Good day, everyone. Thank you for standing by, and welcome to the TripAdvisor First Quarter 2022 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the Q&A, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now hand the conference over to your speaker today, Ms. Angela White. Thank you. Ma'am, please go ahead.
Thank you, Lovely. Good morning, everyone, and welcome to TripAdvisor's first quarter 2022 financial results call. Joining me today are Steve Kaufer, CEO, and Ernst Teunissen, CFO, and Chief Executive, Viator, TheFork and Cruise Critic. Last night after market close, we distributed and filed our earnings release and made available our shareholder letter on our investor relations website. In the release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measure discussed on this call. Also, on our IR website, you'll find supplemental financial information, which also includes reconciliations of certain non-GAAP financial measures discussed on this call, as well as other metrics. Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent management's views as of today, May 5th, 2022.
TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements. With that, I'll turn the call over to Steve.
Thank you, Angela, and good morning, everyone. We just reported a great quarter and a solid start to the year. We are certainly seeing benefits from the recovery, and I'm pleased with our continued execution. I believe that TripAdvisor is uniquely positioned as the world opens up again, and I'm really proud of the role we play in helping travelers. For so many, this brand is about trusted advice, guidance, a community, a spirit of adventure. With the travel industry in recovery mode, we're really excited about the year ahead. Another reason for our excitement relates to the other announcement we made last night. Matt Goldberg will join us as CEO starting in July.
As you read in last night's release, his experience across multiple industries in travel and digital media and advertising, as well as his experience in strategy and operations, make him a really great fit for TripAdvisor. We look forward to introducing him to you on the next call, and in the meantime, I personally look forward to bringing him up to speed on our amazing business and helping him to hit the ground running. On behalf of the entire TripAdvisor family, we welcome Matt to TripAdvisor. With that, let me turn it over to Ernst before we take your questions.
Thanks, Steve, and thanks to everyone for joining. I wanted to start off today by acknowledging that this will be Steve's last earnings call as our CEO. Most of you know that Steve founded TripAdvisor in 2000 above a pizza shop in Needham, Massachusetts. Fast-forward more than two decades later, and TripAdvisor has grown to be an iconic brand and the most trusted travel website in the world, helping hundreds of millions of people plan and book their perfect trip. TripAdvisor has also proven to be an important economic enabler, helping millions of small businesses thrive in the hospitality industry around the world. Thank you, Steve, on behalf of all TripAdvisor employees for your leadership, your integrity, your optimism, your passion. It's been such a pleasure and honor to work with you. Now to our quarterly financial update.
We are very pleased to report our 2020 first quarter results. This is indeed a good start to the 2022 fiscal year. As we exit the quarter, we saw sure signs that we have passed the Omicron headwinds of January. Our revenue was 70% of 2019 levels for the quarter, but we exited March at over 80% of 2019, and we improved further in April. Our Hotels, Media, and Platform business outperformed our internal expectations for the quarter. Our Experiences and Dining business revenue crossed over 115% of 2019 levels in Q1, with booking levels ahead of revenue and exited the quarter and into April at an even higher rate. Experiences in particular is growing very rapidly and ahead of schedule.
We believe this reflects our strong position in our experiences in dining marketplaces. This quarter gives us confidence in the transition of leisure travel back to full recovery and the benefit we expect to derive from that as TripAdvisor. We are also confident that the value we provide to our customers and partners has us well-positioned as we move forward with our 2022 operating plan and our key investment areas, which should propel our future growth. With that, let's jump into Q&A.
As a reminder, to ask a question, you will need to press star then the number one on your telephone keypad. If your question has been answered and you'd like to remove yourself from the queue, press the pound key. Our first question comes from the line of Richard Clarke from Bernstein. Your line's now open.
Good morning, and just to reiterate Ernst's kind words, Steve, we're certainly missing having you on the other end of the call and answering our questions, and good luck going forward.
Thank you.
