Tripadvisor Execs Suggest Viator and Hotel Auction Will Be Key to New Strategy

Further investments in Tripadvisor's Viator tours and activities brand, as well as making Tripadvisor's core hotel price-comparison feature more relevant to travelers will likely be key elements of the company's turnaround strategy, executives hinted, although they plan on first laying out their complete vision to investors in 2023.

That was one of the takeaways of Tripadvisor's third quarter earnings call Tuesday.

Tripadvisor invested in Viator brand advertising in social media and podcasts during the third quarter and is continuing to do so in the fourth quarter, as Viator was clearly the top performer in Tripadvisor's portfolio of brands.

Outgoing chief financial officer Ernst Teunissen told financial analysts that Viator "has been on a spectacular path this year" with improved conversion and retention rates, as well as travelers booking more experiences before and during trips. Given Viator's large supply of attractions, and the fact that 80 percent of the sector is still offline, there is tremendous upside, he said.

New Tripadvisor Chief Financial Officer Mike Noonan, who's been on the job for a week or so, likewise said the company thinks it has an attractive opportunity to take advantage of a growing travel and experiences market. Teunnissen will stay on in a transitional role through the end of 2022.

"In light of this opportunity, we will assess areas of investment, opportunities to reallocate capital as well as look for ways to continue to drive operating efficiencies," Noonan said. "We will continue to do so with a disciplined ROI-driven approach. I'm looking forward to catching up with everyone over the coming weeks."

CEO Matt Goldberg, who started at his post in July, replacing longtime boss Steve Kaufer, was likewise bullish about the company's hotel auction, which enables online travel agencies and hotels to bid for position in Tripadvisor's price comparison search results.

This Tripadvisor metasearch service, he said, has bounced back strongly, and is providing high value to hotels and online travel agencies because consumers using it generally have a high intent to travel. Goldberg said there are opportunities to make the service more relevant to travelers, and improving its mobile features and grabbing certain geographic opportunities may be on the agenda.

Asked about competition from the online travel agencies and Google, Goldberg said:

"You have to think about what you're going to do that's going to be different than Google. And I think we have a lot that we can do that will be different from Google. If we focus on our content and our trust and the security that travelers have with us when they think about the decision that they're going to make, the way that we're able to guide with a point of view and leverage the community, we know that we're ranked above Google, Facebook, Airbnb, Booking when we track our brand in terms of trust."

Goldberg said he's been meeting with teams across Tripadvisor and the company is formulating a new strategy in a structured way. He added that more details with be forthcoming next year.

He said the company is likewise exploring appealing more directly to consumers, instead of mostly through hotels and online travel agencies, and officials are mulling how its Tripadvisor Plus subscription plan might fit in.

Goldberg said Tripadvisor might also look to tweak its media products.

"I think as I talked about product before, when we think about the product and services that we want to provide to deliver performance, leveraging engagement and data and productivity as well as with media, getting into those formats where we're experimenting already, but we primarily played in the display ad category, which we know is declining," Goldberg said.

Goldberg stressed that Tripadvisor has the potential to build on its status as a trusted brand, and to take advantage of its content and community.

"We know that our community has value," Goldberg said. "We know that curating content and really thinking about a more longitudinal relationship to serve consumers at every step along the journey not just at a moment when they're ready to make a particular search, I think, are all ways that we're thinking about how to do that."

There wasn't any talk during the call of spinning off Viator into a public company. Tripadvisor filed the paperwork early last year to potentially take Viator public, but hasn't pulled the trigger as market conditions changed.

Both Viator and Tripadvisor now sell experiences under their respective brands, and Goldberg said there may be opportunities in approaching the market in a different way than has been tried in the past.

"We can think differently about the relationship between Viator and TripAdvisor, and that's something we're really excited to think about because the two together give them a very distinct advantage in the marketplace," he said.

The Bottom Line

Tripadvisor saw its net income rise to $25 million during the third quarter, up from $1 million a year earlier. Revenue jumped 51 percent to $459 million.

"We are very pleased with the progress we’ve made year to date," the company stated in its shareholder letter. "Throughout the year we’ve seen quarter over quarter improvements in recovery levels. Despite some variability across regions, currency impacts, and the macro uncertainty, all of which we expect to continue, we believe performance in 2022 has been reflective of the overall travel market trends in the various distinct sub-categories in which we compete."

Tripadvisor's Viator tours and activities brand, and to a lesser extent its dining reservations platform, TheFork, showed particular strength, reaching 179 percent and 103 percent of 2019 revenue, respectively. Europe-oriented, Currency headwinds adversely impacted TheFork's revenue numbers by 9 points compared with the comparable period in 2019.

The Tripadvisor Core segment, which includes its hotel advertising auction, display ads, experiences and dining revenue, still lagged the recovery at several online travel peers, reaching $284 million in revenue, or just 88 percent of its 2019 marks. That core segment confronted 3 percentage points of currency headwinds relative to the third quarter of 2019.

Tripadvisor's share price was trading at $18.50, down about 22 percent for the day on Tuesday morning after issuing a fourth quarter outlook containing a "moderate step-down" of core segment revenue versus the third quarter. That was based on an especially robust August "and unique items in Q4 2019" making for a tough comp, the company said.