Image: TripAdvisor.

The online travel industry has been full of activity lately, and specialist TripAdvisor (NASDAQ:TRIP) has taken its share of opportunities in the space. Yet even as Expedia (NASDAQ:EXPE) announced a deal that would open the doors to the room-sharing industry, TripAdvisor has worked hard to move forward in a variety of strategic directions, and boost its growth prospects.

Coming into Thursday's third-quarter financial report, TripAdvisor shareholders were hoping that the company would sustain some of its past growth rates on both the top and bottom lines. Instead, TripAdvisor fell short on both fronts, and the stock sank in response. Let's take a closer look at how TripAdvisor did, and whether it can rebound in the near future.

TripAdvisor stays home
TripAdvisor's third-quarter results continued a troubling trend for the online-travel specialist. Total revenue grew 17%, to $415 million, with the slower pace of growth disappointing investors, who had generally expected a 21% rise. On the bottom line, adjusted net income rose almost 10%, to $78 million, but the resulting adjusted earnings of $0.53 per share were $0.02 less than the consensus forecast among those following the stock.

As we've seen several times in recent quarters, the strong dollar had an adverse impact on TripAdvisor's results. Revenue took about an eight-percentage point hit, and adjusted operating earnings would have been 17% higher if measured on a constant-currency basis.

Still, TripAdvisor delivered growth in all three of its major revenue sources. Subscription and transaction-based revenue jumped 56% from the year-ago quarter, now bringing in more than a fourth of total revenue for the company. Growth in the key click-based advertising area rose just 6%, while display ads brought in 20% more revenue this quarter than in 2014's third quarter.

Geographically, the strong dollar favored North America over other sectors, with home-region growth amounting to 24%. The segment including Europe, the Middle East, and Africa saw sales climb 13%, as did revenue in Latin America. The Asia-Pacific region only managed to keep revenue flat for the quarter.

CEO Steve Kaufer remains confident in TripAdvisor's long-term prospects. "We are focused on evolving our products to enable more users to not only plan and compare, but also book on TripAdvisor," Kaufer said. The CEO also noted that the transformation will take time, but he thinks that the steps that TripAdvisor has already taken will pay off in the long run.

Can TripAdvisor get its growth mojo back?
In particular, TripAdvisor has two main areas that it needs to address. First, the key hotel segment brings in more than four-fifths of its total revenue, and there, efforts to court new partners have paid off with lucrative agreements with industry leaders. Elsewhere, TripAdvisor has focused on acquisitions, especially in the attractions and restaurants businesses. Margins in the hotel side of the business remain far higher than in TripAdvisor's other areas, but the company has the capacity to work harder at finding more profitable opportunities going forward.

The interesting question that TripAdvisor needs to consider is whether Expedia's strategy to buy vacation rental specialist HomeAway marks a departure from the online travel industry's traditional focus on regular hotel rooms. Expedia's $3.9 billion deal taps into the increasingly popular market for alternative housing options, with younger generations, in particular, apt to look for sharing arrangements. With TripAdvisor's instant-booking service, the focus has thus far been on regular hotel business; but there's nothing inherent in the offering that prevents TripAdvisor from catering to nontraditional real-estate owners looking to offer short-term accommodations.

TripAdvisor shareholders were nevertheless concerned about the company's failure to meet expectations in its fundamental metrics, with the stock falling more than 7% in the first hour of after-market trading following the announcement. As competition grows fiercer, TripAdvisor will need to keep working hard in order to keep pace with its rivals, and offer the exceptional service that online customers now expect. If it can do so, then TripAdvisor has room to rebound from the immediate knee-jerk downward response from traders.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends TripAdvisor. The Motley Fool recommends HomeAway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.