Maybe if I can just start off with the CEO appointment, and maybe you can highlight your thoughts of what areas of his past expertise were, you know, you feel are gonna be most beneficial to TripAdvisor, you know, the company you founded. It seems like he's come from a sort of marketing background. You know, is that kind of the key skill that you were thinking about in looking for the CEO of someone that could sort of pursue those- Those display marketing ambitions. I know back in 2018, you talked about doubling those revenues. Is it to sort of follow through on some of those ambitions?
Thanks Richard, for the kind words and the question. Great question. I'm really happy with Matt as our selection. Can't wait for him to start and feel great about handing the reins over to him. What I really came to love and appreciated was really a number of things. First, I'd cite kind of the breadth of experience, not just at different companies, but in different roles. Like in one guy you've got biz dev, you've got strategy, significant M&A. He's been a COO, like, operated different parts of the business, EVP of North America at The Trade Desk, and of course, being CEO at Lonely Planet. When you've had a lot of different roles, at least in my opinion, you get to see all different aspects of the business up close.
It's just, the perspective that that provides, I think is really helpful, for the top job. Second, I'd say being CEO, actually, in this case at Lonely Planet, you just have to make a ton of trade-offs while being responsible for the overall growth. You know, you can imagine, we talked to a number of very accomplished individuals that had risen to do very well in their respective departments at some, you know, very big companies. I felt Matt's ability to see the whole picture was actually more valuable than, you know, a star player, an A player that had either just done sales or just done product. Again, there are lots of different ways to craft what a CEO is gonna be great at, but I like the breadth.
TripAdvisor is a complex business, and having someone at the helm who has had the experience of running the company before, it's just great not to have to kind of teach that on the job. Let's see. Third, he's got a real focus on building great teams, the people, the organization. In all of his jobs, he's paid a lot of attention to that. We were certainly convinced that, for a business as complex as TripAdvisor, building the right teams to be able to deliver, and getting the teams to work as well together as they can, it all makes for that overall success. Finally, he knows at least in my opinion what it's like to be a change agent and really help transform a business.
I just love that type of background. You know, TripAdvisor isn't a startup anymore, but at the same time, our goal isn't to kind of eke out a 5% or 10% growth each year, optimizing different parts of the business. Our opportunity is so much more than that. We have a huge TAM in front of us, a huge number of assets. That's our belief that as he did at Lonely Planet, be able to take an existing company, reshape it to meet the needs of our future customers. I have a ton of confidence in. Then when you actually go down and look through his resume, you see remarkable accomplishments at each and every job that talked about how he delivered the goods. You know, in our view, it's not just hand-waving talk about things, it's delivering results at very successful companies.
Thanks for that, Steve. I've heard lots of great color there. Maybe I can ask just one quick follow-up. One of your peers was quite bullish about the impact of the Digital Markets Act coming in Europe. I was just wondering what your perspectives are and whether you could see TripAdvisor actually benefiting from the changes, the regulatory environment that's happening in Europe.
Yes, I see a number of definite potential benefits. We kind of got to see how it all shakes out and when the appeals are done and all the rest of it. As I've stated many times before, it's hard to or we choose not to craft a strategy around that versus take it as a tailwind if it emerges as good for us.
Great. Thanks very much.
Thank you.
Our next question comes from the line of Naved Khan from Truist Securities. Your line is now open.
Great. Thank you. Two questions, please. One on the HM&P side, and within that, if I look at the different pieces, auctions versus display versus Hotel B2B, and I compare the performance versus what the trends are for the OTAs, I think you guys are a little bit lagged in terms of recovery. I think with Booking actually talked about room nights getting to a positive and like 7%-10% in April. I wonder what the disconnect might be, and if you could go into that. Is it trip length or is it business travelers still not coming back, or is it Asia? Any color there would be helpful. The second question I have is on the E&D side, how much of the acceleration or the really strong growth you're seeing here is driven by conversions versus increased traffic? Just any color would be helpful here as well.
