Tripadvisor CEO at Skift Global Forum 2024 | Driving Traveler Engagement and Unlocking Experiences

I'm doing really well, Seth. Thanks for joining us.

Oh yeah, yeah, very excited. Yeah, let's come on. Thank you for that. I was genuinely not expecting that. Thank you.

This is one of the great jobs because of the setup, because of the assets, because of the incredible brands, because of the audiences, because of what we can do. It's all so hard to be a business that is going through very different cycles in different parts of our business. You know, the reason I wanted to take this job was because when I thought about TripAdvisor, I thought, who's in a better position to think about putting experiences at the heart of everything they do? And you think about the transformation of the brand TripAdvisor, you think about the growth and now profitability of Viator, you think about The Fork, which is the leading dining platform in Europe, which in itself is an experience. Intra-Europe, people going into Europe, you've got all these incredible assets that allow you to take advantage of exactly where the consumer is going. So we're really excited about that.

Earnings calls are fun. They're a lot of fun. I always look forward to them. You know, last quarter it was fun because we had a chance to report that for the first time in our history, every single one of our segments was contributing profit. Never happened before. $20 million incremental coming from Viator and The Fork from the previous Q2, so that's exciting. And it just shows the diversification that's happening across our portfolio.

300 million, can be more, sometimes less, you know, it's seasonal. Hundreds of millions of users.

We are seeing a healthy travel consumer who continues to show windows staying consistent, length of stay staying consistent, average order values relatively consistent. And you know, the thing is, they are putting experiences at the heart of their budget. So when you talk to travelers about what are you going to do this fall, 86% say that they're going to spend on a travel experience, and then two-thirds of them are saying we're going to do three or more experiences, which is actually up from the fall of last year. So experience is getting stronger and stronger. But the traveler is healthy. The data out there, clearly we're seeing some macro things happening, there's a lot of crosscurrents, some things are going well, some things are going poorly. And there may be some bifurcation in the consumer, the upper end versus the mid and lower end consumer. But by and large, they are preserving this discretionary spend of travel, and even more so because they want to spend on experiences. So when you see normalization happening, it's happening at a slower rate, especially in experiences, than areas like retail or the things I might choose to buy. So that trend is durable. We think it's a new normal.

First of all, it's great to see Steve Kaufer anywhere, anytime. A great human being. We love Steve Kaufer. So it's interesting. You know, I think you mentioned that our core was meta search. And this is one of the common misperceptions about brand TripAdvisor. People think about TripAdvisor Group as brand TripAdvisor, people think about brand TripAdvisor as meta search. And it used to be that that was true because meta search used to be upwards of 90% of our total revenue and more than 100% of our profit. But that hasn't been true for a long time. It's actually an historical, outdated perspective. We have already reduced our dependence on meta search, which we know is under some amount of pressure. That was true from 2015 to 2020, when the pandemic came, you could chart what was happening in terms of the top line, in terms of pressure on margin in that business. There were a few shots at trying to think transformatively, and what we're really excited about is our strategy is just about doing that. You know, you talked about the 300 million people that come to TripAdvisor on a given month, and that's true. I'm a lot less interested in the 300 million than the very large number that are coming and engaging with us. So we are shifting from arbitrage economics to engagement economics. And today, meta search probably is, I don't know, less than a third of our revenue. It's still important, we still see it as relevant. When we talk to the ecosystem, it is a source of high value, relevant traffic. We're doing things to make it even more valuable, to make it convert even better. We're seeing price benefits there, but it's not a growth driver. When we think about transforming brand TripAdvisor, what you want to know is the core. It is about leaning into our heritage, leaning into the trusted brand, which is still one of the most trusted brands in all of travel, leaning into the heritage of content, leveraging our data in new ways, helping people plan their travel, whatever category they are interested in, and then ultimately make it happen. And what you've seen us do over the recent few years is prove that people will book with us for experiences. And now we quietly launched hotel booking in our app. We're leaning into free membership, and we are focused on today. There's 130 million members that come to our site. We are focused on growing that, and we've already said that our KPIs, top of the funnel is stabilizing, but more importantly, we are seeing growth in membership, people who use the app, and that's driving growth in ARPO because the unit economics are better than just pure CPC economics. You start to have economics around booking, you can add on media, and we're just getting started on that journey. It's actually going very well.

