Well-
Hello, Richard
Thanks. For anyone that doesn't know me, I'm Richard Clarke. I'm the Global Hotels Leisure Online Travel Analyst here at Bernstein, I'm absolutely delighted to have Matt Goldberg, President and CEO of TripAdvisor joining us again for the Strategic Decisions Conference. Welcome, Matt. You're always very welcome to join us.
Thank you. Always enjoy doing this with you, Richard.
We are in a period. Let's start with a little bit of macro-
Sure
Then we'll get into the strategic stuff we're meant to be talking about. Every day we're seeing headlines out there, bombs seem to be dropping again this morning, oil prices going up. I think we get a lot of questions of, can travel demand really hold up in this kind of geopolitical macro environment, or is eventually this going to bite? What are you seeing? Are you seeing resilience of travel? Does your business model make you more or less insulated from any disruptions that are out there?
Yeah. Well, of course, we all see the same macro and read the same news and hear about the same reports. I think you got to watch what the traveler's doing, and travelers have indicated they want to travel. If Memorial Day travel in the U.S. was any indication, travelers are going to get out there. It's certainly hard with uncertainty in the background to make bold predictions about what's going to happen in the future.
Yeah.
You can look at travel intent, which has been relatively stable. I think, we're seeing upwards of 70% intent to travel through the summer. That's stable with last year. Of course, we also see that nine in 10 travelers are saying they're going to travel the same or more in the summer months. We'll see what they do. I think you also have to look at the behaviors. Travel, in the short term, can get disrupted, but in the long term, travelers get out there. They may make other choices. For example, they may choose to shift from long-haul international to short-haul regional or domestic.
What I think really sets us up well is our focus on experiences, because experiences has proven to be the category that is most exciting, most durable in these times of disruption, and of course, at the heart of the travel budget. We've seen that seven in 10 travelers want to put experiences at the heart of their budget. The majority want to book ahead of time. That's even more when you look at younger travelers. It is a trend that we feel very excited about. I think in the long haul, travel will be resilient, it will be durable, and we will focus on controlling what we can control, and that's what we're focused on.
The comments you just made about Memorial Day demand, is that a comment about what you've seen at TripAdvisor or just?
I'm just watching the news just like everybody else.
Yeah.
Of course, even with higher energy prices, people were out traveling on the roads during Memorial Day, as well as getting on the plane and going out. I will say that if we see a shift to domestic, we feel really well-positioned because that's a place where we've added inventory for our experiences. Two-tier and three-tier destinations makes us a really good option for those traveling domestically.
Okay, great. On the TripAdvisor brand product, I guess as a price comparison site, would you suggest that has any kind of natural hedge in a period of macro uncertainty? People want to compare prices more aggressively?
Yeah. Well, listen, TripAdvisor is more than just.
Sure
a price comparison site, right? It's a multi-category site that really focuses on every region of the world, all the things you can see, do, eat.
It tends to be a great demand generation platform. Of course, sort of the meta search product still remains relevant. In times when people are thinking about their budgets, they really want to compare prices and choose the best option, so we can provide that. They also are less likely to cancel the experiences that they do.
Yeah.
Right? They're more likely to cancel something like shopping, which they'll cancel probably two to three times more frequently than they'll cancel an experience.
Yeah.
If they're going to go travel, they really want to go have an experience. They want to make it worth their while. That means that across all categories, whether it's lodging or dining, and TheFork is performing incredibly well because it's not dependent on going very far away.
Yeah.
It can be a trip and dining, or it can be local and dining. That business is performing incredibly well. Experiences, we feel that across all categories in all destinations, and frankly, all source markets, we have a product that will serve travelers.
Let's hone in on experiences. You've made a comment you want to reorientate the business around building the world's largest experiences marketplace. Maybe just go into a bit of detail what that means to you. Does that mean, is Viator now the core brand of TripAdvisor Group, or is TripAdvisor itself also going to be reorientated around being focused on experiences?
We have been very clear. We are reorienting the entire company to be experiences-centric, to lead with the most exciting part of travel, the fastest-growing part of travel, and frankly, one of the most difficult categories to organize. Obviously, we have 30 years of experience with Viator, which is the leading OTA in experiences on multiple measures. We also are fortunate enough to have more than one brand. Viator can go incredibly deep when you know you want an experience, and TripAdvisor can go incredibly wide. Wherever you are in the world, wherever you're going, whatever experience you want to have, whether it's paid or free, TripAdvisor can serve you. Having two brands has a number of benefits. It has the benefits of creating a very large pool of travelers for demand.