Hey, Naved, this is Ernst. I'll kick off and Steve will fill in, I'm sure. On HM&P, o ur total HM&P segment recovered 63% in Q1. That was 76% in March, and then it was over 80% in April. If I unpack that, the business that has been recovering somewhat slower than the rest has been our hotel subscription business, our business to business to hotels and to chains, as well as our display. It's moved a little slower than the average. It's partly because we're rebuilding our sales force at scale. It's also partly because this sort of up-funnel, relatively up-funnel advertising by hotels has been lagging. It's been improving very, very solidly. It's below the pace of the general hotel recovery.
If you look at our auction obviously suffered in January but then recovered quickly. Our auction was at 76% of 2019 in March, improved very substantially then in April and was largely that. If you compare that to some of the OTAs, I think one difference is our auction is almost purely hotel-based, where some of the OTAs are reporting numbers which include alternative lodging, which is not included with us. We believe alternative lodging is recovering faster than hotel. That's one component of it. Of course, we have always skewed to international travel, which we've seen, which may impact that as well. We have seen very robust recovery in the United States. Those are some of the puts and takes. Steve, I don't know if you want to add anything to that.
E&D, yeah, phenomenal progress in E&D, both in restaurants and in experiences, but particularly experiences. E&D revenue above 130% of 2019 in April. Experiences more than 140% above 2019 in April as our estimated revenue. Doing phenomenally well, experiences very U.S.-based in 2021, but we've seen very robust recovery in Europe as well. We called out in the shareholder letter some great factoids in April. Actually, Europe as a destination was as large as the U.S. as a destination for experiences. That is awesome, very different from last year. We also saw that U.S. travelers going to Europe and doing experiences was above 2019 levels as well.
The business is just doing very well. It is partly improvements in conversion that we've made on the site, as you were alluding to, Naved. It's also being very successful at attracting more traffic both in paid channels and in free channels. Most of the indicators in this business are just doing superbly, and the management team has done an awesome job in making us grow. Restaurants was already relatively strong even in 2020 and 2021, but we keep making progress there as well. Very pleased with that as well. If you take the two businesses combined, experiences and dining, it's really the fast grower in our portfolio at the moment and is exceeding our expectations in this first quarter in April versus what we thought we would do, and we were already quite ambitious with those businesses. All around very pleased with that performance.
Thanks. That's very helpful and, wish you all the best, Steve.
Thank you.
Our next question comes from the line of Jed Kelly with Oppenheimer. Your line is now open.
Hey. Great. Great, thanks for taking my questions. Just unpacking some of the strength you're seeing in experiences and as we think about you unlocking more value, how would you think about a breakdown between, you know, the experiences coming through the Viator brand and then the experiences that are being booked on TripAdvisor? If you were to potentially IPO Viator, would those experiences booked on brand TripAdvisor, would those actually that revenue go over to Viator? How should we think about that?
Yeah, excellent question. Our shareholder letter actually has some explanation of what that would look like on a more stand-alone basis. Let me take you through that. Our experiences revenue consists of the Viator point of sale, the TripAdvisor point of sale, and then we have third-party integrations. All of that revenue, if you were to separate out Viator, would be Viator revenue. For instance, the TripAdvisor point of sale, all the revenue there would be Viator revenue. Viator is the merchant of record for TripAdvisor experiences, basically delivers the execution of all of that for TripAdvisor.
The Viator point of sale is by far the largest point of sale, TripAdvisor second, and the third parties sort of third in that. If you were to separate them out, we would recognize all the revenue of the TripAdvisor point of sale on Viator, as I just said, and we would cross-charge an affiliate marketing fee to Viator for that traffic. The revenue would sit with Viator. That's where it was. Like, a part of your question was, hey, where are you in your thinking there for experiences?
We said in previous quarters that for both Viator and TheFork, we're considering ways of structuring it slightly different from today and carving them out more. We said last quarter that we had filed confidentially with the SEC for a sub-IPO for Viator. The work's continuing. In the first quarter, obviously, we've had, you know, an IPO market backdrop that is choppy. But we're continuing on our path of looking at all the options, including a sub-IPO for Viator. We're just very pleased with how the business is doing in the meantime.
