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Summary

  • TripAdvisor is the world’s largest travel review website and averages more than 250 million unique visitors in a month.
  • In a move to attract more users and better monetize its restaurant traffic it acquired LaFourchette this month for $140 million in an all cash deal.
  • TripAdvisor has a history of acquiring startups, such as SeatGuru, Jetsetter and Niumba, and integrating their services with its own.

TripAdvisor (NASDAQ:TRIP) is the world’s largest travel review website and averages more than 250 million unique visitors in a month. The company allows users to read reviews on hotels, vacation rental properties and restaurants. In a move to attract more users and better monetize its restaurant traffic it acquired LaFourchette (meaning “The Fork”) this month for $140 million in an all cash deal. LaFourchette is one of the leading Internet and mobile restaurant reservation systems in France and Spain with over 12,000 participating restaurants.

LaFourchette generates revenues by selling its online reservation software to restaurants and its APIs to third-party developers for analyzing data to increase a restaurant’s business. The company has already achieved scale in France and Spain, and it turned profitable last year. With the acquisition, TripAdvisor will be looking to strengthen its position in Europe’s restaurant market. Although LaFourchette will be discontinued as a brand, its employees will continue to operate from the company’s offices in Paris and Barcelona.

LaFourchette Widens TripAdvisor’s Opportunity In The International Online Restaurant Reservation Market

We believe that there are four key aspects that TripAdvisor considered before acquiring LaFourchette. First, the former receives over 200 million page views per month from its restaurant traffic. It will be able to provide a better experience to these users by offering a booking service and taking them further down the booking funnel. Second, the scope of growth in the online restaurant reservation category is much bigger internationally than that in TripAdvisor’s domestic market—the U.S. While over 20% of restaurant bookings in the U.S. occur online, the percentage stands at low single-digits in nearly every international market. Third, from the revenue generation perspective, TripAdvisor will be able to better monetize its restaurant traffic by converting many of its users into seated diners. The booking feature will also attract new users and restaurants to its website, presenting an opportunity to exponentially grow restaurant reservation revenues. And fourth, OpenTable (NASDAQ:OPEN) dominates the North American online restaurant reservation market with approximately 23,000 partner restaurants. This will make it an arduous task for TripAdvisor to penetrate the market. Targeting international markets makes more sense in this scenario.

TripAdvisor has a history of acquiring startups, such as SeatGuru, Jetsetter and Niumba, and integrating their services with its own. The company not only has considerable investment capital ($319 million as cash and cash equivalents as of March 31, 2014) but also has the relevant experience and resources to grow LaFourchette into a leader in the European continent. Besides LaFourchette, TripAdvisor made other important acquisitions this month including that of London-based Tripbod—a travel community that connects travelers to local experts, and Vacation Home Rentals—a Massachusetts-based vacation rentals site with over 14,000 listed properties.

Disclosure: No positions

Source: TripAdvisor Enters Online Restaurant Reservation Space With Acquisition Of LaFourchette