TripAdvisor's Most Attractive Business Isn't Hotels

There isn't much about TripAdvisor's (NASDAQ: TRIP) non-hotel business segment that would grab investors' attention at first glance. After all, the division contributed just $2 million toward profits over the last six months, or 5% of the total haul. It has been a money drain in each of the last three years, and removed $28 million from adjusted earnings in 2016 alone.

That helps explain why Wall Street focused on the weakening outlook for the core hotel business when it punished the stock following the second-quarter earnings report in early August. Yet TripAdvisor's non-hotel segment is becoming a key part of the operations and, if you believe management, it should deliver attractive sales and profit gains over the long term.

In 2014, TripAdvisor counted just 9% of its revenue as coming from this segment that allows users to book attractions, restaurants, and vacation rentals, which it lumps together in a unit called "non-hotel". The remaining 91% of sales came from its core platform of hotel inventory.

Source: Fool.com