TripAdvisor (NASDAQ:TRIP) continues to be The Little Engine That Couldn't, with second-quarter results indicating that the company's recovery efforts are taking longer than initially expected. Now that we're halfway through the fiscal year, let's see how 2017 is likely to look in the context of TripAdvisor's longer-term track record.

Image shows exotic vacation destination.

Image source: Getty Images.

Monthly user growth remains on solid ground

TripAdvisor's most important asset is its base of engaged users. As the world's largest travel site, according to comScore, TripAdvisor reported an average of 415 million monthly unique visitors in the most recent quarter:

TripAdvisor's average monthly unique visitors from Q1 2014 through Q2 2017

Data source: TripAdvisor investor relations. Chart by author.

In 2015 and 2016, monthly active unique visitors increased 22% and 14%, respectively. And through the first half of 2017, they've grown another 16%. This massive user base creates 290 new pieces of content every minute, adding to TripAdvisor's already formidable collection of 535 million reviews and 110 million photos.

While the company doesn't give guidance for user growth, there's nothing in TripAdvisor's results to indicate that its ratings and reviews are becoming any less popular, and continued growth in the mid-teens would indicate that TripAdvisor's user community remains robust.

Hotel revenue is stuck in the mud

The hotel business is TripAdvisor's No. 1 segment by far, contributing 80% of the company's total revenue in the most recent quarter. Unfortunately, the rollout of instant booking encouraged users to book directly with TripAdvisor, even when the company didn't offer the best price. This caused hotel revenue growth to fall off a cliff over the past couple of years, as users understandably didn't embrace the new feature. 

The ongoing shift of TripAdvisor's user traffic to mobile hasn't helped either, as mobile users monetize at far lower rates than desktop users. In 2016, hotel revenue appeared to have bottomed out, falling 5% year over year:

TripAdvisor's hotel revenue and growth rates from 2012 through 2017 (projected)

Data source: TripAdvisor investor relations. Chart by author.

Earlier this year, TripAdvisor began highlighting the instant-booking feature only when it is the lowest-priced option; the ship appears to be slowly turning, as the company has now reported two consecutive quarters of positive growth in hotel revenue. For the full year, TripAdvisor is now expecting click-based and transaction revenue growth in the mid-single digits.

Given that this is the largest portion -- roughly two-thirds -- of hotel revenue, and that the other categories of hotel revenue are either growing more slowly or declining, my best estimate is that hotel revenue will grow somewhere around 3% for the year to roughly $1.23 billion. While any positive number represents a step forward, 2017 isn't looking like the recovery investors were hoping for.

The non-hotel business is a star in the making

The non-hotel segment includes attractions, restaurants, and vacation rentals, representing the other 20% or so of TripAdvisor's total revenue. It may be the smaller segment, but it's growing much more quickly, becoming more important to the company's overall results with each passing quarter as it helps compensate for the hotel segment's slump:

TripAdvisor's non-hotel revenue and growth rates from 2012 through 2017 (projected)

Data source: TripAdvisor investor relations. Chart by author.

The segment experienced such rapid growth in 2014 and 2015 -- more than 100% in both years -- that at first glance, this chart might appear underwhelming. However, in those early years, from such a small base, that kind of growth was a lot easier.

As the segment has scaled up, it still managed the impressive growth of 27% in 2016. And management has said it expects comparable growth for 2017, putting expectations for full-year non-hotel revenue at around $368 million. The non-hotel business clearly has a long runway for growth ahead, with the company believing the segment has $1 billion yearly revenue potential.

Earnings growth is still on vacation

After TripAdvisor posted 23% adjusted EBITDA growth in 2014, the company's instant-booking debacle took an instant toll on earnings. Adjusted EBITDA was flat in 2015, then declined 24% the following year:

TripAdvisor's adjusted EBITDA and growth rates from 2012 through 2017 (projected)

Data source: TripAdvisor investor relations and 10-K filing. Chart by author. EBITDA = earnings before interest, taxes, depreciation, and amortization.

Management's latest guidance for 2017 is for "flat-to-down" adjusted EBITDA, primarily due to the non-hotel segment achieving full-year profitability. That's a pretty vague range, but taking into account that adjusted EBITDA is down 3% year to date, for the purposes of the chart above, I've estimated negative 1.5% growth for the full year. Obviously, that result would mark a big improvement over the prior year.

However, until TripAdvisor's hotel business shows signs of a more dramatic recovery -- creating the possibility of a return to double-digit top-line and bottom-line gains -- it's hard to see investors getting excited again about this former high-flying growth stock.