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TripAdvisor Strengthens Its Network Effect

Entering the booking commission market greatly expands its long-term revenue opportunity.

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Despite intense competition, we expect  TripAdvisor’s (TRIP) 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 increased marketing spending.

We expect TripAdvisor’s sales growth to slightly exceed the online travel industry’s high-single-digit annual rate we forecast on average over the next several years. Further, only around 25% of total travel advertising is spent online, versus 40% of total travel bookings done online. We believe this gap will close over time as advertising dollars become more aligned with industry bookings.

Dan Wasiolek has a position in the following securities mentioned above: GOOG, GOOGL, AMZN. Find out about Morningstar’s editorial policies.