When I talk about arbitrage economics, and Steve was largely talking about the core, it used to be that TripAdvisor was a product where one size fits all. A lot of people would come to the site and they would be moved off the site and we would get paid and capture the difference. That's arbitrage economics, and there was very little thought to who was coming, very little thought about the data around them. Engagement economics is the notion that we can still do all that, because it was a very small percentage of the total traffic that was getting monetized this way. We can now understand why somebody's coming to the site. Because we are not a traditional OTA, we don't have to worry about driving them to the bottom of the funnel. We can begin to engage them mid-funnel, have them think about planning. So we've put generative AI at the heart of our planning process, and that's going very well. I've been talking about the KPIs around that. They can then generate itineraries through that product or on their own, and we can immediately make it happen, and you can do it across category. And what you wind up seeing is the unit economics are better. The RPO of somebody who uses that travel planner is 15 times the average user on the site. And so you see RPO rising. And when we look at where we've done the product work around this, which is largely English-speaking North America, which is where we've done most of our product work, and then we roll out internationally, you are seeing the numbers even better where the product has rolled out. And what I'm excited about, and I think people can see it, is that the products and the innovation we're doing look very different than two plus years ago. The app looks very different, it's much more contextual, there's different products and services in there that get you in that planning cycle. And we think that when you look cross-category between experiences, hotels, and other categories to come, you're going to see cross-sell. We're one of the companies that I think is best positioned to see cross-category monetization because when someone books a hotel with us, what we've seen early days, they are three times more likely to book an experience. When somebody books an experience with us, they are far more likely to book a hotel, and the ARPU rises. So early indicators are very strong.

I wouldn't use that language, but what I want it to be is the most trusted source of trip planning available anywhere, because the insights come from real human beings, they're fresh, we can aggregate them, we can synthesize them through AI, but then we can show you the actual human that made that review. And we think the combination of our audience, our brand, and our quality content is a differentiator.

I've said publicly many times, we don't think of meta search as our grower. We don't think about that as the strategy for the future. Our strategy is to make sure we maintain the relevance. I think the ecosystem would like an alternative to Google. I think even Google would like an alternative to Google. That's the conversation that we have all the time. I think, you know, I guess we were all surprised to hear the judicial branch say that Google has been a monopoly and has been acting that way for some time. It was very surprising to all of us in the room. You were shocked, right? You never heard that before. And look, we've always been a proponent of an open web, of a fair and competitive playing field. Obviously Google has leaned into travel, it's had an impact. To many in this room, there's a toll or a Google tax that has to get paid. And I will tell you, when I talk to Google, the conversations are very direct, they're very substantive, they're very reasonable. It's good to see regulators and legislators and different branches start to say this is an issue that we want to address. But we haven't been sitting still. We haven't been waiting. We have been differentiating. What assets do we have that can help us do what Google doesn't want to or Google can't? And leaning into that. And that's what you have to do in the travel ecosystem, because it is one of the most interesting times in the history of our industry for those who really want to lean in and innovate and drive product-led growth and let the product do the work. And that's what we're doing across TripAdvisor Group.

We are so excited. You know, we've been putting AI right into what we're doing in various categories for a very long time, right? So it's not new. But of course, generative AI emerged, and we all saw what a big impact this can have on every company in the world, every industry. And we got right to it to say, what can we do that's different that leverages our assets? I'm really pleased to say that again, when you ask travelers, do you plan to use an AI tool this fall when you go out and travel? A little less than a third of them will say yeah, I'm going to try an AI tool. And then if you ask them the follow-up question, who will you use for that tool? You will likely first hear OpenAI or ChatGPT, because of course we've all been talking about them around the dinner table for a very long time. But the second name that you hear is TripAdvisor. And that is not, you know, it's just from surveys that have been done and are well understood. And that's exciting because we've made it a core part of what we're doing. I think we have assets to leverage across content, data. I think this trust thing, yeah, that's a real thing. If trust becomes relatively more important and more valuable in an AI-led world, do you worry that your AI would ever get it wrong and it would take a five-star hotel and say it's terrible? Of course you always have to worry about these new technologies, but I think we have largely gotten it right. And what I want to say about what we did that was very different, and I use that product that was just flashed all the time, because the thing I care about when I go to a hotel is I want it to be quiet. And so you can have noise level, relatively high, relatively low. But more importantly, you can then click in, it will then take you to the provenance, the source material of the actual recent reviews from the actual human beings that are verified by the best trust and safety team in the world, and tell you who was saying that. And so for me, I will make decisions on that basis. And we have seen that we're getting higher levels of engagement and higher levels of monetization from that product that you showed, actually from both products. And I will also say, I think it's interesting that we're one of the few companies in travel who's actually talking about financial impact that we are getting with our AI product. So we're pretty excited. It's early, we need to scale it, but we're excited about what we're seeing.

It is intentional. We thought very hard about the point that you made, which is when can we be the highest trust? And we've rolled it out to the right number of hotels based on our understanding of what consumers want. So you want to be careful not to roll it out somewhere where you are more likely to have a problem with hallucination. And so that problem gets solved over time, but as a starting point, we are very focused on maintaining that trust.

I think we have a fantastic UGC data set, but as importantly, we have one of the best signals of intent available anywhere in the world. Much of that can come down to closing, particularly in experiences, and we'll have more with hotels to come in other categories. Closing the loop of the transaction, that is coming. And so we've got these incredible assets. I think you won't be surprised to hear that there isn't an AI company that gets talked about that probably hasn't reached out to us about we'd like to do something with you. And there are a number of really interesting conversations. I think we want to approach it slightly differently than some others. I don't think it's about selling our asset to train somebody's LLM. It's actually about bringing our knowledge of the traveler and the ecosystem, about what we could do differently, about bringing not only data and content but also our supply, and thinking about executing in a fundamentally different way. I think there will be tremendous value created there, and we will make sure that we get our fair share. In the meantime, we're blocking AI crawlers. We're doing quite a bit of blocking every single day of those who we don't want to be taking our precious content.

