Summer 2013 Travel Review: Not So Hot, Says TripAdvisor

Investor's Business Daily

TripAdvisor (TRIP) shares tumbled 9% Wednesday after CEO and founder Steve Kaufer told a Canaccord investment conference that summer travel trends have been weaker than expected and that visitor traffic has been missing the company's target for what is typically the industry's busiest season.

"I don't generally provide updates in the quarter, but if I have to, the update this quarter is like I'm not seeing a lot of positive stuff," Kaufer said in a talk with analyst Michael Graham at the Canaccord Genuity 33rd Annual Growth Conference in Boston.

Kaufer also said the summer "so far has been bumpier than I had been forecasting. Our traffic is holding, but not as strong as had been expected, and pricing has been a bit down for us.

TripAdvisor fell 7.41 to 73.55.

Kaufer also hinted that TripAdvisor may have trouble reaching a "revenue neutral" impact by year-end from its ongoing shift from cost-per-click ads to a metasearch business model.

Metasearch is a price search tool that generates revenue by allowing users to book hotels and other travel products directly. CPC is an online ad model used to direct traffic to websites and formerly provided the bulk of TripAdvisor's revenue. The metasearch transition is expected to disrupt TripAdvisor's revenue flow temporarily.

TripAdvisor execs said July 24 when Q2 results were issued that the shift's biggest negative impact would occur in Q3.

TripAdvisor at that time didn't issue a formal Q3 outlook. But CFO Julie Bradley reiterated guidance for full-year 2013 revenue growth "in the low 20s" in a conference call with analysts.

Whatever the impact from the shift to metasearch, Kaufer said at Wednesday's conference that he's "confident that the right long-term steps are in play" for TripAdvisor. He also predicted that TripAdvisor's Q4 revenue will be higher than Q3 "because we'll have more time in revenue optimization.

Priceline (PCLN) CEO Jeffery Boyd noted on a call with analysts after releasing Q2 results on Aug. 8 that summer travel got off to a strong start, boding well for its Q3. Priceline shares fell about 1% to 940 on Wednesday.

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