Viator continues to
become a more valuable asset for Tripadvisor.
In the second quarter this year Viator brought in $216
million in revenue – up from $136 million in Q2 2022 – and accounted for 43% of
Tripadvisor’s total revenue.
That’s a notable change from one year
ago when Viator accounted for just 32% of revenue. Prior to Q2 2022, Tripadvisor
did not provide a breakdown of revenue for Viator.
In a call with financial analysts Thursday morning to
discuss the results, Tripadvisor CEO Matt Goldberg acknowledged Viator is the
company’s “high growth business,” with gross booking value of $1.1 billion in
Q2, up 40% year-over-year.
Goldberg said much of that growth is coming from repeat
bookers, which he said gives them confidence in Viator’s “unit economics and
margin potential over time.”
“We have a tremendous opportunity to drive awareness for the
OTA category in experiences and to build our brand alongside it,” Goldberg said.
“We believe we can shift travel behavior from an often
disjointed booking experience to Viator, a single convenient place to see, sort
and book experiences. … Since the launch of our brand advertising last fall we
are seeing growth in awareness and related metrics like direct traffic and
branded searches that stand as a clear example of our decision to build scale
and long term customer economics despite delayed profitability.”
Goldberg also said the Viator will work to enhance the
experience for both travelers and operators, with improvements to the mobile
app and checkout process in development. Viator president Ben Drew discussed similar ideas when he spoke at Phocuswright Europe in Barcelona in June.
Optimistic outlook for generative AI
Another bright spot mentioned by Goldberg is from the
company’s work with generative AI, which he said they are executing “with urgency
… across our business.”
Last month Tripadvisor added a travel itinerary generator
that is powered by OpenAI’s generative artificial intelligence technology.
The product,
currently in public beta and accessible via desktop and mobile web to users in
the United States, analyzes Tripadvisor’s more than one billion user-generated
reviews and opinions to create day-by-day itineraries based on the user’s input
of a destination, travel dates, who they are traveling with and the types of
activities they are interested in.
“Our early metrics are promising with user satisfaction
scores already approaching nearly 70% positive feedback on individual recommendations
and meaningful conversions to saved trips,” Goldberg said.
“The completion rate at which travelers are providing input
to generate an itinerary is approximately two times higher than our historical average
for other similar structured inputs. And travelers are signing in as members to
engage with this feature at approximately four times our site-wide average … And
this is only the beginning. Going forward we have a robust product roadmap that
includes extending these features to our mobile app in both iOS and android and
integrating hotel and tour recommendations.”
Additional financial results
The Tripadvisor Core segment – which includes its hotel
metasearch, Tripadvisor experiences and dining and other offerings such as
cruises, rental, flights and cars – was nearly flat year over year for revenue,
at $279 million compared with $274 million in 2022. Within the core segment, revenue
from experiences and dining was $50 million, up 43% year over year, which helped
to offset a decline in branded hotels revenue of 7%. And Tripadvisor reports
hotel meta revenue was down in the low single digits in the United States and
Asia Pacific and down even more in Europe.
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Tripadvisor chief financial officer Mike Noonan told
analysts the U.S. and APAC performed as expected but in Europe, “… it was this
more unusual pattern … and it really did stem from a very delayed and more
muted seasonal pattern. The season peak season tends to be more paid-traffic
driven. What we saw was just a more much more competitive environment in those
paid channels.”
And Goldberg acknowledged meta is “not a growth driver,” but
one part of the overall strategy for Tripadvisor, that could also include new types
of marketplaces in the future.
“We believe that as we leverage the product innovation we’ve
been doing and as we really think about how we deliver that world class guidance
experience, we can then deliver that user into a set of revenue streams which
will include our media business, which is out performing the market today … our meta business, which we believe can
sustained over a long period although we understand it is not a growth driver. And
through our marketplace business which … we’ve already proven what we can do to
fuel growth at Viator, and we think we can match our demand with supply in
multiple categories over time.”
Revenue for TheFork, a restaurant booking platform primarily
used in Europe, was $38 million in Q2, up 19% year over year.
Total revenue for Tripadvisor in the second quarter came in
at $494 million, up 18% year over year, and adjusted EBITDA was $90 million,
18% of revenue and down 17% compared with Q2 2022.
Tripadvisor’s selling and marketing costs were $270 million
for the second quarter. That’s an increase of 24% year over year and 55% of Q2
revenue, up slightly compared with 2022, which the company said was “primarily
due to an increase in Viator marketing costs, which includes brand spend.”
Tripadvisor is also implementing cost-savings measures, including a reduction in head count,
primarily within the Tripadvisor Core segment that should be completed by the end
of this year and that it expects will result in $35 million in annualized cost
savings.
“We have initiated cost savings actions that will provide
flexibility in prioritizing our strategic investment as we finish 2023, plan
for 2024 and bolster our path to our long-term financial objectives,” Noonan
said.