While most of the focus has been on TripAdvisor’s slow-to crystalize hotel-booking foray, CFO Ernst Teunissen says the company’s tours and activities business, which he believes can achieve $1 billion in revenue, could produce “hotel-like” margins and commissions.
TripAdvisor co-founder and CEO has talked previously about tours and activities, built on the foundation of its 2014 acquisition of Viator, could be TripAdvisor’s next $1 billion business. But Kaufer hasn’t compared with hotel commissions, which are generally considered to be the highest-margin portion of the travel industry — with the exception of the advertising sector.
“The margins that we see in that [tours and activities] business, the commission rates look very favorable, hotel-like, and we believe that business can have an attractive margin structure for us going forward,” Teunissen told attendees at the Raymond James Institutional Investors Conference in Orlando earlier this month. “So with the $1 billion revenue in the future an attractive EBITDA contribution, as well.”
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