Great. That's helpful. Just one more. As we think about your direct marketing spend over the balance of 2022, how should we think about your direct marketing relative to your 2019 levels going forward? Thank you.
Yeah. That's different for HM&P and E&D. HM&P for our auction in particular, we have not changed our ROAS levels or return on advertising spend levels compared to 2019. There, we have been successful at growing paid marketing largely because our CPCs have been very favorable. At higher CPCs and the same return on ad spend, you can buy more traffic. That's been the impact there, and we've seen a relative shift in 2021 and into this first quarter within our hotel business to more paid as a result of that.
On the E&D side, particularly on experiences, slightly different, we have actually pushed harder on marketing than we did in 2019, in 2021, and now in the first quarter as well. We are working off of pretty good and consistent multi-year historical data on cohorts on lifetime value of our customers. We have compared to 2019, where we were investing at relatively near-term returns, we've pushed that, you know, beyond the one-year payback period on the customers, but still profitable over a multi-year period. That has been very effective for us in increasing the volume we can get from experiences.
Combined with that, what we have been able to do is with a very, very strong focus on improvements that we have been driving through the pandemic, particularly on our Viator point of sale, we have increased our conversion rates. We've increased our repeat rates. The cohorts of customers that we acquired in 2021, even at these elevated marketing expenditures, have actually performed better than the cohorts of 2018, 2019 in terms of their repeat profile in the quarters after. That is very, very encouraging. It means that not only were we right in spending what we were spending on acquiring these cohorts, actually, the cohorts have outperformed how we thought they were.
Improving conversion, improving repeat, and more marketing spend, but also diversifying our marketing channels beyond Google has been an important focus. Lastly, the app. We've spent considerable amount of effort in improving our app on Viator. Still a way to go, but we've really seen the results in traffic to the app and revenue we generate from the app. Those are some of the core drivers of what's going on in our business.
Thank you. Good luck, Steve.
Thank you.
Our next question comes from the line of Mario Lu with Barclays. Your line's now open.
Great. Thanks for taking the questions. Steve, congrats on finding your successor. Matt seems like a perfect fit. The first question is on Viator and TheFork. Appreciate the additional P&L detail in the shareholder letter. It looks like both businesses, you know, are operating negatively in terms of profits today. Are there examples where you see pockets of profitability, say, in more mature markets? Just trying to get a sense of what long-term margins could look like for these businesses. Separately, you know, TripAdvisor Plus , there wasn't really a mention of it this quarter. Just wondering if there's any updates there. Is it no longer a focus for the company to drive future growth? Thanks.
Hey, Mario. I'll take the first question, and Steve will take the second. Yes, we are investing in these businesses. They are, as we say, loss-making on a standalone basis if you were to break them out. But we're investing significantly in growth in both those assets. That is people cost, driving the product, in the case of TheFork, driving restaurant acquisition, with the sales force. Importantly, we're investing marketing dollars against an LTV concept. I have been talking about experiences. If you look at dining, at our TheFork business, you see the same thing. We have significant repeat in that business, and therefore value in a customer that we acquire.
As the business is growing, you'll see that we're operating on a marketing basis at a loss for future gains, which is all going to pay back later. I've said in the past that we expect for this segment, E&D, sort of long-term margins to be, you know, mid- to high-20s % EBITDA margin. That applies to these individual businesses in some roughly similar measure. The gross margin, for instance, of TheFork and of Viator are very robust, you know, 90%-ish gross margin if you take out cost of sales out of Viator, for instance.
A very robust underlying gross margin profile, currently spending on marketing and people costs to drive the growth. But long term, you know, tremendous amount of leverage in that business. These businesses, take Viator, it's an OTA business with very good take rates, you know, mid-20s type of commissions that we get from operators, which is a very robust commission to work with, is favorable compared to the hotel industry, for instance. We think long term, that business as that business scales, it can have very attractive margins indeed.
