripe to transform TripAdvisor into a more far-reaching global brand.

On the social front, TripAdvisor revealed that it became the company with the largest number — 40 million — of monthly Facebook visitors to its websites late in the fourth quarter, according to AppData, and that 35% of new reviews on TripAdvisor are now written by Facebook-connected users.

TripAdvisor’s fourth quarter profit leapfrogged 52% to $33.6 million, on $169.4 million in revenue, a 23% increase.

For full-year 2012, net income increased 9% to $194.1 million based on a 20% revenue hike to $763 million.

TripAdvisor also announced that Liberty Interactive CEO Gregory Maffei became chairman of the TripAdvisor board, replacing Barry Diller.