Tripadvisor could likely have more resources to invest in Viator's growth if it spun out the tours and activities brand into a separate public company. A nice way to better compete against Softbank-funded GetYourGuide and Klook.
While no decisions have been made, Tripadvisor would have options ranging from separately reporting their financials to spinning them off into separate public companies while potentially retaining voting control.
Tripadvisor currently lumps its tours and activities brand Viator, and largely European dining reservations brand, TheFork, into an experiences & dining line item. Their business models are largely based on bookings and not advertising clicks as is the case with Tripadvisor’s hotel and media businesses.
In an ironic twist, Expedia spun out Tripadvisor into a separate public company in 2011, and retained control of Tripadvisor for several years.
“As we look forward to 2022 for this segment (Experiences & Dining), we are more convinced than ever that we have a significant value creation opportunity for our Viator and TheFork businesses,” Tripadvisor stated in its third quarter shareholder letter Monday. “We continue to see an attractive growth profile, market opportunity, and competitive strength, and we are considering options to better crystalize their inherent value.”
Discussing various possibilities for Viator and TheFork during the companies third quarter earnings call Tuesday, Chief Financial Officer Ernst Teunissen said Tripadvisor wouldn’t be “an outright seller” of either business, “at least not in the near term.”
But he argued that Wall Street isn’t properly valuing Viator, a global leader in experiences, or TheFork, which is a top brand in dining reservations in Europe and is dabbling with fintech products.
“So one area of options would be enhanced disclosure in our segment reporting,” he said. “But there’s also a family of options that we are considering that go a little further in separating out and in separately financing these businesses. Now we haven’t got more details to share at this point, and we haven’t yet committed to any particular course of action, but we wanted to give you a heads-up that we are considering options over the months and quarters to come.”
Teunissen said particular with Viator it is strategically important for Tripadvisor to have “significant influence” over the experiences brand.
For the quarter, revenue in Tripadvisor’s experiences & dining segment grew 115 percent to $114 million. The Experiences part of the segment reached 75 percent of 2019 revenue while dining revenue was more than 90 percent of that pre-pandemic year.
Finding a way to create shareholder value and financing for these businesses would enable Tripadvisor to continue invest in their growth, he said.
Overall for the third quarter, Tripadvisor record just $1 million in net income compared with a $48 million loss a year earlier. Revenue jumped 101 percent to $303 million.
Photo credit: A zip-lining experience is shown. Tripadvisor is mulling options to create more value for Viator and TheFork. TripAdvisor