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Hello TRIP Fools!

Wow, what a difference a few weeks make, huh? Trip Advisor is up ~ 24% and the Premium Commons boards remind me of going back to visit Kansas City from Portland, OR every year for Thanksgiving; familiar, yet new. Actually, the same can be said for Portland right now as well.

This post is going to serve primarily as a brain dump of my thoughts on TRIP over the past several months. Some are my own. Some were inspired by Market Foolery and Motley Fool Money podcasts. My holding philosophy is inspired by both Tom and David G. I am still adding money to my portfolio every month so I am trying to let my winners run and losers lose without actually selling.

I hold two positions in TRIP in my Roth IRA.
11/19/2014 $71.14 (-16.62%) trailing the S+P by ~ 53%
12/14/2016 $48.35 (+22.70%) beating the S+P slightly by ~ 5%

As most Fools who follow TRIP know, all of the upside has come in the last year and really in the last six months. According to Yahoo, TRIP is up 70% to the S+P's 2.9% YTD and if you asked most analysts or fellow Fools I think the only answer you would get is that performance has been "less bad" fueled by non-hotel and specifically attractions growth. I will come back to this in a bit. Fasten your seat belts, put your tray table in the upright and locked position and be prepared for a little turbulence because this could get a little bumpy.

Why I Am Holding My TRIP shares
This is a note that I originally wrote to myself towards the end of January, 2018. At that time, TRIP was trading at ~ $34.50.

I should point out that I treat my Roth-IRA with more or less a "set it and forget mentality". I let my winners run and my losers lose. The only time I look at my account is when I deposit more money or make new purchases. Regardless of what happens to my losers, I have found that this keeps me from selling my winners too early i.e. I completely forgot that I even owned Activision Blizzard (I sold a position in my taxable account at $45, doh!)as well as IPG Photonics and have since 2010!

"... either TRIP will continue to grow the Non-Hotel segments of its business like Attractions and Restaurants as it works toward a long-term recovery in the Hotel segment or it will get acquired. As a few Fools mentioned previously, John Malone’s Liberty Interactive still holds a sizable stake in Trip Advisor and would have no reason currently to entertain low-ball offers from potential suitors.

I have to say that I cannot knock Stephen Kaufer and Co. for the focus on shifting to Instant Book a few years ago. He saw that travelers were coming to Trip Advisor to do their research, planning and comparisons but were leaving the site and booking elsewhere. IB was supposed to help close this “monetization gap”. The company took a risk that they could directly capitalize on the customer traffic to the site and as of yet it has not paid off. Add to that the marketing spend, development cost and reduced margins in cost-per-click on mobile and the stock price is bound to experience a little turbulence.

I am going to continue to hold my shares because I believe we are still on the first or second leg of this multi-stop journey. My views have evolved over the years on buying shares of companies whose prices are declining. I think it’s the David Gardner “invest in your winners” mentality starting to wear off on me. I am going to wait until after Q4 earnings, but this might be an opportunity and circumstance where I do average down a bit."

There are a few personal takeaways from reading through this again. This was one of the first times that I have held onto a position specifically because I thought that there was enough value there to warrant a buyout if a turnaround failed. Another recent and similar example is Twitter, which I bought at $38 back in 2015 I believe. I held through all time lows and after rumors that Salesforce or Disney were going to acquire the platform and before Jack Dorsey returned to run the company.

Tons of Content and Millions of Users Doesn't Necessarily Make A Great Investment
Piggy backing off of the last thought, there was a Market Foolery podcast not too long ago where Mac Greer discussed how Trip Advisor and Twitter both attract hundreds of millions of users to their respective platforms but until recently have had issues monetizing that traffic. We are beginning to see both gain momentum and traction after what was almost two years of declines. That said, investors who have bought shares over the last 12 months have done really well.

I Don't Fault Management For Attempting Instant Book
CEO Stephen Kaufer and team saw that their was a "monetization gap" as users did research and comparisons on the Trip Advisor site but then went to another OTA or brand to actually book. I went back to a Q4 2015 conference call and found this

"... we believe Instant Booking presents a massive long-term growth opportunity for us. Our revenue per hotel shopper is currently in order of magnitude lower than that of our largest partners. That monetization difference represents a multibillion-dollar opportunity for us. Instant Booking plays a key role."

At the time, they were actually partnering with Priceline on Instant Booking so it wasn't like they had done a complete 180 and biting the hand that feeds. It still not clear to me exactly why Instant Book failed although management had a difficult task of educating the customer / visitor, rolling out the option on both desktop and mobile, rolling out IB in a majority of markets across the world and spending heavily on marketing. Instant Book was only mentioned one time in the Q4 2017 conference call and it was during the Q+A.

"On the Hotel side, Instant Booking or the ability to actually finish the transaction on TripAdvisor
remains part of the product on all platforms in most countries. We think of it as earning its spot in the meta auction. So where we have signals that the consumer prefers this, then that's what we will show in the premier position. Otherwise, it is yet another option. It's not a strategic thrust for us to grow that channel, as it happens, because a segment of the population like it. That's wonderful for us. If not, that's okay. So we're no longer -- as of a while ago, we're not trying to push that forward and we're not investing a ton of resources in that particular path versus a click-off to a supplier or an OTA"

Non-Hotel Attractions Business Segment
"Non-Hotel business, particularly Attractions, is doing really well. It's all a function of having a wonderful supply footprint that continues to grow, matching it -- getting better and better at matching it with the demand footprint that TripAdvisor prides, plus all the indirect channels that the Viator business unit also chases, be they travel agents or the set of websites or other third-party relationships. So not unlike how the Hotel space has had some fantastic growth over the past couple of decades in the form of booking engines, Viator and its supply team have been fantastic at getting attractions bookable online. And when we acquired them, integrated our demand platform into that, it just fueled the growth that you're seeing and that we expect to see for many more years"

The Attractions marketplace is seeing explosive growth as it moves from traditional offline mechanisms of booking to online. In April, Trip Advisor acquired, Bokun, an online business management software solution created specifically for tours, attractions and experiences suppliers: it acts as a booking engine, an inventory channel manager, a price management tool, and more. According to the press release, "Bokun offers exceptional value in the market. It currently offers subscriptions for €100 per month, versus the industry standard of 5%-6% taken on online bookings. To serve its goal of bringing the entire experiences category online, TripAdvisor will make its software product even more accessible with a near-term move to a fraction of a percent per booking, far under the industry standard."

It is hard to tell from the wording but it sounds like TRIP may have a recurring subscription service with Bokun and be able to take a tiny cut for each experience booked. It would be great to see a portion of the attractions business subscription based rather than transaction based.

We've Reached Our Destination
Well, Day Trippers we've reached our destination for the evening. While TRIP still hasn't turned around its hotel business the company does have some other business segments that are seeing positive growth and which management believes can grow at +20% for the next couple of years. While recent results have been "less bad" or about as "meh" The Biggest Ball of Twine in Minnesota, the market has seemed impressed lately to revisit TRIP as an investment.

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