Obviously, there are hundreds of millions of travelers that turn to TripAdvisor every month. We have over 100 million in our membership base. We have almost 10 million things to do, see, and eat there, and that can create tremendous demand, and we will orient it to serving the traveler who wants to find the best experience. We're really excited because our vertical focus on experiences allows us to focus on going and finding the highest intent traveler, whether they're on our platforms or others, leveraging our data and AI to target them effectively, to get them onto our product. Turn our product into something that is going to convert far more effectively, get people to come back and be more loyal. Then to add the inventory and the experiences, which we have the largest and are increasingly focused on being the highest quality, across the globe.
That means that we can get a flywheel going. When you have multiple brands to do that with, and we will serve third parties, because we still think that third parties are incremental and profitable. We think that that flywheel, and you add to it the software that we bring to the operators, we can serve operators incredibly effectively, and we can connect them directly to that demand. Orienting the company around the growth profile with the increasing profitability is the transformation we are going through, and we feel that that is going well. You can see it showing up in our financial profile, which is shifting.
You said within that you're increasingly focused on improving the quality. Maybe you can just sort of dial in on that a little bit. Is this a shift in focus? You want to go for more of a curated set? Are you removing poor quality experiences? How are you raising the quality bar?
Absolutely. We're doing a lot there. It's always been something that we've thought about, but of course, as you're building out these marketplaces, you're looking to add, and we've always been an open marketplace for experiences.
Yeah.
I think we are far more focused on serving the best possible experience that gets consumers to repeat, and that means having the highest quality. That does mean thinking about how you measure quality, thinking about who you go out and target in the first place, the way that you onboard them, and we are onboarding, leveraging AI to speed that up, to make sure that we're scoring appropriately, to understand the experience that people are having to drive that first booking as quickly as possible. That's also an important part of bringing new inventory onto the platform. Getting the quality to do the work to drive loyalty, that's something. We think size is great, but more important is quality, and we will focus on quality, yeah, equally with the size.
Perfect.
If not more important, frankly.
Just your latest view on how big a prize is the experiences market. We see a lot of numbers being put around there, but most seem to have experiences market as multiple hundred billions of potential GBV value, commission rates around that sort of 20% level. Is this really a sort of $40 billion-$50 billion revenue market opportunity, or is actually that includes subsets you can never go after, or is this a huge potential prize?
I would say yes, absolutely, a huge potential prize, and we're only playing in a subset of it, right?
Yeah.
We are highly concentrated in the U.S. We have an opportunity to expand internationally and grow our TAM meaningfully. We are highly concentrated in tours and activities, which are both smaller than attractions. We have an opportunity to add attractions. We have the opportunity to reimagine our serviceable addressable market and think about niche areas. There's a number of niche areas, which includes local and the reasons people travel, whether that's health and wellness or for sport or a live event. We have the opportunity to grow in a number of ways that include tailwinds that aren't going away. The shift from offline to online, and the way that we can play a role in that shift. Adding new categories, adding new territories, and of course, thinking about how we drive loyalty and work with third parties.
I think you put all of that together, it is a very big opportunity, probably larger than the narrow slice. It depends how we define it.
Yeah.
We will invest over time to create the biggest serviceable addressable market that we believe we can deliver on, and we're just getting started. It's early.
Talk about going into some of those kind of new subverticals, if you like, attractions. How do you get into that? Is that selling the tickets?
Yeah.
You were talking about maybe doing live events as well. Is that an opportunity potentially?
I think there are many to sort through, and we can look at doing that through partnership, we can look at doing that through our teams that are set up around the globe to add new inventory. Of course, we always want to follow the consumer. If we're thinking about serving a consumer in a new territory, we will think about what is the experience that that local person, maybe in France or Spain or Italy, might be thinking about their travel, and how would that be different than how we've typically served. That might mean language difference, that might mean product that is localized all on a global platform. We think that there's a tremendous opportunity for growth ahead, and it is a long-term path for growth.
We get really excited about the growth rates into the future. We think they're double-digit growth rates into the future. We think that they migrate profitably as we continue to see our cohorts shift with more loyal and increasingly less costly to serve. We've seen that shift, and that's why our profitability has increased as we've continued to deliver good, strong growth rates.
Maybe just talk to us about that growth rates. Q1, you talked about January and February, I think brand Viator was growing 20%.
Greater than 20%.