It's always been about trust. And you know, I've been a student of content throughout history, we're talking about this going back to the very beginning of dawn to the present day where things might go. And you know, content has always been about trust. Where does it come from? Can I trust it? Can I rely on it to reduce my risk on a particular decision? Can I rely on it to, when I get to a destination or a hotel experience, restaurant, it's going to be what I saw in the content source that I used? Steve Kaufer figured out that those glossy brochures didn't make a lot of sense, and he was the first to really come up with a plan to democratize travel information through UGC. We are leaning into that heritage in a very, very big way. I think trust is at the center of everything we do. I think AI will actually wind up being a very good thing for our company because provenance and brand and assets at scale will be highly valued. We will get value for that. And I think we need to be open-minded and curious as we innovate. We shouldn't imagine that it all has to be on our own and operated platforms. We shouldn't imagine that it's a particular product experience that we've imagined, because consumers will always show you a path to a new place. I find it interesting. Great content always adapts to new technologies. It always finds distribution channels to audiences. And then the question is, how do you think about monetization and business model? What I am most excited about is what we've done with our business model. We have an incredible business at Viator where we are one of the large and growing players in the field. Experience is going nowhere. We've got a very strong dining platform in Europe, and we are diversifying our monetization streams on that core TripAdvisor brand. And so I think our future is very promising.

I think we've got multiple growth drivers. We've got Viator and The Fork, which are both double-digit growers. We've got TripAdvisor, which we've talked about meta, and we think that's interesting for the future, but we are showing that we can drive media growth, we can basically create new marketplaces that consumers want as long as we guide them in a trusted way. I think we'll have multiple aspects of our business that are growing both top and bottom line.

Right now, we grew 14% constant currency growth last quarter very profitably. I think they did $10 million more than they had done in Q2 2023. And we're constantly talking about how much growth, how much profit, and what do we want to do with market share. And we're very excited about all three. I think there is so much headroom in this category. It is just getting started. I love our position because not only the brands and the trust, the combination of broad TripAdvisor, deep Viator, we are just getting started on thinking about how those two businesses really come together in a more meaningful way. The fact that we are serving more third parties than anybody, that we have the largest supply than anybody in the world, this sort of notion of B2B and B2C fitting well together, I think is really interesting. We have put a focus on unit economics that we've talked about are progressing nicely. We have seen cohorts shifting in a positive direction, how quickly they repeat. That's at Viator. So you're seeing positive unit economics and progression. That's why we're more profitable this year than we were last, why we will be more profitable on a full-year basis than we were last year. And we were profitable a full year ahead of schedule in 2023. Our plan was for 2024. And so I want to give the team a lot of credit for making that happen. And we are building on that. And I just think there is so much headroom in this space because of the consumer. And we, I would say, we're probably so focused on how we acquired consumers into this space and so focused on making sure that we brought in new consumers, we weren't thinking about what are the things we're going to do to drive repeat, how do we want to lean into our R&D agenda and really get our app to be the best experiences app available anywhere. It's just getting started, and already we're starting from a very strong position. So we will reinvest in that business. And then I just got to give a plug for The Fork, who we don't get to talk about very much. Before I got here, The Fork, which is the dining leader in Europe, because you don't have Yelp, you don't have Resy, you don't have OpenTable in Europe. You have TripAdvisor and The Fork. They were burning cash in a big way in the three years before I arrived. I looked at that business and I said, you know, the growth is nice, this can be a profitable business. And we leaned into the unit economics.

You know, our focus is Europe. We think there is so much headroom in Europe that that's not the first thing that we would choose to do. We think we can grow double-digit and profitability very, very well without even having to think about exiting Europe. And that's a good position to be in.

No, not at all, actually. And it's so interesting, it's so different than anything TripAdvisor has done in the past. And I have to say, the proof is not in what I say here, it's actually what we're hearing from our OTA partners, what we're hearing from hotels who look at it and say, this is actually very different. We see it as a source of new incremental demand because it is in our app, because it is for members, because we are rewarding transactions rather than trying to do discounts. They actually want to do more with us. We can do more direct, we can do first-time booking, and we know when somebody books a hotel for the first time, they're more likely to come back and do it again. So the signals are very, very positive. We were excited to partner on this because it allowed us to get to market very quickly. Somebody else, HTS, has done a good job to bring technology and supply. There are some things that we haven't announced that will make our availability and pricing even better.

We make really good unit economics. The economics are very attractive relative to meta. But as importantly, we're not trying to compete with meta. These two things can be totally compatible. So if you think about it, to come back to your question about hotels, the hotel category is vibrant, and we think we've identified ways we can drive growth and profitability in the category that is different than saying we're going to drive growth and profitability in meta. And this is a good indicator of what's to come. Just getting started. The early metrics are really, really strong, and yes, the unit economics are terrific.

Thank you.