TripAdvisor 2015 Annual Report Download - page 36

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Current Trends Affecting Our Business
Thereareanumberoftrendsthataffectourbusiness.Followingaresomeexamples:
Continued Shift to Online Travel and Social Media to Access Travel Information. AccordingtoPhocuswright,globaltravelspendingisexpectedtobe
greaterthan$1.3trillionin2016.Travelrelatedcommerce,informationandadvertisingcontinuetomigratetotheInternetandawayfromtraditionalmediaoutlets.
Forexample,consumersareincreasinglyusingonlinesocialmediachannels,suchasFacebookandTwitter,asameanstocommunicateandexchangeinformation,
includingtravelinformationandopinions.Webelievethistrendwillcontinuetocreatestrategicgrowthopportunities,allowingustoattractnewconsumersand
developuniqueandeffectiveadvertisingsolutions.Overtheyears,wehavemadesignificantprogressusingsocialnetworkingtoleveragetheexpandinguseof
thesechannelsandenhancetrafficdiversificationanduserengagement.
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.WewillcontinuetoadaptouruserexperienceinresponsetoachangingInternetenvironmentandusage
trends.
Increasing Competition. Thetravelplanningindustryand,moregenerally,thebusinessofcollectingandaggregatingtravel-relatedresourcesand
informationaswellasenablingconsumerstopurchasetravel-relatedproducts,continuestobeincreasinglycompetitive.Thereareanincreasingnumberof
companiesincludingsearchcompanies,suchasGoogle,Inc.andBaidu.com,Inc.,largeandincreasinglyconsolidatingonlinetravelagencies,orOTAs(suchas
ExpediaandPricelineandtheirrespectivesubsidiaries),aswellasnewglobalentrantssuchasAirbnb,Inc.andAlibaba,whocollectandaggregatetravel
informationandresourcesandenableconsumerstoplanandbooktravel.Weplantocontinuetoinvestinordertoremaintheleadingsourceoftravelreviewsas
wellascontinuetoenhanceouruserexperience.Inaddition,wefacestrongcompetitioninourOthersegment:Attractions,RestaurantsandVacationRentals.
Refertoourdiscussionabovein“—Competition”inItem1.“Business”sectionforadditionalinformationonourcompetition.
Accelerated Rollout of Instant Booking. Revenuefromourinstantbookingfeatureisincludedinclick-basedadvertisingrevenue.Currentlyourinstant
bookingfeatureismonetizingatalowerrevenueperhotelshopperratecomparedtoourmetasearchfeature.Whileweexpecttoclosethismonetizationgap,
primarilybycontinuingtostreamlineourbookingpathtoenhanceuserexperience,persistentlypromotingtheTripAdvisorbrandastheplaceto“plan,compare
andbook”andcontinuingtoseekpartnerswithstrongbrandingandsupplychannels,thereisnoguaranteethattheseinitiativeswillultimatelybesuccessfuland,if
not,ourclick-basedadvertisingrevenuemaybemateriallyadverselyaffected.
Inaddition,ourinstantbookingrevenuerecordedundertheconsumptionmodelisrecognizedatthetimethetravelerconsumesthestay.Comparatively,
instantbookingrevenueunderthetransactionmodelisrecordedatthetimetheuserbooksthestayandourmetasearchfeaturerevenueisrecordedwhenatraveler
makestheclick-throughtothetravelpartners’websites.Basedonourinternaldata,wecurrentlyestimatetheaveragetimebetweenauserbookingastayto
consumingastayisapproximatelythreetofiveweeks,subjecttoseasonalvariations.Infutureperiods,greatercontributionfromourinstantbookingconsumption
modeltoclick-basedadvertisingrevenuecouldresultinadditionalrevenuerecognizedatthetimeofaconsumedstayandthereforeashiftinthetimingofour
revenuerecognition.
Evolution of the 360 Degree Travel Experience. Webelieveourroleintheoveralltravelexperiencecontinuestogrowinimportanceinthetravelindustry,
asweemphasizetotravelersthatwearetheplacetocome“plan,compareandbook”theirtrip.Ourwebsitesgloballyreached350millionaveragemonthlyunique
visitorsduringtheyearendedDecember31,2015,accordingtoourinternallogfiles.With320millionreviewsandopinionson6.2millionplacestostay,placesto
eatandthingstodo–including995,000hotelsandaccommodationsand770,000vacationrentals,3.8millionrestaurantsand625,000attractionsin125,000
destinationsthroughouttheworld,webelievewehavethebestcontentinthetravelindustryforresearchandtravelplanningdecision-making.Whencombined
withourhotelmetasearchcapabilitiestocompareandfindthebestprices,ourinstantbookingfeature,allowinguserstobooktheirhotelsonalldevicesdirectlyon
ourwebsite,andsubsequenttotheirtriptheabilitytosubmitatravelerreview,TripAdvisorhasbecomea360degreeorendtoendtravelexperience.
Growth in Mobile Phone and Other Handheld Devices. Toaccesstheinternet,usersareincreasinglyusingdevicesotherthandesktopcomputers,including
mobilephonedevicesandhandheldcomputerssuchasnotebooksandtablets.Toaddressthesegrowinguserdemands,wecontinuetoextendourplatformto
developmobilephoneandtabletapplicationstodelivertravelinformationandresources.Althoughthesubstantialmajorityofourmobilephoneusersalsoaccess
andengagewithourwebsitesonpersonalcomputersandtabletswherewedisplayadvertising,ouruserscoulddecidetoaccessourproductsprimarilythrough
mobilephonedevices.Wedodisplaygraphicadvertisingonmobilephonedevices;however,ourmobilephonemonetizationstrategiesarestilldeveloping,as
mobilephonemonetizationissignificantlylessthandesktopandtabletmonetization.Mobilephonegrowthand
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