Greater than 20%?
Yep.
And overall-
In both volume and GBV.
Perfect. Experiences overall growing in the sort of high teens, you had a little bit of disruption in March from Mexico, Hawaii, et cetera. Is that level of growth rate you saw in January and February, is that a sustainable growth rate? Was there some idiosyncratic tailwinds there, is that what you're aspiring to achieve in growth?
Growth rates are always interesting to pick apart.
Right.
I think that the broader point is that we said that we're going to accelerate our growth rate, and that's in fact what we were doing in January and February. We had the dislocation in March. That meant volumes came down, cancellations went up. We've seen cancellations come back to a more appropriate level and a more normalized level. We've seen the build-back that we said we expected to happen through Q2. That is actually happening. Even with some of the external things happening, we are seeing build back, as we started to talk about at our last earnings. I think the point is we feel really confident about our ability to exit the year with an accelerated growth rate and to continue that long into the future. That holds.
I appreciate, maybe don't want to name specific names, but just talk to us a bit about the competitive position in experiences. We've seen other platform businesses want to get involved in selling experiences. What is the sort of Viator and TripAdvisor moat that means you're the best place to go and book experiences?
The competitive interest in this category, in our mind, validates it.
Okay.
The fact that there are horizontal players that are interested, the fact that it's a category that all travel aggregators think is important, just suggests that this is a really big opportunity, and it has relatively low awareness. We think we have a tremendous advantage in being a vertical, focused on this category. That's because it's really hard to organize. Having a focus on those operators, having a focus on the unique demand profile of travelers who want experiences, which is different than other categories. Having the sort of marketplace infrastructure, right, which means the ability to go find the demand, connect it to that supply, and everything in between, the transactional workflows, payments, logistics, all the tricky bits about putting this together. We feel that's something that's important. That's not totally unique. There are others who are vertically focused.
What we have that nobody else has is this multi-brand opportunity with TripAdvisor, which stands for trust, multi-category, huge source of demand. We know that about a third of them come to us for experiences, and growing quickly. We know that that's true across the world, and we're in every region there. TripAdvisor is known. It lowers the barrier for us to enter new markets. You combine that with Viator, nobody else has it. It also brings a data asset that we can leverage to drive our conversion rate. Of course, it's also a test bed of a very large volume of people that we can drive our testing, which will drive conversion rate and experimentation velocity, which is critical to really drive your outcomes on a marketplace. We think that that is quite unique, and we just got started on bringing that together.
We put our marketing teams together, and we believe that focusing holistically on experiences as a company is going to be a very valuable proposition for a long time to come.
You talked earlier about the fact that you'll go and meet the customers where they are. You've done some partnerships. You support some other platforms with the Viator inventory. What gives you the confidence that is incremental, that you should support other platforms rather than trying to drive everything through your own platform and keeping the customer relationship?
Well, we're very attentive to that. Obviously, we go after whomever has a high-intent audience. That includes many thousands of travel agents. It includes any site that has an audience that might want to book an experience. That can be e-commerce, it can be large tech platforms, and of course, it can also be OTAs, like Booking and Expedia.
Yeah.
We have a lot of confidence that the way that we are working with them, that is a traveler who we would not otherwise get on our own.
Yeah.
It's something we watch over time. As we enter new markets, we will consider what is our third-party strategy, but we have a lot of confidence that those are incremental, profitable, and allow us to reinvest in that marketplace. I think that's been a really good part of our flywheel that we intend to continue with.
Perfect. I'm going to have some more questions on AI later, of course. Just specifically when we talk about experiences, I guess when we talk about online travel in a lot of categories, there's always a lot of questions about what is the actual level of disintermediation risk. Can an LLM get straight to the supply? Does it need that aggregation layer? Specifically with experiences, is that a realistic threat, that you could be disintermediated, or does the platform have a sort of essential value to the transaction?
We have a lot of confidence that the experiences category is going to be more durable to that level of disintermediation because of the long-tail nature of the supply, because of the challenge in that marketplace and how hard it is to structure, because of everything you need to bring to that customer, logistics and customer service and all of the pieces that some of the horizontal players will not choose to do. We've already seen some of the AI players, the broad LLM horizontals, back off of wanting to be the booking platform of record. Of course, we're working with many of them.
Yeah
Have a seat at the table, which I think is really important because we believe that we can collapse that moment where you're looking for something and help you book. There is this trust gap with AI, which is travelers by and large, want to experiment with it for discovery, to build an itinerary, maybe. Maybe that's half or more of travelers who are playing with AI in that way. Less than 10% of them are actually booking.
