Whenever people plan a trip, the first thing that strikes the mind is to create an itinerary and for that, there is nothing better than TripAdvisor. It confers the best suggestions from the people who have an extensive experience of traveling. The real life advice and a wide variety of travel and accommodation choices make it the best in the hospitality industry.
This giant that has the largest travel community in the world is constantly generating low revenue due to its rising marketing costs. Currently, it seems unlikely for Tripadvisor to manage the incurred costs that the company's advertising and marketing strategies are draining.
Why TripAdvisor is losing revenue
Thus far, TripAdvisor has received the lowest revenue in its fourth-quarter results. This all has happened due to its rising marketing costs. As the company is facing a tough competition from its rival sites ranging from Kayak to Airbnb.
TripAdvisor Inc is constantly under pressure to retain and attract customers, it is striving to beef up its offerings. To be in the game, they have aggressively jumped into the marketing field and spending more than ever on advertising.
TripAdvisor's share price falls
The Share Price of TripAdvisor is constantly falling from the past 12 months. Last year, it fell 11% and now it has tumbled 5.3% after hours to $49.41. The company generated $316 million revenue in the fourth quarter.
That determines the company earned 16 cents per share, which is quite low as per the estimation of analysts who were expecting to earn 31 cents per share.
In the last three months of 2016, hotel sales through TripAdvisor fell 3.1% to $252 million and its advertising expenses climbed 18.6% to $172 million. For the same quarter, the company registered a profit of $1 million, which was $3 million a year earlier.
And profit per share of TripAdvisor slipped to 16 cents from 45 cents dramatically.
The mistake that TripAdvisor is constantly making.
The company's mistake is that they are not adopting any creative approach in advertising and sales. They are glued to age-old methods of marketing and that is costing them a lot and yielding no effective results. Maybe a new creative approach will help them raise revenue.