Thanks, Ernst. Thanks, Mario, for the question. On TripAdvisor Plus, it absolutely remains a focus for us. You know, we acknowledged before that we got out ahead of ourselves in terms of talking about it with such excitement before we had actually proven the product market fit. We had to pull back, and let's just say that while we continue to test and iterate, you should expect us to be quieter on the topic until we're ready to kind of share the results. There's really no doubt in my mind that the concept of a travel subscription, be it surrounding discounts or extra services, there's a natural fit in the marketplace, the set of travelers that we serve. There's lots of different ways to go about that product.
To be crystal clear, it is an ongoing effort at TripAdvisor. We have plans, we release new things, we sign new deals. It is an ongoing effort and, you know, we'll share in a more judicious manner going forward.
Great. Thank you both.
Our next question comes from the line of James Lee with Mizuho Securities. Your line is now open.
Great. Thanks for taking my questions. Steve, thank you for answering our question for many quarters. We wish you all the best. Now, I got two questions here. One, maybe a little bit follow-on to Plus to what you talked about, you know, last quarter. Are you thinking about maybe making adjustment to your offering in light of the inflationary environment, how that may impact consumer spending? I think you mentioned last quarter you were trying to resolve some of the frictions for consumer hesitating for the membership fee. And also you were talking about last quarter assessing kind of between instant discount versus rebate, and just wondering, have any update on that. And my second question is regarding the auctions business.
You know, when you're looking at your customer segments specifically, are you seeing OTA customer coming back more aggressive versus hotel direct booking? Wondering, I mean, the color there. Also, you know, maybe Ernst you can parse out looking at the revenue recovery for the Viator business. Can you kind of break out between volume versus pricing growth? Thanks.
Sure. Thanks, James. I'll touch upon Plus briefly. We continue to iterate on both the pieces of the value proposition that we're offering to travelers, as well as different ways that we think we can sell it on the site and to our customers, as well as through distribution channels. Those are all ongoing. We're keeping our options open in terms of discounts or rebates. There's pros and cons to each. We generally prefer the discount model, but I'm not saying that the rebates are out of the question. On auction, I will turn it over to Ernst.
Yeah, we've seen in the recovery, we saw it last year, and we've seen it in Q1, that the pricing levels, our CPCs effectively have recovered ahead of volume. That has been a very clear trend and continues to be so right now. So if you look at our revenue, you know, healthy CPCs, volumes are still below 2019 levels. That's an indication that actually our auction is functioning very well, that our partners, both OTAs and hotels, are bidding on our platform, and we have a very healthy auction going on with very good price realization. But volumes still behind in the recovery.
Ernst, any distinct difference in terms of growth profile OTA versus hotel direct booking? Any segment that's growing faster than the other?
No real trends to call out.
Okay, great. Thanks.
Our next question comes from the line of Deepak Mathivanan with Wolfe Research. Your line is now open.
Thanks. This is Zach on for Deepak. Just quickly on the 2Q guide, just hoping to get a little more color on the margins. You know, revenues are approaching back to 2019 levels, a little below, but margins are kind of expected to be about 10 points below. You've mentioned before reinvestment, reinvesting a lot of the cost savings back into the business, particularly on the E&D side. Given the strong recovery over the past couple of months, are you seeing incremental opportunities to reinvest?
Is this primarily marketing, or is there any kind of anything else that we should be aware of? Second, just on the B2B business, you know, you've given color that, you know, the recovery kind of lags other areas, but are you seeing any kind of green shoots here? Should we expect this to kind of pick up a little bit in the back half, or is this kind of more of a steady kind of recovery over the course of the year? Thanks.
Yes. Thanks, Zach, thanks for that. With regards to Q2 and sort of margin, yes, we've indeed guided for Q2 to an overall consolidated adjusted EBITDA margin of approximately 20% of revenue. We are investing in E&D significantly, that is marketing expenditure and building up some new capabilities in those areas as well, oriented towards growth in 2022, but also importantly, growth beyond there. We've said in the past, we've saved during the pandemic about $200 million of fixed cost. We're investing some of that back, but the majority, you know, of that is sticking.