Yeah.
We believe that's because of trust, it's because of relevance, it's because Viator and TripAdvisor, and what we've built with our marketplace platform is actually the best place to book, and you can rely on it. We believe that we bring all of that in addition to our content and our data. We've had very rich conversations with a number of players. We recently announced that we launched with Anthropic and Claude. We'd already had an app with OpenAI. We're doing work across the board with Microsoft and Amazon and Meta. We are out there having really good conversations and partnering. Of course, at Google I/O, they announced that Viator is going to be with them as we experiment. We're playing, and we think that seat at the table allows us to play a role to influence it and to position ourselves very well.
We believe there is a more durable moat for experiences than some other areas.
Some other areas. Customer service you mentioned there. I guess when it comes to experiences, customer service is incredibly important. I need to actually go and find at that moment where I'm meant to be during this experience. I need a kind of customer, someone to contact. That's quite a big part of the Viator experiences proposition.
We think it's an incredible advantage, our customer service, and we believe that we are market leading in the industry. We focus on it a lot. Of course, we're doing customer experience not only for Viator and Experiences, but also TripAdvisor across the board and TheFork.
Yeah.
When you look at it, we're wiring it with AI, and I know that some have been out there talking about, if you look across all of our brands, across all of them, between 30%-60% of all our customer service is being handled by AI without a human in the loop, satisfactorily. That will only grow over time, and that will be a productivity advantage for us as we continue to drive our customer service strategic asset. It is a strategic asset.
Experience is obviously the primary future of the TripAdvisor Group. Talk to us about how you see the future of, say, the other parts of the business, particularly maybe starting with the price comparison, the meta search. Does that have a future? Is that going to be replaced by other business models over time?
Absolutely. Price comparison is still an important product. It's good for consumers, and it's very good for those who bid on that traffic. You've seen, although, obviously we have declared it's hard to compete with Google in that space, and we don't think it's the growth avenue of the future, but it's still profitable.
Yeah.
We intend to deliver on that. What you've seen is really strong pricing, which is an indicator that our clients and our partners really like that product. You continue to see some subset of the total traffic, we call them the hotel shopper.
Yeah
that's been more durable than the overall traffic, which obviously has the known SEO headwinds. That is a really good indicator that there will be long life there. I think the thing that everybody wants to know is, how does that stabilize over time? We've declared that we're not going to invest for growth, that we're going to run it for profit. We think running it for profit is the right thing to do, and we think that can have long life, and we think that it does not become a product that goes away. We also recognize that we have better opportunities for our capital, because we're not a pure play there. In fact, I always ponder at the fact that so many people think about TripAdvisor Group as TripAdvisor-
Yeah
as price comparison. You even said it to me today, "You're a price comparison site." That is now not even close to a majority of our revenue.
Yeah.
It's still important from a profit perspective, and we intend to simplify that business so that we can serve it well, orient ourselves around experiences, and continue to mine that profitability into the future.
If I think about some of the other opportunities we've talked about down the years, B2B, has been talked about as an opportunity, and display advertising, that kind of business model. Are these still potential avenues of revenue growth for TripAdvisor, or is it really experiences is the main pathway ahead?
We continue to have B2B relationships. As I mentioned, we have almost 10 million operators that are listed on TripAdvisor, and they want to have a relationship with our audience. That audience is high intent and performs for them. Our media business has actually held up reasonably well, all things considered. They're doing a lot, not only on our platform, but off platform, and I think that's an asset we can think differently about in the future. We want to be clear that experiences is the biggest opportunity.
Yeah.
We will allocate capital there because it will grow, and it'll become more and more profitable. We will make decisions based on what serves the experience seeker first, as opposed to trying to serve some other master. I do think both B2B and media will be a part of our future. I think B2B's really interesting in experiences.
Okay
where we're serving the operators in really effective ways, and there are other ways that we can serve them. Clearly, it's been a huge growth opportunity at TheFork, where B2B has come on really strong. It has been a tremendous growth driver. We're, as a company, I think skilled in B2B, and there are opportunities for us to continue to think about how that serves our vision and our strategy.
You talked at the last earnings report about TripAdvisor being able to plug that trust gap. You mentioned it earlier, between sort of AI search and Booking. Maybe you can just give us your sort of vision of what does that model look like? How do your brands plug that? How is travel going to flow through the TripAdvisor funnel?
