Trip Cabo
Image source: TripAdvisor.

Online travel has been a high-growth area for years, but recently, TripAdvisor (NASDAQ:TRIP) and its peers have started to experience some growing pains as conditions in the global economy appear likely to deteriorate further. Even with the company having started to work together with historical rival Priceline Group (NASDAQ:PCLN), TripAdvisor stock has fallen to its lowest level in nearly three years. Coming into its fourth-quarter financial report on Thursday, TripAdvisor investors want to see signs that the company can bounce back from its recent sluggishness and start to grow at a more familiar and quicker pace. Let's take a closer look at what we're likely to see from TripAdvisor and what's ahead for the online travel company going forward.

Stats on TripAdvisor

Analyst EPS Estimate

$0.33

Change From Year-Ago EPS

(5.7%)

Revenue Estimate

$298.54 million

Change From Year-Ago Revenue

3.7%

Earnings Beats in Past 4 Quarters

0

Data source: Yahoo! Finance.

When will TripAdvisor earnings start climbing?
In recent months, investors have looked increasingly nervous in their views on TripAdvisor earnings, reducing their fourth-quarter estimates by $0.02 per share and cutting their full-year 2016 projections by about 6%. The stock has also continued to plunge, falling another 28% since late October.

TripAdvisor's third-quarter results showed the extent of the slowdown that the online travel specialist has dealt with lately. Revenue gains of 17% and net income growth of 10% were both slower than the consensus forecasts among investors had predicted, and the strong U.S. dollar continued to weigh on the company's international performance. TripAdvisor did a good job keeping its revenue from subscription and transactions, click-based advertising, and display ads moving upward. Still, strong competition not just from Priceline but also from other online travel companies required TripAdvisor to keep looking for ways to differentiate itself from the crowd.

The biggest element of TripAdvisor's future success comes from its Instant Booking platform, which has the potential to disrupt the industry. By working directly with hotel companies like Marriott, TripAdvisor's platform gives potential clients the ability to reach travelers without having to work through a full-blown intermediary like TripAdvisor's online-travel competitors. Priceline's unusual arrangement to offer its inventory through the TripAdvisor service reveals another potential growth avenue for Instant Booking. Given how traffic to TripAdvisor has risen, hitting the 350 million mark in monthly visitors, the prospects for the service are only growing with time.

Still, TripAdvisor has to be careful. Priceline has moved on to seek other partnerships with fellow online travel providers across the globe, and TripAdvisor needs not to let its own deal with Priceline lull it into a false sense of security. In addition, if global economic conditions deteriorate, TripAdvisor will need to find ways to overcome what could result in a reduction in demand for travel more broadly. If the combination of terrorist threats, geopolitical risk, and economic obstacles leads to fewer people choosing to travel, then TripAdvisor, Priceline, and all of their peers will struggle.

In the TripAdvisor earnings report, investors need to find out from management how the company expects to handle the threat of services like Airbnb eating into their results. TripAdvisor could look to work more with small lodging owners to offer Airbnb-like services, but the bigger question is whether hotels themselves will start to see a big hit from the direct-accommodation marketplace. Bad news for the hotel industry would be bad news for TripAdvisor, and in order to get earnings moving back higher in 2016, TripAdvisor needs to overcome any such obstacles and find more ways to grow going forward.

Dan Caplinger owns shares of Priceline Group. The Motley Fool owns shares of and recommends Priceline Group and TripAdvisor. 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.