TripAdvisor 2014 Annual Report Download - page 15

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x Subscription-Based, Transaction and Other Revenue. Business Listings, is a subscription-based advertising product
offered to hotels, B&Bs and other specialty lodging properties. Managed by our TripAdvisor for Business team, this
advertising product is sold for a flat fee and allows subscribers to list, for a contracted period of time, a website URL,
email address and phone number on our TripAdvisor-branded websites, as well as to post special offers for travelers. In
addition, we earn revenue from making hotel room nights available for booking on our transaction-based sites, including
Jetsetter and Tingo for which we are the merchant of record; making rentals available through our vacation rentals
business; selling destination activities through Viator; and providing online restaurant reservations through Lafourchette;
as well as other revenue including content licensing with third party sites. For the years ended December 31, 2014, 2013
and 2012 we earned $236 million, or 19%, $130 million, or 14%, and $81 million, or 11%, respectively, in revenue from
subscription-based, transaction and other revenue.
Our Industry
We operate in the global travel industry, focusing exclusively on online travel activity and the online advertising market.
According to the PhoCusWright, gross bookings in the global travel industry are expected to be greater than $1.3 trillion in
2015. Recent historical trends show that, each year, an increasing percentage of global travel spending has been conducted online
through supplier websites and online travel agencies. We believe that this trend will continue as online penetration continues to grow,
as more consumers gain broadband access to the Internet, as smartphone, tablets and other mobile computing devices continue to
proliferate, and as travel activity increases along with an expanding middle class in certain developing countries like China and India.
According to the International Data Corporation, or IDC, New Media Market Model, only 26% of the approximately $51
billion that is expected to be spent on travel advertising will be spent online in 2016. We believe that the Internet will continue to
become even more integral to the travel-planning process due to increasing worldwide online penetration, particularly given the
capabilities that the Internet provides travelers, including the ability to refine searches, compare destinations, view real-time pricing,
complete bookings, and access information while in-destination.
According to the IDC New Media Market Model, the global online advertising market is growing and is projected to exceed
$165 billion by 2016, as more and more advertisers continue to shift their spending from offline to online channels, mirroring the
trend in consumer media consumption generally. Given the size of the online advertising market, we believe that travel providers and
travel related advertisers are, and will continue to be, motivated to devote significant resources to advertise their travel products and
services. In addition, as more and more travel transactions are conducted online generally, we believe that an increasing amount of
travel advertising spending will migrate from traditional offline advertising channels to online advertising opportunities.
Our Key Strengths
Our TripAdvisor branded sites help travelers plan and book the perfect trip. To help our users plan their trip, we have more than
200 million reviews and opinions, approximately 30 million candid photos, and helpful content ranging from hotel room tips to travel
guides. We have created a comprehensive online resource for user-generated content on destinations, lodging, restaurants and
attractions. We provide real-time pricing and availability search functionality that compares hundreds of partner websites so that our
users can find and book the best prices. We also enable users to book activities and attractions and make restaurant reservations
through our site. The tools and information we provide are available in 28 different languages on web-based and mobile applications
on desktops and across all mobile devices.
In order to achieve our goal, we leverage our key assets—a robust travel community, rich user-generated content, continuous
technological innovation and global reach—as follows:
x Robust Travel Community. We believe that we have the largest breadth of content in our markets, and that, because of
this breadth, travelers gravitate to our websites to research and plan their trips. By providing an interactive forum to share
their experiences, our large and highly engaged community of travelers is a valuable resource. To facilitate planning, we
enable consumers to research pricing and availability from third-party travel booking sites. To encourage better travel
experiences for consumers and to create a feedback loop between the hospitality industry and individual travelers, we
allow hospitality management representatives to respond to reviews of their properties on our website. After completing
their trip, consumers can return to our websites to write reviews to give back to the community that helped them plan their
trip. Through this cycle, more content is generated, which drives community, traffic, loyalty and higher search engine
rankings, all of which lead to further content creation. We believe that the volume of reviews generated on our websites
and the robust feedback loop created on our websites provides us with a significant advantage over our competitors.