Tripadvisor Sale: Apollo’s Interest and Possible Scenarios

Ever since Liberty Tripadvisor disclosed in early February that it was exploring a potential transaction in which itself and Tripadvisor would be acquired in an all-cash deal, speculation was rife that a private equity firm was behind the possible move.

Apollo Global Management, one such private equity firm, has been looking into that acquisition, Bloomberg reported, citing sources who didn’t want to be identified. That exploration is said to be at an early phase and may not come to fruition.

Liberty Tripadvisor wields a majority of Tripadvisor’s voting power at 57% so would be the decider on any transaction. Greg Maffei is the CEO of Liberty Media and chairman of Tripadvisor.

Tripadvisor’s shares were up about 1.5% late afternoon Wednesday after the report about Apollo’s interest.

Other players could get involved, as well.

Apollo in the Travel Industry

Apollo has been very active in the travel industry over the past couple of decades. Apollo helped fund Expedia Group during the the beginning of the pandemic in 2020 when Expedia needed liquidity, and an Apollo SPAC merged with American Express Global Business Travel to take it public in 2022.

Other Apollo acquisitions in travel included Oceania (2007); 50% of Norwegian Cruise Line (2007); Harrah’s (2008), which became Ceasar’s Entertainment; Diamond Resorts (2016); and with a group of other investors, Atlas Air Worldwide Holdings (2023).

Tripadvisor Mulling Offer(s)

Tripadvisor has formed an independent committee to vet any offers that may come and has retained a financial advisor.

Analysts and travel industry insiders look to private equity as likely suitors for Tripadvisor. In addition to Apollo, other names that have come up as potentially having interest in a deal could be Permira, CVC, EQT and Softbank, which has investments in both GetYourGuide and Klook.

Big potential strategic partners, ranging from Booking Holdings to Expedia and Google, either wouldn’t be interested or might be scared away because of regulatory hurdles in the U.S. and abroad, the thinking goes.

Potential Scenarios for a Tripadvisor Acquisition

What might Apollo or any private equity buyer do with Tripadvisor?

Tours and activities leader Viator is the fastest-growing and the all-star in Tripadvisor’s portfolio of brands and products. In speaking to travel industry insiders since news broke of a potential deal, most agreed that buying Tripadvisor and then selling Viator made the most sense.

In 2021, Tripadvisor filed confidential paperwork with the U.S. Securities and Exchange Commission to spin out Viator into a public company. Nothing came of it, however, because the IPO market turned sour, with investors favoring profitable companies over growth companies that were deep in the red.

Tripadvisor CEO Matt Goldberg said recently — but prior to Liberty Tripadvisor stating that there was acquisition interest — that Tripadvisor hasn’t ruled out a Viator spinoff, but wasn’t focused on it.

One former chief financial officer of a publicly traded company said a potential buyer might acquire Tripaddvisor and then try to sell Viator to rivals GetYourGuide or Klook for a revenue multiple. The ideal scenario would be to team up with GetYourGuide and Klook in a pre-agreed deal to facilitate a sale.

The private equity firm buying Tripadvisor could then keep Tripadvisor’s hotel metasearch product, innovate and remove costs.

Tripadvisor’s hotel metasearch is still the largest part of the company, but Google has cut into its market share, and the service is stagnating. In 2023, the Brand Tripadvisor segment, which includes hotel metasearch and business subscriptions, saw adjusted EBITDA rise just 1% to $348 million. Revenue tilted up 7% to $1.03 billion. Brand Tripadvisor — until recently it was called Tripadvisor Core — has been the biggest revenue generator for the company in recent years.

Other Scenarios

Another Tripadvisor brand, TheFork, which might be called the OpenTable of Europe, isn’t performing as well as Viator, and “doesn’t move the needle,” the former CFO said.

Another analyst said he didn’t believe there was much CEO Matt Goldberg could do to turn around Tripadvisor, although he’s trying.

“I don’t think there’s much of anything Matt can do to turn the company around,” he said. “Sell it/chop it up into pieces. That may happen.”

Another analyst wondered if a major player, including one with generative AI ambitions, might want Tripadvisor’s hotel metasearch and user reviews for its rich trove of data. “Sell it to Google,” the analyst said.

Google, though, has its own much larger data assets.

“Assuming this is classic leveraged buyout, a buyer would take out a lot of debt,” another analyst said. “You would sell off Viator because it would command the growth multiple and generate the cash to pay down your interest burden. Then you own Trip Core for free.”

Perhaps Softbank, which has investments in GetYourGuide and Klook, could buy Viator from a private equity buyer and then combine the troika into a tours and activities super mashup. That would grab the attention, though, of competition authorities.