Some is going back to inflation of cost, some is going to investment, particularly in E&D, but the majority of it is staying on overall in the business. We have increased our marketing expenditures, specifically in E&D. That's led us to give the guidance for both segments for the whole year, is to say that we're expecting significantly recovering EBITDA margins, both for HM&P and for E&D versus 2021 in the full year of 2022. For both segments, we don't expect to be quite yet at the EBITDA levels that we were in 2019. Importantly, improving in both segments.
B2B issues?
Oh, sorry.
Great. Thanks. On the B2B business.
On the B2B, on the B2B business. I think there's a couple of factors going on there. For our media business, for which we are very ambitious, and some of the questions were asked before about our new CEO and his capabilities, media is a business that is a historical strong suit for TripAdvisor and has significant potential going forward. But it's been slower to recover than other parts of the business during the pandemic and now into the quarter. It's upper funnel marketing and that's been slower to come back. But we expect that to eventually recover and grow as we go back.
On the direct to hotels business, the subscription business, you know, being found on TripAdvisor, advertising on TripAdvisor for those businesses on a subscription basis, that business has been robust in the pandemic, because it's a subscription business, but now that the market is coming back strongly in March, April, we see that business improving, but not as much as other parts of the business. That's two factors. One is we are rebuilding the sales force really out of the pandemic to be able to sell new subscriptions.
That has a bit of a lag time, because you bring on new salespeople, and they have to be trained up, and then they have to start selling, but that, we believe by the end of the year, we will have the sales force replenished and firing on all cylinders. That is a strong business that we have high ambition for going forward as well. Both our Hotel B2B business and our media business were double-digit growers from 2018 to 2019, significantly impacted by the pandemic, but strong businesses, and we believe when they're back on the path, they will continue to be growers for us.
Very helpful. Thank you. Best of luck to you both.
Thank you.
Our next question comes from the line of John Colantuoni with Jefferies. Your line is now open.
Hey, thanks for taking my questions. Wanted to ask about sales and marketing disclosure for the E&D segment. Can you just give a bit more detail on how much of that line is, you know, the kind of the cost of boots on the ground versus traffic acquisition costs? You know, given a lot of the business partners probably turned over during the pandemic because of financial strain. You know, and I guess is the step up in sales and marketing the result of, you know, having to get your, you know, try to get your sales force, you know, going back door to door to sign on new customers? You know, and if so, you know, how do you see that dynamic impacting profitability for the segment over the course of the travel recovery?
I'm also just curious if you have any initiatives to kind of build a more robust self-serve offering to accelerate the margin improvement over time.
Yeah, great questions. It's different for TheFork and for Viator. TheFork, the sales and marketing expenditure leans to sales force acquiring new restaurants, signing up new restaurants. The business has lost some restaurants in the pandemic and has to replenish some of it, but it is not a huge factor. We're coming from behind from where we were in 2019 in the number of restaurants, but it's not a dramatic difference. But we have ambitious goals to continue to grow our restaurant base, you know, new countries, where we were relatively under indexed, like Germany and U.K., where we made an acquisition just before the pandemic.
Also in existing markets, getting deeper into, you know, tertiary, quaternary cities. There's still growth to be had there. Some recovery from lost restaurants, but, you know, not that dramatic. On Viator, it's different. There, the mix is very much skewed to marketing, to, you know, non-payroll external marketing expenditure, both on Google and other online channels. More variable in nature, in that particular part of the business. There, we have not seen a major impact of loss of supply in the pandemic. Acquiring more supply is not a huge priority. We have a lot of supply.
We spent a lot of the 2017, 2018, 2019 years building our supply base very aggressively, and we have a supply base second to none, and we're pretty happy with what we have. We're always adding, of course, but it's not a big part of our cost growth. Our cost growth in Viator is very focused on the front end, on improving our front end points of sales and in marketing.
Great. Sounds like Experiences, you know, benefited a bit from continued strength in North America. You know, as Europe continues to improve, can you just talk about your supply strength in that region and, you know, how you see the European travel recovery impacting that business? Thanks.
