The stock price of Massachusetts-based TripAdvisor Inc. (NASDAQ:TRIP) went up by 7 percent on Tuesday after they disclosed a deal with Expedia where their hotel inventory will be added to the instant booking platform of TripAdvisor. By the end of the trading day, the stock was higher by 5 percent.
The instant booking feature allows people to click and make hotel bookings immediately, through online travel agents or hotels. At this time, there are more than 70 hotel chains such as Marriott, Starwood, La Quinta Inns & Suites, and Best Western among others with whom the rooms can be booked. Expedia Inc.
Brands like Hotels.com and Expedia.com would probably be available for this booking feature on TripAdvisor. However, this has not been confirmed yet. Currently, the feature is on test mode.
The Agreement Serves Both TripAdvisor and Expedia Well
The Chief Executive of Expedia (NASDAQ:EXPE), Dara Khosrowshahi, has been complaining for more than a year now that Booking.com has an exclusive agreement with TripAdvisor’s instant booking. That has finally changed with the Tuesday announcement. Finally, Expedia too will become a booking partner of TripAdvisor.
This is good news for TripAdvisor as well. The business has been struggling to make the transition from click-based revenue to a combination of bookings, commissions, and clicks. The company is a market leader in reviews. Many land up at the site to read reviews, but end up making the bookings from elsewhere. The TripAdvisor (NASDAQ:TRIP) stock has been struggling off late, trading close to their 52-week low.
But with this change, consumers will now be able to read reviews on the site, and make the bookings as well through Booking.com and also Expedia.com.
Robin Ingle, a senior vice president said, “Expedia’s inventory will complement TripAdvisor’s existing offerings, helping users shop for a great deal on a hotel”.
Is TripAdvisor’s Move Going To Be Effective?
Some analysts are however skeptical on whether this move will change the future of the TripAdvisor stock, as they say, the move was expected. It’s not a game changer.
An analyst at Guggenheim, Jake Fuller, says that signing Expedia won’t significantly improve their booking. The impact will be limited to just adding one more high converting partner. Jake feels the addition of Priceline last year was more effective as it broadened the coverage and brought in more quality content. Others like Michael Olson of Piper Jaffray disagree, saying this is good news for the business.