TripAdvisor has fallen 44% from 52 week highs and Barron's says it's $5bn valuation is inexpensive.
Compared to 2019 EBITDA of $400 million it looks fairly valued, maybe a bit pricey. But TripAdvisor is developing a $99-a-year subscription service offers members discounts on hotel rooms and experiences.
It aims to offer members savings averaging $350 a stay. The discounts are provided by hotels that will save the 15% commission that they pay to Booking and Expedia and in return would get more detailed information about customers to remarket to them—information they don’t get from sites like Expedia.
Tripadvisor has big hopes for the service. On the Q1 earnings call CEO Stephen Kaufer discussed potentially attracting “tens of millions of subscribers and a multibillion-dollar recurring revenue stream.”. Even a fraction of that would be meaningful, given that Tripadvisor market cap of just $5bn.
Execution risk is significant but a positive sign is that a smaller European online travel site, eDreams Odigeo, has already attracted a million subscribers to its subscription service.
Not Advice. Please do own research.
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