Yeah. Pre-pandemic, actually, Europe as a destination for Experiences was larger than the US as a destination. This has historically been very strong. From a point of sale perspective, we have been much stronger in the U.S., of English-speaking in general, U.S., U.K., Australia. But from a destination perspective, Europe has always been very, very strong and very important for us. That changed in the pandemic in 2021. The U.S. as a destination was really important to us. But as I said in my opening remarks or to answer one of the questions, actually, in April, Europe as a destination crossed over again and was actually at par with or a little larger, more recently than the U.S. as a destination for Experiences.
As I also said, U.S. travelers going to Europe, which was one of them, was historically an important part of our Experiences business, actually is above 2019 as well from a sales perspective in April. Europe is coming back very strongly, and Europe is an important destination market for us. We still have room to grow in Europe as a point of sale, and we're making good progress there and have ambitions going forward for 2022 and beyond to make Europe as a point of sale even more important to us. As a destination, it's always been up there.
Thanks for the details. Appreciate it.
Our next question comes from the line of Lloyd Walmsley with UBS. Your line is now open.
Thanks. Wondering if you can just talk a little bit about how Matt is thinking about reviewing the strategy. You know, anything you can share on how, you know, from a process standpoint, under new leadership, what that might look like, how the board's thinking about that. A lot of, you know, a lot of different irons in the fire. Just wondering if there's anything from a process standpoint you can help us with.
Excellent question. I can't help you too much as he hasn't really started yet. Obviously, with our onboarding procedures, we're getting him up to speed on the business. I can share that he's very focused on identifying, clarifying, improving, focusing on that strategic piece. What are the core differentiators for TripAdvisor versus our upstream competitors or our downstream clients who are also looking to address the same needs of the same travelers, and leveraging the tremendous assets that TripAdvisor has in terms of trust, in terms of guidance or position in the ecosystem, and the ton of first-party data that we have being the largest travel site on the internet. Obviously, from The Trade Desk, Matt comes with a ton of experience looking at data through that lens. That's really quite a big business.
To the subscription question earlier, I mean, he launched subscriptions as part of Dow Jones and Wall Street Journal. He's got relevant experience in a number of the different areas. Of course, it'll be up to him and the amazing leadership team we have here to carve out that next strategy clarification and the changes that he might wanna make. Great question. I'd encourage you to give him more than just the next earnings call to get back to everyone on it.
Okay. Thanks. Good luck, Steve.
Thank you.
Our next question comes from the line of Vince Ciepiel with Cleveland Research. Your line is now open.
Great. Thanks. A question on E&D. The revenue progress there has been really impressive, and it sounds like it's tracking ahead of expectations for the year, but the margin outlook is unchanged. I guess, you know, when you have more revenue and unchanged margin, it kind of also implies that you're adding back some additional fixed costs. I think E&D was probably about half of the $200 million of fixed cost saves that you guys saw through the pandemic. Now it basically looks like you're adding all of those back in 2022. Can you help me understand if that is the case or if I'm missing something there? Also help us understand, you know, what types of things you're spending on in 2022 that are different than what you were spending on in that segment in 2019?
Yes, Vince, it's accurate that we are reinvesting some of the overage we've seen in the quarter and therefore for the rest of the year in E&D back into the business. Marketing oriented, the one you know growth when you are levels that are immediately loss-making but returning over a longer period means that if you are able to push harder on that will come at the expense of EBITDA. That's part of what we're doing, continuing to push hard on that. We're also investing in some new marketing channels that we've experimented with.
On the experiences side, it's predominantly pushing more on marketing, which should translate into 2022 and 2023 revenue, as well as an improvement in how we position. Much less of a focus on pushing even harder in experiences on our people cost. On the restaurants side, it's really steady as it goes. We're executing on the plan, and we're in line with the plan, and not much changes to the plan than that we originally had. On the restaurant side, we are in 2022 compared to 2021, making investments in our people capabilities in particular, both growing our restaurant base but also improving some new products and services.
