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Whether it is hotel-like commission levels on the online travel agencies, new product features, or market share gains, Tripadvisor was unabashedly selling the virtues of a Viator IPO — or deal. It's not a winner-take-all market, but rivals have narrowed any competitive gap.

Tripadvisor’s fourth quarter earnings call with financial analysts amounted to a sales pitch for its potential Viator initial public offering — or other options under discussion with third parties that Tripadvisor said are taking place in “parallel.”

No company files a registration statement with the U.S. Securities and Exchange Commission to spin out a brand, as Tripadvisor has done for Viator, as a bargaining chip, but the prospect that Tripadvisor has a viable alternative in taking Viator public and strengthening it as a competitor could give it leverage in talks with potential acquirers or partners.

During the discussion about Tripadvisor’s fourth quarter and full-year 2021 results, Tripadvisor Chief Financial Officer Ernst Teunissen said Viator has traditionally been strong in selling experiences in English-speaking countries, particularity in cities as part of international travel.

However, in 2021, although Tripadvisor saw a European rebound in the July to December period, the year was notable because Viator gained market share in the U.S. domestically, an arena that it hadn’t previously taken advantage of, he said. Tripadvisor had upped its marketing of Viator in the U.S., and saw revenue growth, he added.

Teunissen argued that Tripadvisor, which would still control Viator in the event of a sub-IPO, is “uniquely positioned” to sell tours and activities as standalone products, while Tripadvisor can market them as part of the overall trip.

While there will be other online travel agencies —, Expedia, Airbnb and TUI, to name a few — that will sell experiences as part of larger trips, Teunissen said “we believe that we are uniquely positioned with our Viator brand to capture that pure-play experiences OTA (online travel agency) space.”

Of course a variety of players, everyone from GetYourGuide to Klook, would argue with the notion that Viator will win the “pure-play” sector. For example, Johannes Reck, GetYourGuide co-founder and CEO, wrote on LinkedIn the day that Tripadvisor announced a potential Viator IPO: “We anticipated that this year [2022] would be big, but the ramp-up is beyond anything I have seen. We went from 20% under 2019 to 60% above 2019 in 6 weeks. And the season has not even started.”

Teunissen acknowledged that tours, activities and attractions, which are still about 80 percent offline, will still be highly competitive.

“But we believe that we have a fantastic position to be positioned long term as that player,” Teunissen said. “And the differentiation comes in the breadth of supply that we’re aggregating and we have about 300,000 Experiences products today, breadth of supply, a differentiated way of marketing that to our users and just a brand recognition for that one place you go to, if you really want to book an exciting experience.”

He added that the combination of Viator selling standalone experiences and Tripadvisor taking the more integrated selling approach, “is going to be very differentiated.”

“And that’s where — that’s the space — competitive space that we’re capturing,” Teunissen said. “So we’re playing it from both angles, from that angle, plus the more integrated play that we make with TripAdvisor. And that combination, we think, is going to be very differentiated.”

Non-IPO Scenarios for Viator?

Tripadvisor hasn’t spoken publicly about what sorts of other deals it is considering as alternatives to doing a Viator IPO in 2022. But Teunissen made clear that Tripadvisor having an ongoing relationship with Viator would be a strategic priority.

“The fact that we have Viator as a company in our portfolio and later perhaps with a more arm’s length relationship is important for TripAdvisor the brand and a strategic focus for TripAdvisor the brand,” he said. “And TripAdvisor is — has — ambitious goals to grow its channel there. And so Viator will benefit from that in the future as well.”

There are a variety of financial transactions, including with private equity, that Tripadvisor could make to generate more shareholder value from Viator.

But regarding other transactions and partnerships, the idea of Softbank-funded GetYourGuide in Europe and Klook in Asia combining has been bandied about. Could Softbank make a deal for Viator and combine the three tours and attractions players? It isn’t a likely scenario, and would leave Tripadvisor’s own experiences business without Viator weakened.

Google has been making a big push in tours and activities. It would accelerate Google’s business in that sector if it acquired Viator from Tripadvisor, but Google and Tripadvisor have long been at odds over what some view as Google’s anticompetitive tactics in hurting Tripadvisor’s and other companies’ presence in free search results.

“I don’t think they want to get into the business of contracting/ managing experiences, though,” said Tourpreneur publisher Shane Whaley, referring to Google. “They would rather be paid for sending traffic their way. That’s what they are trying to do with Google Things To Do.”

 Airbnb, of course, would be another potential Viator acquirer. But Airbnb, which expects big things for its own experiences business in 2022, tends to think it has a better formula than others for most products, and frequently desires to give things its own twist.

Among major online travel agencies, you’d have to think that executives at Expedia Group and Booking Holdings, both of which have tours and activities businesses, would take a call from Tripadvisor CEO Steve Kaufer or board chairman Greg Maffei if Tripadvisor sought to go these routes with Viator.

“I am not convinced a merged entity is good news for the operators,” Whaley said. “Certainly not the small to medium-sized operators out there who struggle to gain traction on these platforms as it is.” 

Summary of Corporate Strategy

In a summary of its corporate strategy in its fourth quarter 2021 shareholder letter, Tripadvisor said although its subscription business, Tripadvisor Plus, did not make the progress it expected, the company remains committed to building a direct-to-consumer business, and has the foundation in place for Plus.

The company said it would direct more resources toward its core Hotel, Media & Platform, and Experiences and Dining segments.

As reported Wednesday, Tripadvisor has plans in place for an initial public offering for its tours and attractions business, Viator, and is exploring ways to likewise gain more shareholder value for its dining reservations business, TheFork. Tripadvisor may break out both those brands’ financials on a standalone basis, instead of its practicing of combining them into one segment, after the first quarter.

The Financial Mumbo Jumbo

Tripadvisor’s total revenue or 2021 was still 42 percent lower than pre-pandemic 2019. Full-year 2021 revenue grew 49 percent year over year to $902 million. Tripadvisor notched a 2021 net loss of $148 million, an improvement of the $289 million loss in 2020.

In a shareholder letter, Tripadvisor stated that the smaller net loss for 2021 was driven by higher revenue and “fixed cost management.”

For the fourth quarter, Tripadvisor $241 million in revenue was a 108 percent jump compared with the same period in 2020, but it was 28 percent lower than the fourth quarter of 2019. Tripadvisor recorded a $29 million net loss for the fourth quarter of 2019.

Tripadvisor attributed the lower net loss in the fourth quarter of 2021 to “revenue improvment.”

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Tags: airbnb, attractions, earnings, experiences, getyourguide, google, ipo, Klook, loyalty, m&a, mergers and acquisitions, softbank, subscriptions, tours and activities, tripadvisor, viator

Photo credit: A view of the lobby in the global headquarters of TripAdvisor in Needham, Massachusetts. Tripadvisor may spin out Viator through an IPO. TripAdvisor

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