Well, stated simply, we have unique assets.
Yeah.
Those unique assets include the brand and the trust that it engenders in travelers and has done for more than 25 years. That includes our content, which is continuing to grow. In the last fiscal year, we reported we added 80 million new ratings, reviews, and opinions on a base of over 1 billion. The actual contributors to that asset and the contributions are relatively stable. In fact, we grew contributors last fiscal year that we reported over the previous fiscal year, and the contributions was relatively stable. Even though you have traffic that has been declining because of the SEO headwinds in Google SERP, which the business had been built on over the years, that is a very stable base, which suggests that travelers continue to want to contribute, and we have traffic coming to benefit from it.
We also have this incredible data asset and all of the inventory that we can bring, the pricing and availability. The ability to collapse the moment where you're looking for something to do or see or eat or experience, and making that booking happen, certainly in the experiences category, is an opportunity that we can do on platform, and we're totally focused on that. We can also bring that raw material to partners.
Yeah.
That's why we've been talking to the LLM providers because they recognize that having that layer of judgment, the human layer, and listen to what these players are saying, it is that human element that brings trust that will allow that gap to be closed. We believe we can bring that raw material. It can be with partners in the form of multiple ways to monetize. I've said we are already doing it with more than a half a dozen partners, which we put in place relatively quickly. It's meaningful. It's going to continue to grow. We're having conversations about deepening those with a number of those players. As importantly, we can do it on our own platforms. We will continue to leverage AI and all of those materials to drive loyalty and conversion on our sites.
Of course, to target and onboard our operating partners, and to go out and find the right high-intent customers to come. AI really plays a role both on-platform and off-platform. We think we're well-positioned for it. We actually really see a world where it will be a tailwind. Now, you have to work through that SEO challenge, which everybody talks about.
Yeah.
We were the best in the world at SEO for a long time. As that has declined, all of that capability applies to what is being called AEO or GEO, which is the AI first search. We are applying it, and we are seeing ourselves surface, and that has been a high-intent customer that we're getting there, and it's growing very quickly off of a small base. As you do this kind of transformation, it takes a bit of time, and I know I'm impatient for things to happen very, very fast, but we see ourselves working through that. As we work through that, our financial profile will reflect it.
Maybe just what you expect to be the sort of revenue model of those AI platforms and the sort of ability of TripAdvisor, would you go and buy traffic from them, or would you hope to be able to sort of show up organically because of the quality of the assets you're bringing to them?
Well, we will have capability and advantage in doing both.
Yeah.
We'll be competitive, and we've tested with what might it look like to go and advertise there. That testing has been very informative. Where we see opportunities, we'll lean in, and we're always looking for a diverse set of high-intent travelers to come to our platforms. We can also get large amounts of traffic organically. In fact, that is a big part of the value exchange, and we are seeing organic traffic come. We can also get licensing dollars, and we can build experiences where we benefit from the revenue that those experiences would generate. One thing we will not do is we're not going to share the revenue that we generate when it comes to our platforms. We don't need to.
You mentioned the unique data you've got, the review data, other data you've got. I guess we sometimes get the pushback, well, other companies have reviews. Google has reviews. Booking.com has reviews. Maybe you can just help us understand how much deeper and better and higher quality is that data and review data that TripAdvisor holds?
Well, I talked about the stability of the data asset, which is really good, and we are going to continue to lean into that asset because we know that it serves us and our strategy. It's great for people who are looking for experiences as well as other categories. We think we lead in the quality front. We have an industry-leading trust and safety team that does an incredible job of sort of rooting out anything that is violating our guidelines. We're using AI to remove AI-written reviews. We might think about experimenting with using AI to sort of stimulate a real review from a real human, but we are totally focused on making sure that reviews are coming from real people who actually went and did it because that is the highest quality.
We also tend to have a better set of data, whereas some of the other players might, your review might be one star, hated it, five stars, great. That's not happening on our platform. Our platform is actually saying, "Five stars, this was an incredible dining experience in a corner of Paris that I really loved. I had a great time with my wife, and I recommend it if you're looking for a romantic getaway in Paris." We really get that kind of level, and we have it in a structured format, and we're able to use that in a very effective way. We think it's a tremendous advantage. Again, like I said before, as I was talking about inventory, it's not always about quantity, it's about quality, and we intend to continue to be the leader in quality.