We're particularly happy in that area with some of the more fintech-oriented products that we have been developing. We've been pushing hard on the growth of TheFork PAY, which is an ability to through the app pay at a restaurant for consumers and for restaurants to integrate with great benefits for us long term in capturing loyalty and for restaurants as well. Gift cards is another area that we're growing, the ability to give gift cards to friends and family for restaurants, which TheFork is promoting as well. That and numerous other initiatives are the focus there. Dining is a big category in Europe. It's relatively under-penetrated online compared to the United States. TheFork has a truly awesome market position in most of Europe with opportunity to grow its market share in the U.K. and Germany. We're playing to win with that business in the European restaurant landscape.
Helpful. A follow-up there. It sounds like some additional marketing. I think that you had previously expected variable expenses in the segment as a percentage of the revenue to look pretty similar in 2022 as they did in 2021, but with an additional push in marketing, are you now expecting that to be higher, A? And then B, related to that, when you think about the long-term path for E&D margins, like I think I kind of calculate variable as a percentage of revenue is probably running over 50% now of sales. Is there a long-term place where you think that can settle? You talked about, you know, gross margins being pretty good there.
I mean, is this something that variable could get down to 30%, 35% over time and get closer to kind of where variable is as a percentage of sales that you see in HM&P? Can you help us understand that?
Yeah. With the sort of lifetime dynamics and sort of repeat performance of cohorts and repeat improvements, we expect not only growth from acquired. We're actually seeing a very strong growth on our free channels. We see strong growth of repeat bookings and revenue in our experiences business. And that over time, that part of repeat bookings will grow as a percentage over time and will provide more leverage on marketing over time. That's sort of a clear impact of an LTV model.
Secondly, we have a fixed cost base, but you know, with the substantial scale that we're seeing, fixed cost as a percent of revenue is coming down for Viator. And that's gonna provide leverage going forward. If you just take those two points together, that makes us basically confident that we have that we can show strong, you know, mid-20s% to plus type of margins in that business. For TheFork, that is a scale game as well. We're still growing the platform with high growth rates and the underlying cost structure there is favorable as well. With scale, will come attractive margins there as well.
We look at both businesses and say, yes, the margins are not there yet at the level of potential, but that is really all you can point really all to the growth strategy that we have in those two businesses. Underlying these businesses are both very, very healthy.
Thanks. Yeah. Nice to see the top-line progress in E&D, and thanks for the color on the margin path.
Thank you.
There are no further questions at this time. I'll hand back the call over to Mr. Steve Kaufer for closing remarks.
Well, thank you. These being my final remarks on what is my final earnings call as CEO of TripAdvisor, I want to thank you all and all of our employees, past and present, for your continued support of this amazing business. Over the past 22 years, we've built a passionate community of travelers that helps hundreds of millions of travelers and diners every month, enabling them to plan and have a better trip. Along the way, we've helped millions of businesses, even the tiniest ones in the remotest corners of the planet, to find their audience and grow via the global reach of our platform.
The idea of TripAdvisor was a good one, clearly, but the real success of TripAdvisor belongs to the thousands of people who invented it, built it, ran it, evolved it, and turned it into the most popular travel site on the internet. A special thanks to all of you who helped build this company. At TripAdvisor, we believe in the power of travel to do good. I have a sign in my office. It's a quote by Mark Twain that reads, "Travel is fatal to prejudice, bigotry, and narrow-mindedness." I truly believe that travel can be a positive force that brings us closer together and a partial antidote to the many divisive issues in the world today. For TripAdvisor, this is a special company that will always hold a special place in my heart.
It is also a company with a terrific future ahead, as we are only a few chapters in on this remarkable journey. I'm excited to hand the reins over to Matt and the entire TripAdvisor team to invent the next chapter of TripAdvisor and help bring the world closer together. Thank you. Thank you all for the privilege of leading this amazing company.
This concludes today's conference call. Thank you for participating. You may now disconnect.