The stock ended its day 5 percent higher.
The company's instant booking feature enables users to click and initiate a hotel reservation immediately, via the hotel or online travel agent. Currently the service features more than 70 hotel chains, including: Best Western, La Quinta Inns & Suites, Marriott, Starwood, Wyndham and more.
TripAdvisor's senior vice president of global sales, Robin Ingle, said Expedia's inventory will complement TripAdvisor's existing offerings, helping users shop for "a great deal on a hotel."
Some analysts were skeptical of the news' impact on the stock, suggesting the Expedia deal was expected and not "a game changer."
Jake Fuller, analyst at Guggenheim, said in a note that while "adding another high converting (instant booking) partner may be a modest positive," signing Expedia "does not significantly improve instant booking." On the other hand, last year's addition of Priceline to instant booking "brought broad coverage and quality content."
Although TripAdvisor shares gained after the announcement, Fuller said the firm would not expect the Expedia deal to have a material financial impact and continues to see 2017 consensus expectations for TripAdvisor as too high.
Scott Devitt, analyst at Stifel, reiterated the "hold" rating on the stock in a note Tuesday, saying the firm expects investors "will remain concerned about the company fundamentals until there is clear evidence that instant book is gaining traction across multiple devices and geographies."
Conversely, Piper Jaffray's Michael Olson maintained TripAdvisor's "overweight" rating and $70 price target, saying he expects the deal to lead to higher hotel-shopper monetization and create stronger long-term economics for the company.
Even with Tuesday's gains, TripAdvisor shares have fallen 42 percent this year.
Disclosures: Stifel or an affiliate expects to receive or intends to seek compensation for investment banking services from TripAdvisor and Expedia in the next 3 months. Stifel or an affiliate is a market maker or liquidity provider in the securities of TripAdvisor and Expedia.
Guggenheim Securities or its affiliates expect to receive or intend to seek compensation for investment banking services from TripAdvisor, Expedia and The Priceline Group in the next 3 months. Expedia is currently a client of Guggenheim and Guggenheim is currently providing investment banking services to Expedia. Guggenheim or its affiliates received compensation for investment banking services from Expedia during the past 12 months. Expedia is or was during the 12-month period preceding the date of the distribution of this report a client of Guggenheim. Guggenheim provided Expedia investment banking services.
Piper Jaffray was making a market in the securities of TripAdvisor at the time this research report was published. Piper Jaffray will buy and sell TripAdvisor securities on a principal basis.