Tripadvisor Sees Viator at Full-Year Profitability in 2024

If Viator turns profitable in 2024, would Tripadvisor consider a spinoff? Or would that be like giving up your favorite child?

In February 2022, Tripadvisor filed a confidential draft registration statement to take Viator public, but never pulled the trigger because market conditions soured. Officials haven't ruled out such a move.

Tripadvisor cited strength in its Tripadvisor-branded experiences business and in hotels during the third quarter, the company said.

Chief Financial Officer Michael Noonan said Tuesday during Tripadvisor's earnings call that Viator is expected to achieve full-year profitability on an adjusted EBITDA basis in 2024. It said ongoing investments, such as in-brand marketing to acquire new customers, are appearing to pay off.

Viator's adjusted EBITDA was negative $15 million through the first three quarters of 2023; it lost $11 million in 2022.

Tripadvisor operates tours and activities, or experiences, under both the Tripadvisor and Viator brands. The company doesn't break out numbers for Tripadvisor experiences, but the segment it falls within, Tripadvisor Core, saw revenue grow 2% in the third quarter. Tripadvisor Core includes experiences, hotel shopping and display advertising.

The Viator segment, which has been the fastest-growing portion of Tripadvisor in recent years, saw revenue climb 41% in the quarter to $245 million. That's down from 59% in the second quarter. Viator's EBITDA jumped 42% to $17 million.

Viator Is Leading the Way at Tripadvisor

In the third quarter, Viator notched $1.1 billion in gross booking value, which is recorded when customers book experiences but it doesn't reflect cancellations that might occur before the actual tour or activity takes place. That's the same amount Viator did in the second quarter.

"Our position as the global leader in experiences continues to strengthen," CEO Matthew Goldberg said. "We're serving more travelers partnering with more operators, empowering more experienced storefronts than ever before."

Tripadvisor Is Seeing Progress in Customer Engagement

In July, Tripadvisor upgraded a trip-planning product called Trips, which is in a public beta and has a generative AI component.

"During the first 3 months in beta, members who created itineraries, returned at a much higher rate within the first seven days than members who hadn't created an itinerary, and we have observed that higher return rate continuing for the full month thereafter as well," Goldberg said. "Importantly, members who build an itinerary also generate, on average, 3x higher revenue than the average Tripadvisor member, and the average member already monetizes at approximately 10x the rate of nonmembers."

Experiences Saw Volatility at the Onset of the Hamas-Israel War

Noonan said Tripadvisor saw volatility, particularly in experiences, in October when war broke out in the Middle East.

"We saw both an increase in cancellations and a deceleration of new bookings in the region," Noonan said. "We also saw some impacts in European countries as travel warnings were implemented. Cancel rates receded as we exited the month."