Experiential Travel And AI Will Redefine Market Trends

Key Takeaways

• Expansion into experiential travel and new B2B offerings is strengthening growth, improving cash flow predictability, and increasing Tripadvisor's long-term addressable market.
  
• Investment in AI, personalized recommendations, and loyalty programs is driving deeper user engagement, enhancing margins, and reducing dependence on expensive third-party channels.
  
• Persistent declines in organic traffic and core revenue, intensifying competition, and lower-margin growth areas threaten Tripadvisor's profitability and long-term revenue stability.

Catalysts

TripAdvisor, Inc., an online travel company, engages in the provision of travel guidance products and services worldwide.

• Tripadvisor's focus on scaling its experiences marketplace (Viator and TheFork) takes advantage of global consumer shifts toward experiential travel, as rising international leisure travel from the expanding middle class and a preference for unique experiences are both enlarging the company's addressable market and supporting sustainable, above-industry growth rates-positively impacting long-term revenue and gross profit.
  
• The accelerated adoption of app usage, launched rewards program, and personalized, AI-powered recommendations are driving deeper user engagement and shifting customers away from paid channels to higher-ARPU, repeat users-likely improving net margins and stabilizing future earnings as reliance on costly third-party acquisition declines.
  
• Rapid integration of AI and machine learning across TripAdvisor's ecosystem is fueling operational efficiencies (content moderation, customer service automation, personalized search) and smarter marketing spend, which should translate into expanding operating leverage and margin enhancement over the long term.
  
• Diversification of revenue streams-especially with TheFork's growing B2B SaaS and subscription adoption, plus exclusive partnerships (like Mastercard)-is increasing revenue resilience, expanding recurring/contractual revenue, and could drive higher and more predictable cash flows.
  
• Tripadvisor's strong global brand, proprietary data, and trusted content position it well as online travel discovery increasingly shifts to verified, peer-driven platforms, placing the company at the forefront of long-term digital planning and booking trends, thus supporting both sustained traffic growth and higher monetization potential over time.

Tripadvisor Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Tripadvisor's revenue will grow by 7.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 3.5% today to 6.3% in 3 years time.
• Analysts expect earnings to reach $144.4 million (and earnings per share of $1.33) by about August 2028, up from $65.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $173.4 million in earnings, and the most bearish expecting $79 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.6x on those 2028 earnings, down from 32.5x today. This future PE is greater than the current PE for the US Interactive Media and Services industry at 13.6x.
• Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.63%, as per the Simply Wall St company report.

Tripadvisor Future Earnings Per Share Growth

Risks

• Brand Tripadvisor continues to face persistent headwinds in free traffic acquisition-especially in organic channels-leading to ongoing declines in core revenue and forcing an increased reliance on paid marketing, which puts pressure on net margins and threatens long-term profitability if the trend persists.
  
• Competitive risks remain acute as core hotel metasearch and planning offerings at Brand Tripadvisor are stagnating in growth, with ongoing volume and traffic declines, while dominant rivals like Google and travel super-apps further erode market share and may depress future top-line revenue.
  
• Monetization in growth areas such as Viator is increasingly dependent on a higher mix of lower-margin third-party merchant bookings, which, despite being profitable and incremental, carry lower average booking values and take rates, potentially limiting long-term earnings growth as these comprise more of the revenue mix.
  
• The long-term shift towards direct supplier bookings and intensifying focus from OTAs, travel providers, and experience operators on capturing customers independently could reduce the relevance and commission revenues of platforms like Tripadvisor, resulting in pressure on both revenues and net margins.
  
• Macro and secular risks such as global economic uncertainty, climate-related disruptions to discretionary travel, and increasing regulation in areas like data privacy and content moderation threaten to suppress long-term user activity and increase compliance costs, impacting both revenue stability and earnings potential.

Valuation

• The analysts have a consensus price target of $18.382 for Tripadvisor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $25.0, and the most bearish reporting a price target of just $13.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.3 billion, earnings will come to $144.4 million, and it would be trading on a PE ratio of 15.6x, assuming you use a discount rate of 9.6%.
  
• Given the current share price of $18.18, the analyst price target of $18.38 is 1.1% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.