You'd mentioned on the last earnings call potentially being open to allowing an LM to be trained on your data. Maybe go into how is that different to what you're currently doing at the moment? How big an opportunity is that? Is that a sizable financial opportunity for TripAdvisor?
We haven't done it in the past because all of our deals were intended to be very, very thoughtful about a learning agenda. We've been blocking anybody that didn't have the right to come and take our content and data. Although, of course, in the past there've been all kinds of. The search model benefited from taking data. I think anything over the last several years, we chose to either block or go do a deal. When we did those deals, we basically said, "Okay, what do we want to learn, and what rights do we want to give?" We would give rights to a certain amount of data, a certain amount of content for certain uses, and we did not permit training of the models. I think that that's something we could consider doing. We would want the value exchange to be meaningful.
We haven't greenlit anything yet, but are in a number of conversations, and if we find something that we think is good for us, good for the partner, and where we will have a value exchange that really works, and you can read that as meaningful, we'll do it. If not, we don't have to do that.
Maybe just talk about your own internal AI initiatives. You mentioned customer service earlier.
Yeah.
The AI trip planning tools, is this gaining traction? Maybe any other areas that you're focused on using AI internally.
Richard, you know this because you've been following it. We've been driving AI product development since the emergence of generative AI, and long before through machine learning, and leveraging our data to drive predictive analytics. We have a lot of experience with it. Over the last few years, as we've been experimenting, of course, we experimented with Itinerary Builder on TripAdvisor. We experimented with review summaries and, of course, conversational AI or a planning assistant, which we call Ollie on TripAdvisor. We've done a lot on Viator and TheFork too. If you look at that was all on top of a platform that was our platform of the past. What we've been doing lately is experimenting in AI native products, and that means thinking about the product from an AI first experience.
We've been doing that around planning and discovery, which could lead to an itinerary, or it could lead to a set of content or booking opportunities with the idea that you can collapse the moment of search with the moment of booking, and we've been experimenting with that. We're also experimenting with in-destination AI. If I'm in destination and the weather suddenly changes or something unexpected happens, what's around me now? What are the things I might want to do today? How do I find access to promotions and opportunities that I might not otherwise? We can do a lot there, and we're learning a lot. We've said that as we've done AI native development, we actually have seen higher levels of engagement and conversion from our earlier experiments with AI. That's very promising.
As with all these things, we're going to be very prudent in how we scale it, and we're going to invest appropriately, because I think sometimes we all get ahead of ourselves around what consumers really want.
Yeah.
We will wait for the consumer signal, and I think you're seeing that across travel. The reason I like our position is that we are doing it on our own platforms. We are doing it hand in hand with very good relationships with all of the horizontal LLMs and having really interesting conversations around where it might go and how we might influence it. I think we have multiple ways to serve that consumer. I think we are well set up.
Okay, perfect. Let's shift on to your portfolio review. Talk to the decision that TheFork could and probably will be separated from the group going forward. Why was that considered an asset that could be separated? Any updates on, I think you said at the Q1 results, you had to stop buybacks because it was imminent. Is that still the case?
I don't think we said we had to stop buybacks because it was imminent.
Okay. Apologies.
I think we said we were having conversations in the market that caused us not to be able to, so I just want to be thoughtful about that.
Apologies.
TheFork is a great asset, and it's only gotten stronger over the last few years. It is the clear leader in dining in Europe. It's in 11 markets, and competing incredibly effectively in that region. It has a really good balance. It was originally almost primarily B2C, or serving the consumer. As we've added inventory, we've really focused on the restaurant and serving them with software that can help them manage their businesses. We have seen increasing penetration rates of our premium software with restaurants. We're at a price point where we think there is tremendous headroom, and that growth has been fabulous. Getting that B2B, B2C, they've been experimenting with innovation across AI, and Ask TheFork, across social, where they're seeing really good indicators in being able to use social to drive bookings and restaurant demand.
They're experimenting across the board with their data as well. We love the business. As we've reoriented ourselves and declared that we're going to be an experiences centric business, we recognize we don't have to own TheFork. We can benefit from it through commercial relationship if we pick a partner that we're excited about. We also recognize we're not getting the value we believe we deserve for that business necessarily in our portfolio. We've said that we're going to go look for catalytic opportunities to not only highlight the value of experiences, but also to look at every option to create shareholder value. We have a board that is enthusiastic about considering the portfolio review, and no options are off the table. We talked about TheFork because we thought that it had been run separately before. It has a fantastic management team.
It is a natural one to consider.
Yeah.
