TripAdvisor Inc. (TRIP), an online travel research company, recently agreed to acquire Dutch websites — Iens.nl and Seatme.nl. Though the financial terms of the deal have been kept confidential, Dutch media reported that the acquisition was worth more than €10 million or $11.8 million.
Iens.nl is an online restaurant booking and review website operating in the Netherlands. It offers reviews for more than 20,000 restaurants to approximately 20 million visitors a year. On the other hand, Seatme.nl offers reservations at around 1,500 restaurants.
Iens.nl and Seatme.nl merged in 2012 and will now be integrated into the TripAdvisor network under its subsidiary — LaFourchette. Reportedly, upon the completion of the deal, Seatme.nl will become part of the TripAdvisor service, while Iens.nl will remain a separate label.
The acquisition will complement TripAdvisor’s existing restaurant offering by providing information about hotel bookings, and reviews and opinions about restaurants. The company will also expand TripAdvisor’s presence in the Netherlands as well as market share. This will improve efficiency, thereby expanding the company’s user base, improving traffic, hotel shoppers and profits. The company is trying to help consumers make informed decisions with the help of other customers’ experiences.
TripAdvisor has an aggressive merger and acquisition strategy. Last year, in May, the company acquired Paris-based online travel research company LaFourchette, to enhance its restaurant offerings by providing details such as restaurant discounts and booking details on mobile. Additionally, in the same month, it acquired TripBod, a start-up which connects travelers with local experts, followed by Vacation Home Rentals for an undisclosed sum. Other takeovers in 2013 include GateGuru, a flight and airport information mobile app, Oyster.com, TinyPost, JetSetter and CruiseWise.
TripAdvisor is the world’s largest online travel research company. The acquisitions have helped it to build a desired portfolio and increase page views per visitor since users now spend more time on its website.
TripAdvisor continues to witness robust top-line growth in every quarter. The company delivered a decent first quarter, with revenues of $354.0 million, up 9.6% sequentially and 38.8%year over year, driven by improvement in all its product lines and strong click-based revenue business. However, earnings of 39 cents missed the Zacks Consensus Estimate by 12 cents.
Over the long term, the company is well positioned for growth, given its expanding user base, improving margins and increasing monetization of social and mobile platforms. However, macro headwinds, continued investments and increasing competition from other players in the online travel market continue to be the headwinds for the company.
Stocks to consider
Currently, TripAdvisor has a Zacks Rank #4 (Sell). Other stocks that have been performing well are Taomee Holdings Ltd. (TAOM), Changyou.com Limited (CYOU) and Brightcove, Inc. (BCOV). While Taomee Holdings sports a Zacks Rank #1 (Strong Buy), Changyou.com and Brightcove carry a Zacks Rank #2 (Buy).
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