Tripadvisor CEO Steve Kaufer to retire after two decades at helm

Tripadvisor co-founder and CEO Steve Kaufer will retire in 2022 after leading the company for 21 years.

The company announced the news in tandem with its financial report for the third quarter of 2021. Kaufer says he will remain in his position until a successor is named, and the company says a search is underway.

“While there’s no right time, I think this is a darn good time to start the transition... When we look at our future now, we see us clearly coming out of the pandemic. I love the new initiatives... overall the business is recovering in all of its parts... I think we have a strong management team. We’ve got new faces, tenured faces,” Kaufer says in a call with analysts to discuss his retirement announcement and the company's financial results.

“As to what the board is looking for, travel experience would be great, subscription experience would be great, e-commerce – that’s a core part of our business today and going forward. There’s no reason anyone should read into anything about my transition other than kind of what is says on the face. The company is in a good position, I’ve been at the helm for, by the time I depart, 22 years... This isn’t a question of needing change, this isn’t a question of looking to do something dramatically different, but I wanted to give the board plenty of time to select truly the best leader.”

Tripadvisor finished Q3 with $303 million in revenue – more than double the revenue from the same period last year and 29% less than Q3 2019’s revenue of $428 million. 

The company achieved income in the period of $1 million, compared to a loss of $48 million in Q3 2020, but still far below Q3 2019 income of $50 million.

Adjusted EBITDA was $72 million in the third quarter, up sharply from the Q2 figure of $25 million.

“We were very pleased to see our revenue and adjusted EBITDA levels step up significantly in this quarter from last quarter, reflecting signs of a continued strong return to travel,” says Ernst Teunissen, Tripadvisor CFO. 

“We call out that our experiences and dining revenue in particular is showing a very strong recovery that is not fully reflected yet in Q3 revenue. For instance, on a booking level, our combined experiences business has been up versus 2019 October and the start of November.... We remain very optimistic that the recovery is taking root and are bullish about travel and our business in 2022.”

Of the $303 million in revenue in the quarter, nearly 60% - $172 million - is from “hotels, media and platform” and $114 million is from “experiences and dining.” 

In a letter to shareholders, Kaufer says “ ...we are more convinced than ever that we have a significant value creation opportunity for our Viator and TheFork businesses. We continue to see an attractive growth profile, market opportunity, and competitive strength, and we are considering options to better crystallize their inherent value.”

When asked by analysts if the company would spin off or sell Viator and TheFork, Teunissen says, “We are not outright sellers... of either asset, at least not in near term. Especially in the case of Viator, there is a strategic importance to Tripadvisor having a significant influence in the company due to the importance of experiences to the Tripadvisor value prop for our consumers.

“But there are some options... we are considering that go further in separating out and in separately financing these businesses. We haven’t got more details yet at this point, and we haven’t yet committed to any particular course of action, but we wanted to give you a heads up that we are considering options over the months and quarters to come.”

The company has not broken out financial results of the Tripadvisor Plus subscription program – which was revamped in September and is currently in beta testing in the United States -  but Kaufer says the changes have helped to “unlock supply” and enable them to get more hotels participating in a Plus offering. 

When asked if the change to a “vacation fund” benefit for subscribers, made to address rate parity concerns from hoteliers, has brought more participation from large chains, Kaufer says because it is a retail model, Plus can now include chain properties through other distribution sources. 

“Because it’s a regular retail rate, it’s not bothering the chains in terms of violating any rate parity. That allows us through other aggregators - not the chains – to be able to represent that we have some of the best properties in the world from the Hiltons and the Marriotts and the IHGs and the Hyatts, because we are getting them through other sources, sometimes directly through channel managers, sometimes through other aggregators,” he says.

“So while I invite all of the chains to participate in the conversations, some will join, some will join later I predict, but the point for our economic model is I don’t actually need them to participate because we have aggregators, including our very public partnership with Trip.com, who has access to a lot of global inventory, and that inventory can show up on our site in a rate parity safe manner.” 

In announcing Kaufer’s upcoming retirement, the company says he co-founded Tripadvisor in 2000 “with the mission to help travelers around the world plan and book the perfect trip. Over the past 21 years, under his leadership, the company has grown into the largest travel site in the world, with employees in over 20 countries and operating localized travel sites in over 40 markets.”

Tripadvisor would not provide details on conversion rates for Plus subscribers, but Kaufer says the company is focused on creating a simple user experience with clear “language on the site explaining the value proposition” and enabling an easy booking flow.

*Steve Kaufer will also be speaking at The Phocuswright Conference on November 16.