As I said at earnings, we feel good about the process, and it won't be long before we'll update.
Okay, perfect. Maybe you can give us any sense of what you might use the funds for if you were to dispose of the business. Are there opportunities to go and accelerate other acquisitions or investments you can make in experiences, or would this be allocated back to shareholders?
We're fortunate we have a strong balance sheet. We've got good cash flow generation, so healthy. If we were fortunate enough to have additional cash come in, we would be able to make prudent choices about shareholder return, whether they come in the form of share buyback, paring down debt, and strengthening the balance sheet, or looking at opportunities to invest in experiences. We see both inorganic opportunities in that category that could be interesting, but we also see organic opportunities, and we're going to do that all judiciously. Certainly, we are thinking about shareholders, and we think that being prudent about how we look at that in the future is something that we'll do.
Perfect. Beyond TheFork, are there other potential portfolio changes that could be made? I guess if Experiences is the center of the business, you talked about wanting those two brands. What else is there potentially within the group that could be subject to portfolio changes?
Yeah, there's a number of different things that we could do. I don't want to necessarily get ahead of myself.
Sure
today. You could imagine, we could think about. We've talked about simplifying TripAdvisor. What that means is, there could be opportunities for other transactions, certainly. There could be opportunities for strategic partnerships, where if we identify a business line that we've been in in the past where we don't think we have the scale or right to go win.
Sure
We're not going to invest as heavily as somebody else, there could be partnerships that would be, we think, meaningfully accretive, and we're open to all of that. There's also areas of the business where, and you've seen us do this, simplification also means saying what you won't do. We're happy to look at stuff and say we're going to exit it, because it helps us focus.
Simplification and focus on a high-growth category where we have the right to win, we believe is the best vision, strategy, and way to run our company, and we think it will get rewarded over time. There are multiple options, and nothing's off the table.
Talk to us a little bit about having activists within the TripAdvisor shareholder structure. I guess what we see outwardly is some open letters, which can be a little aggressive. What's the reality of working with them? They've appointed a couple of, or managed to encourage a couple of extra board members to join the group. Is everyone now more aligned? How much of a sort of conflict are you still finding?
No, there's no conflict. As you know, we had an agreement that we announced in late March. We were very pleased with the agreement.
Yeah.
It has been very collaborative. We had been on the process of board renewal. Remember, we had simplified our shareholder structure in late April and started the process, and then we had this partner to have a conversation with about board renewal come not long after. This was the natural result. We're very enthusiastic about having four new independent board members. Went through our screening process. We added two immediately that we knew well, and we've put into our proxy that we've named two others, who will get elected at our AGM. We're excited about that. It's been engaging, energizing, having a fresh perspective with a strong background is something every CEO should want for their business.
Sure.
At a moment like this one, where we're making really important decisions, it couldn't be a better time to have that kind of constructive relationship. Yes, open letters, none of that seemed in any way unusual to me. What was important to me was that we were focused on the business, driving value, staying focused, which is exactly what we did.
To what extent do you feel scoreboard pressure or stock price pressure at the moment? The stock's hovering around that $10 mark. What is the most misunderstood component? You've laid out today, I guess you're happy with the strategy, you're moving ahead with experience focus, you're optimistic about where that will take the business. Doesn't seem to be, I think, fairly reflected in the share price today. What is misunderstood and how much pressure do you feel to sort of get that share price working?
I agree with you. We recognize that the sum of the parts, there's a dislocation, which is why we are doing our portfolio review, and have made some of the comments there that we've made, and think that we have opportunities there, as I've discussed previously. We've made so much progress. We simplified our shareholder structure and went from a controlled company to a non-controlled company. We went through the process of what happens when you do that, and we are through that now.
Yeah.
At the same time, we took out more than 20% of our shares. That felt like a very positive thing for us to do. We then announced that we were focused clearly on simplifying the complexity, focusing on the most exciting part of travel, which is experiences. We've begun to organize ourselves around that and deliver against that. We are at the same time simplifying TripAdvisor, which has well understood secular challenges that we are working our way through and feel good about that. We've shifted our financial profile. Remember, it wasn't long ago that metasearch and TripAdvisor was the vast majority of the revenue in this company.
Yeah
More than all of the profit.
Last year, it was not the majority. The marketplace business had become the majority and really coming on strong. The marketplace businesses had delivered 35% of the profit. Now we're seeing Experiences, it's 50% of the revenue and growing, and this year there'll be more, and will continue to drive a much higher level of profit. We feel that the financial position of the company has shifted, and that will get rewarded over time.
