Skift Take

Tripadvisor sees its future as providing differentiated trip-planning, in-destination tools and personalized recommendations for travelers. That isn't wholly different from that of its prior regime, and would be tough to achieve.

Tripadvisor is overturning the management structure of its operational teams to address a lack of execution and product deficiencies in its core business, which includes click-based hotel advertising, subscriptions and display ads, experiences and dining.

That core segment, which doesn’t include the much healthier Viator experiences brand and to a lesser degree dining reservations platform TheFork, saw 2022 revenue of $966 million, and that was still only 79 percent of pre-Covid 2019 levels. The comparison to 2019 isn’t apples to apples because the 2022 figure doesn’t include 4 percent of segment revenue from the divested Smarter Travel and China businesses.

In the company’s fourth quarter and full-year 2022 financial results call with analysts, CEO Matthew Goldberg discussed a new operating model that replaces the pandemic-era structure that had Lindsay Nelson as chief experience and brand officer running the business-to-consumer teams, and Chief Commercial Officer Kanika Soni managing the partner-facing business-to-business teams. Nelson left the company a year ago.

“We’ve introduced an updated operating model that balances the autonomy and empowerment of P&L ownership with strong functional alignment and collaboration,” Goldberg said. “We’ve added critical new leadership roles and aligned our teams around product, marketing, technology and data, sales and operations. This breaks down silos, and already, we’re seeing improved efficiency and productivity and increased capacity in areas like engineering to reallocate resources to our top strategic priorities.”

Goldberg provided few details about the changes other than to say that the company brought in a new chief product officer, whom a spokesperson later declined to name.

The Tripadvisor spokesperson did note that Tripadvisor hired John Boris, who worked with Goldberg at Lonely Planet and is a former chief marketing officer at Shutterfly, as chief marketing officer in November, and he oversees both consumer-facing and partner marketing.

The global engineering team is functionally led, the spokesperson added.

In other changes to a small portion of Tripadvisor’s core segment, the company de-emphasized car rentals, vacation rentals, and flights while retaining cruises. Cruises closed out 2022 at close to 2019 levels, the company said.

Tripadvisor’s Viator business reached 171 percent of 2019 levels in 2022 with $493 million in revenue. Meanwhile, TheFork, which primarily runs dining reservations for consumers and restaurants in Europe, where it has a leading position, reached 99 percent of 2019 revenue in 2022 with $126 million revenue despite foreign exchange headwinds.

But Goldberg said much of his focus will be on Tripadvisor’s core business, including hotel metasearch, click-based advertising and display ads, and subscriptions. The core business lags pre-pandemic levels as a whole, but elements of it are doing better. The company said its metasearch product in the U.S. exceeded 2019 revenue in the fourth quarter of 2022, although the product globally stood at 93 percent of pre-Covid levels for full-year 2022.

There is no “silver bullet” to fix TripAdvisor’s core business, Goldberg said. In fact the performance of the core business, which Tripadvisor Chief Financial Officer Mike Noonan said “saw better-than-expected performance” in the fourth quarter (85 percent of 2019 revenue), actually underperformed the third quarter (89 percent of 2019 revenue).

“We set out specifically to put the traveler first, address both opportunities and challenges and drive steady profitable growth,” Goldberg said. “Delivering this outcome is not contingent on a speculative bet, a silver bullet or a risky agenda. Instead, we have high conviction in a strategy grounded in deeper traveler engagement enabled by better products and stronger execution. This builds on our heritage and the reasons travelers come to us in the first place.”

Tripadvisor’s full-year 2022 revenue was nearly $1.5 billion, a 65 percent jump. Its net income was $20 million, compared with a $148 million loss in 2021.

In the fourth quarter, Tripadvisor narrowed its net loss to $3 million compared with $29 million in the red a year earlier. Fourth quarter revenue increased 47 percent to $354 million.

The company’s share price edged upward around 1 percent to $25.38 after its earnings call Wednesday morning.

Experimenting With Consumer Subscriptions

Goldberg said the company will continue to experiment with paid subscriptions for consumers; Tripadvisor has long had subscription plans for hotels and restaurants. However, Tripadvisor stopped marketing its Tripadvisor Plus subscription plan for consumers in 2021 when it ran into trouble with the hotel industry over rate parity issues.

While not ruling out reviving paid subscriptions for travelers, Goldberg added that the company would likely be leaning toward a free membership program.

“As we develop a more persistent relationship with travelers, we’ll be able to offer a clearer path to become a member of our community and earn their loyalty,” Goldberg said. “We see a unique opportunity to recognize and reward travelers for their engagement. And while we will continue to experiment with our paid membership tier, TripAdvisor Plus, we think strengthening the value proposition of a free membership program is the right place to start.”

Fraud and Tax Issues

Tripadvisor reported that in the fourth quarter it took an $8 million hit because it was the victim of fraud, and refunded subscription monies to a third party. Tripadvisor is trying to recover that money.

The company also said it is likely to be adversely impacted in the amount of $25 million to $35 million in the first quarter of 2023 because of an Internal Revenue Service income tax audit of former parent Expedia for the years 2011 to 2019.

While these losses adversely impact standard GAAP net income measures, Tripadvisor said it did and will exclude the expenses from its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) figures. Tripadvisor’s fourth quarter adjusted EBITDA was $43 million, a 48 percent year over year increase.

Correction: We erroneously reported that Viator’s 2022 revenue fell just short of pre pandemic levels. In reality, Viator’s 2022 revenue exceeded the 2019 mark by 171 percent.

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Tags: alternative accommodations, car rentals, cruise, earnings, expedia, flights, fraud, future of lodging, online travel newsletter, short-term rentals, subscriptions, taxes, thefork, tripadvisor, vacation rentals, viator

Photo credit: Tripadvisor reorganized teams to get more efficient. Pictured is a tour at Parque das Aguas in Paraná, Brazil in 2016. Rosanteur / Flickr.com

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