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TripAdvisor Exceeds Estimates In Q4 2019

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TripAdvisor Exceeds Estimates In Q4 2019

TripAdvisor, Inc. (NASDAQ: TRIP), a popular travel guide and research website, had two main questions on its agenda during Thursday's earnings call. One addressed the impact of the coronavirus outbreak and the other was regarding the competition.

Although traveling to Asia does not make a large portion of TripAdvisor's business, the company has been seeing some unexpected cancellations, so a single low-digit impact on the result is a possibility.

Latest Quarter Results

TripAdvisor reported last quarter results which tap Zacks Consensus Estimate in several segments. Revenues were $335 million, exceeding estimates of $332 million. However, that was still 3% lower compared to the previous year's period. When we look at revenues in more detail, we can see that revenues from Hotels, Media& Platform (58% of total revenues) were down by 6%, compared to the previous year. Revenues from Experiences & Dining (which accounts for 33% of total revenues) were up for 16%. Other revenues (accounting 9% of total revenues) were also down for 30%, compared to last year. It is clear that Experiences & Dining is the segment where TripAdvisor will continue to invest.

Net income of $15 million in Q4 (11 cents a share) has beaten previous years $7 million (5 cents a share). Adjusted earnings were 38 cents a share. After earning were announced, the stock rose 8%.

How Did The Coronavirus Outbreak Impact The Market?

According to the U.S. Travel Association, Chinese tourists were third overseas visitors in the U.S, with a total number of three million travelers. So, the coronavirus outbreak in China may have a significant influence on the hotels', restaurants', and similar companies' results, as well as all other companies related to tourism.

Expedia Group (NASDAQ: EXPE), a company behind fare aggregators and travel metasearch engine websites like CarRentals.com, Expedia.com, HomeAway, Hotels.com, Hotwire.com, Orbitz, Travelocity, Trivago, Venere.com, expects a $30 to $40 million impact on adjusted EBITDA in the Q1, due to the outbreak. However, the impact may not stop in Q1, all depending on the time required for trends to settle down.

Booking Holdings (NASDAQ: BKNG), the owner of Booking.com, is estimated to report earnings before the end of February, but the coronavirus outbreak will unavoidably have an impact, at least on Q1. Many tourist destinations around the world, including New York, are coping with decreases in demand for hotel rooms and restaurants. For example, bus tours for Manhattan sightseeing which are specialized for Chinese tourists are facing many cancellations. And some smaller travel agencies also specialized for Chinese tourists may even have to reduce the number of staff.

Outlook

If everything goes according to Tripadvisor's expectations, 2020 will be a crucial year when revenues from Experiences and Dining segment are expected to exceed the current company's core business – hotel metasearch. The goal is to move away from the hotel auction pond where there are too many crocodiles, some creating a lot of pressure with strong budgets, like Google Inc (NASDAQ: GOOG). So, instead of hotel price comparisons, new TripAdvisor's focus will be on making revenue from experiences, dining, hotel business-to-business, and media efforts.

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Image by Julius Silver from Pixabay

 

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Posted-In: Earnings News Guidance Travel Global Markets Tech General

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