Expedia Takes Stock as TripAdvisor Gets Ready to Fly the Coop

Published on December 9, 2011
by Tricia Duryee

Now that Expedia’s spinoff of TripAdvisor is imminent, the online travel agency must explain to investors why they should stick with Expedia once its high-flying media business is gone.

In April, Expedia proposed a plan that would break the business into two public companies.

One would be a travel agency, focused on selling air, hotel and car rentals, and the other would be TripAdvisor, the travel reviews site that operates in 27 countries and 19 languages.

The deal is expected to close on or about Dec. 20, including a one-for-two reverse stock split immediately prior to the spin-off. Expedia will trade under the symbol EXPE and TripAdvisor will trade under TRIP.

Today, the company filed a presentation with the Securities & Exchange Commission detailing Expedia’s standalone growth prospects. The case will be an important one to make given that TripAdvisor is often seen as the more attractive of the two companies.

The Bellevue, Wash.-based company plans to present the slides to various investors and analysts over the next two-and-a-half months.

In the presentation, Expedia lists three major growth opportunities: International expansion, especially in Asia; a greater concentration on hotel bookings, which have higher margins than airplane tickets; and new distribution platforms, such as cellphones and tablets.

Expedia is a traditional travel agency that collects fees when an airfare or hotel room is booked. Meanwhile, TripAdvisor, which aggregates user-generated reviews, produces revenue from advertising, as well as fees when users book through other sites, such as Priceline or Orbitz.

In the quarter ended in September, TripAdvisor’s revenue jumped by 30 percent compared to the same period a year earlier. Meanwhile, Expedia’s revenues rose only 14 percent.

Additionally, the company is breaking up as it faces increasing competition from Google, which has started integrating the technology of ITA, a travel software company it acquired, into its search results.

Expedia’s stock today is trading at $28.65, up 61 cents.

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