We will continue to focus on that, do the things we're doing, stay focused, and we recognize that transformation is not easy work, but it is very rewarding work when you get through it, and we feel like we've moved through it reasonably well. We want things to move faster. We are looking for catalytic opportunities. We'll continue to pursue that with great vigor.
Just going to go to some of the audience questions.
Please.
This one's got an up vote, so I'll go for this one first. Please go deeper into what it means running old core Trip for profit versus growth. Can you give some examples of what you are actually doing as part of that strategy, and what is the confidence interval that it can be stabilized over the next three years?
It means that we are focusing on really matching our costs with our revenue to maximize how much profit we can deliver from that business. You've seen us do that over time. We are declaring clearly that when there are capital allocation choices, we're going to put our capital allocation choices towards the high-growth future, rather than the things that we believe aren't going to return to growth. We are looking at what are the assets there that we want to continue to support because they're going to serve our vision and our strategy, and you can see a number of them. We have, as I mentioned, over a billion ratings, reviews, and opinions, and adding a good number every year with stability. We have hundreds of millions of travelers who are coming to us in that business every year.
We have over 100 million members in that business and 10 million operators. We will leverage those assets to serve our future while we simplify so that we are not trying to be all things to all people.
We're not afraid of walking away from the things that people don't rely on us for or where we can't win, and I think that will maximize. The question around our confidence and stability, we have a lot of confidence that what drives TripAdvisor for the consumer, what drives TripAdvisor for the operators that want to be there, continues to hold, and that we will see stability. Obviously, the thing that we are working through is well understood. It goes back to 2015, 2016, and it relates to, I think, a couple of things, which is Google's decision to advantage themselves as a monopolist, as we've heard from, not my word, that's the word of the judicial branch of our government, and to prioritize their own platforms. That's very hard to compete with.
The SERP and the SEO that this business had really done the best in the world at, became a headwind, and now you've got to work through that headwind. We're working through it, but we believe that it'll stabilize. We think you can see it when you look through the segments of users and who the shoppers are and what they're doing, who the contributors are and what they're doing. They are different than the broad traffic trends, and already more stable than the broad traffic trends, and we think that will be something which is promising for the future.
Perfect. Is the valuation gap between what you believe TheFork is worth and what buyers are willing to pay narrowing? How long would you be prepared to run this process for?
Yeah, I think I've commented on that. We think it's worth more than we're getting credit for.
Yeah.
We have every confidence. There are a number of players who are focused in this category to which TheFork will be valuable, so this won't go on for long. I think we said in earnings that we would update in the not so distant future.
Okay.
In the near term.
Okay, I believe that. A question here, can you compare Viator to other experiences platforms? How is Viator differentiated versus, I guess, the other pure plays in the space?
You've got really three pure plays, which are sort of divvied up by where their source traveler comes from. You've got us, who are the leader in the U.S. We're growing share, and really feeling good about our U.S. position. Very hard to come into the U.S. from outside. You've got a player in Europe, and you've got a player in Asia. I think the way that we're different is we've really led around our ability to add supply and our supplier relationships. We're differentiated in the connection to TripAdvisor, which is a unique advantage that we are really just getting started on orienting together in a much more meaningful way, because they used to get run separately. We also believe that our ability to compete in various channels for high-intent traffic is an advantage.
Ultimately, we believe that our ability to enter both new categories and new geographies, as we continue to work on our R&D, which by the way, will be transformed in the way that we're using AI. All of our engineers are now using AI. The productivity's going up. That drives experimentation velocity and allows you to experiment much more to drive conversion rates higher. As we do that, we're early in that game, and as that accelerates, the three of those together, the way that we acquire customers, the way that we bring them onto our platform to repeat and have a great experience, and the way we bring operators onto our platform and meet that demand, we think we can be as good or better than anyone in the world at this. The focus that we have.
We also, by the way, are unique in that we have a software asset that we bring, which is different than just Viator.
Yeah.
It's called Bókun. It works, it connects to long-tail suppliers, and helps them manage their business wherever they're selling their product, Viator or elsewhere. That is a very unique advantage, too, that we intend to think about how does that constellation of capabilities come together and allow us to go and win the global opportunity? We have a lot of confidence we can do it.
Great. Well, on that note, I think a good place to finish.
Thank you.
Matt, thanks for your time today.
Thank you, Richard.
Thank you.
Appreciate it.