It should be enjoyable to plan a family trip.
However, anybody who has spent an evening researching hotels, reading reviews, and looking for kid-friendly activities will attest to how quickly the process can become taxing.
A hotel seems flawless until someone brings up unstated costs. A sightseeing trip seems like a great idea until someone else tells you about a bad experience. Selecting the ideal vacation suddenly seems like a full-time job.
Tripadvisor has helped millions of tourists make their choices for years.
The business that created the well-known website is now dealing with its own issues.
Bank of America has downgraded Tripadvisor (TRIP) to Underperform from Buy, slashing its stock-price target to $8 from $15.
The warning comes as the company’s two most senior executives are scheduled to leave, bookings are falling, and profitability has been disappointing.
However, something deeper is taking place.
The way consumers look for hotels, compare locations, and find things to do on vacation is being transformed by artificial intelligence. The web traffic Tripadvisor has historically relied on is therefore at risk.
This raises a more significant question: Will conventional travel websites remain helpful as AI takes over more trip-planning tasks?
According to Bank of America, investors may find the shift to be far more costly than anticipated.
Why Bank of America sees a bigger problem for Tripadvisor
Bank of America analyst Nafeesa Gupta downgraded Tripadvisor on Nov. 5, arguing that slowing growth and management changes have made the company’s recovery more uncertain. The bank reduced its price target to $8 from $15, a nearly 47% cut.
The research report found that Tripadvisor’s third-quarter revenue fell 11%, exceeding management’s guidance for 7% to 10%.
The company’s sales of $436.4 million were less than Wall Street’s estimate of $453 million. In contrast to the roughly $89 million experts had predicted, adjusted profits before interest, taxes, depreciation, and amortization came in at $71.1 million.
Tripadvisor’s third-quarter earnings release confirmed the results.
However, Bank of America’s worries go beyond a single underwhelming quarter.
The company identified three main issues, including declining revenue, disruption from shifting internet search, and concern about the company’s upcoming leadership change. The report’s central warning summarizes its assessment: “Growth slows, execution risk rises.”
Due to pressure on its conventional online travel operations, Tripadvisor’s hotels and other companies reported a 23% drop in revenue during the quarter.
Viator is part of the Experiences division, which had a smaller 3% drop in sales. Experience bookings, however, grew only 2%, falling short of management’s initial forecast of growth of 5% to 7%.
This figure is significant because, as Tripadvisor’s conventional hotel revenue declines, Viator is expected to become a more significant growth engine.
Yet the firm is having trouble growing its more recent venture fast enough to offset the demise of the older one.
How Tripadvisor’s AI problem could change your next vacation
Consider asking an AI assistant to locate a family-friendly hotel in Orlando, evaluate rates, and recommend three kid-friendly activities. You may receive a shortlist in seconds, rather than spending time browsing multiple travel websites, reading numerous reviews, and carefully comparing options.
This level of ease poses a significant problem for Tripadvisor.
In the past, the business has relied in part on search engine traffic that points consumers to its hotel listings, ratings, and booking partners.
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Some passengers would have fewer reasons to visit Tripadvisor’s website, as AI algorithms provide more direct answers.
According to Bank of America, Tripadvisor’s experience bookings dropped by about 3 percentage points in the third quarter due to lower search engine exposure.
The firm anticipates that these challenges will continue until 2027, even though difficulties in the company’s hotels and other operations may last beyond 2028.
But there is a crucial difference. Despite AI-generated referrals currently making up less than 1% of total traffic, according to Tripadvisor, visitors who arrive via such channels are more likely to make reservations.
According to the firm, conversion rates from AI recommendations were almost twice the average for Tripadvisor and five times the average for Viator. This suggests that while AI is disrupting conventional search traffic, it may someday become another important source of clients.
Increased competition among AI assistants, Tripadvisor, and other booking sites may result in more practical travel research methods for tourists. However, improved technology may not always translate into more affordable travel or more trustworthy suggestions.
Before making a payment, families should still check cancellation procedures, compare final rates, read current reviews, and confirm who manages their reservations.
Tripadvisor faces a problem that could change travel.JOEL SAGET / Getty Images
Bank of America’s 2027 forecast reveals a deeper concern
When Tripadvisor releases its next financial results, the company’s issues may not go away.
Due to slower growth and rising client acquisition costs, Bank of America has significantly lowered its profitability projections for 2027. The bank had previously projected a 1.1% revenue dip in 2027, but it now projects a 5% decline.
Its estimated adjusted EBITDA for 2027 has dropped from $235 million to around $174 million. Additionally, the bank lowered its projected adjusted profits per share for 2027 from 91 cents to 50 cents.
These changes show that experts believe it will take longer than expected for Tripadvisor to recover.
The increasing significance of sponsored marketing is one factor. Tripadvisor may be able to acquire clients without having to pay for each hit when people visit via free search results.
However, the business must depend increasingly on advertising and other paid channels to draw customers as conventional search traffic declines.
Even if bookings finally rise, the shift might increase the cost of client acquisition and put pressure on profit margins.
Leadership presents another challenge. According to Tripadvisor’s Nov. 5 management announcement, CEO Matt Goldberg will depart on Feb. 16, 2027.
Chief Financial Officer Michael Noonan plans to leave on Dec. 31, 2026, with Kristen Dalton becoming interim CFO on Jan. 1.
There is more doubt about the company’s capacity to carry out its plan if both leaders are replaced while the firm is being restructured.
Possibilities exist.
Tripadvisor completed the sale of the restaurant-reservation business TheFork to American Express on Nov. 1, receiving approximately $741 million in net cash consideration, according to its earnings release, cited by Investing.com.
Although it has discretion over how to use those revenues, management anticipates prioritizing debt reduction.
Bank of America also believes Tripadvisor’s prospects may strengthen through a possible strategic deal, quicker Viator expansion, or more effective marketing.
Whether such potential can overcome the ongoing pressure on sales and profitability is the concern for investors.
The most immediate lesson for customers is easier. Families shouldn’t assume that any one website offers the best deal or the most comprehensive information, but Tripadvisor is still a viable alternative for researching hotels and booking experiences.
Tripadvisor is facing a challenging financial situation as a result of the same AI technology that helps people plan their vacations. Both the company’s potential on Wall Street and its future utility to customers may depend on its ability to adapt.
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