Tripadvisor reports rising demand in Q1, progress on Plus subscription product

Tripadvisor says “the clouds have started to part” in the first quarter of this year, as expanded availability of vacciness is driving demand for leisure travel on its platform, particularly in the United States.

In a letter to shareholders reporting its Q1 financial results, the company says key metrics were slightly better than expected. 

Revenue came in at $123 million in the first quarter, down 56% year-over-year and at about 33% of 2019’s comparable period.

Net loss in the first quarter was $80 million and adjusted EBITDA was negative $26 million.

The letter states: “Our Q1 results reflect ongoing unevenness in leisure travel’s recovery path. ... Sequential monthly progress was U.S-driven, as vaccinations led consumers back to planning leisure travel. Europe lagged due to lockdowns, but demand picked up in April, and we are optimistic for broadened, international recovery as vaccination rates improve.”

Tripadvisor Plus

Since announcing the direct-to-consumer Tripadvisor Plus subscription service last fall, the product has been available in beta in select U.S. markets. Now the company says it expects to move into a full U.S. launch within the next few months.

While the company is not sharing subscriber numbers, in a call with analysts to discuss the results CEO Steve Kaufer says he is pleased with the early results - with the average subscriber saving more than $300 on their trip and several instances every day when a subscriber saves more than $1000 - and he is getting “more bullish” on the opportunity. 

“This is really early days in a great new product category and success is measured in years, not months, and that’s the way we are approaching it,” he says. 

When asked about the response from hoteliers, Kaufer says the company is working with aggregators, independent hotels and chains, although he says there has been “some push back from some chains.”

“They want to make sure their properties... get their fair share of bookings from this product. Others chains are a little bit more nervous about how we are showing the rate. We have taken that as great sort of constructive feedback, and we are addressing it. So we are in conversations... about what it will take to make them to feel very comfortable about joining the program,” he says.

“And we want to make sure we have participation from as many [chains] as we can because some of those chains have the absolute best properties around. We want every property to be able to join the program. [But] we don’t need need every property, we just need a few dozen in all the geographies people are traveling to.” 

As it looks to build the Tripadvisor Plus product, the company says it is exploring partnerships with car rental companies, digital services, credit cards and others.

Explaining the opportunity with credit cards further, Kaufer says, “The first could be on the part of the more higher end credit card that carries some interesting travel benefits already or maybe a particular financial institution wants to break into that pretty lucrative category of travel so one of the travel rewards with the credit card would be a subscription to Tripadvisor Plus... Another option certainly being explored with other financial institutions is to simply include a discount perhaps or a free trial... with auto renew on... we think that that renewal will come rather simply.” 

Financial details

Tripadvisor’s monthly users on its branded websites crept up slightly each month of the first quarter – reaching 53%, 56% and 58% of 2019’s comparable periods respectively through January, February and March. In the U.S. in March, monthly unique users neared 80% of 2019 levels, while outside the U.S. the percentage was about 50% of 2019 levels. 

Operating expenses in the first quarter were $207 million, down 32% year-over-year, with reductions coming in all categories including a 42% year-over-year drop in selling and marketing costs to $73 million in the first quarter. 

Workforce-related costs are also down as the company ended the quarter with just over 2,500 employees, 34% fewer than last year at this time, and it says the majority of 2020 fixed cost savings should persist throughout this year. 

“We believe we are advantageously positioned for the rebound and beyond. We will continue to focus on factors within our control - serving customers, leveraging competitive advantages and laying the foundation for long-term, diverse growth,” the letter states.