Tripadvisor makes moves to spin off Viator

Tripadvisor has filed a confidential S-1 with the U.S. Securities and Exchange Commission related to a possible initial public offering of Viator .

The company did not reveal the date of the filing, but in a letter to shareholders regarding its Q4 and full-year 2021 financial results, it says: “We are continuing to evaluate opportunities related to Viator that will allow us to better illustrate the strategic value we see in this asset. This includes evaluating opportunities with industry participants as well as independent opportunities, including a potential sub-IPO, which would involve selling a minority stake of the Viator business to the public market.”

Tripadvisor CEO Steve Kaufer – who is retiring this year when a successor is named - and CFO Ernst Teunissen originally shared that they were exploring options to separate both Viator and TheFork during its Q3 earnings call last November .

Now, in the letter, the company says its “conviction in the opportunity for these businesses to become scaled category leaders could not be stronger.”

During 2021, Tripadvisor's Experiences and Dining segment had the strongest recovery within the company, reaching nearly 90% of 2019 levels for revenue in Q4. For the full year, Experiences, which includes revenue generated by booking of tours, attractions and activities, brought in $183 million, compared to $288 million in 2019, and Dining, which includes fees from its online reservation system as well as subscription-based marketing and analytical tools and sponsored advertising, brought in $124 million, compared to $168 million in 2019.

“At this stage in the pandemic we think now is the time to play offense with Viator and TheFork. As such, in 2022, we anticipate re-investing the majority of fixed cost savings made within E&D since 2019 back into the segment through long-term investments in product, supply and technology capabilities. We aim to increase our geographic reach, improve and expand our product offerings and drive loyalty of our customer base with these investments,” says the letter.

Regarding TheFork, the company says plans are still “under assessment,” but that it may change the way it reports financial results at the end of Q1 to “more clearly break out Viator and TheFork as stand-alone businesses within our portfolio.”

Apart from Viator and TheFork, the company acknowledges that Tripadvisor Plus, the subscription program launched in July 2021 and redesigned in September 2021 , has not grown as anticipated - but says it is still committed to the product.

“As we approached year-end, conversions were not at the level we targeted for full rollout. Our 2022 plan assumes continued investment in Plus, at levels scaled appropriately as we find the right product and market fit. We strongly believe in the attractiveness of the offering, and its potential to drive value in the future, but recognize that growth will likely be more gradual.”

Financial details

Tripadvisor’s total revenue for 2021 was $902 million, down 42% compared to 2019 but up 49% compared to 2020.

Adjusted EBITDA was $100 million, compared to $438 million in 2019 – but a notable improvement from the $51 million loss in 2020.

For the fourth quarter of 2021, revenue was $241 million, down 28% compared to 2019, and adjusted EBITDA was $29 million, versus $92 million in Q4 2019.

Tripadvisor’s Hotel, Media and Platform segment revenue grew 52% year-over-year in 2021 to $549 million, which is 58% of the 2019 level. Recovery was steady until Q4 when it flattened, which the company attributes to the emergence of the Omicron variant.

“We do not believe our recovery path in 2021 reflects any changes in our competitive position; we note for instance that CPC pricing levels in our hotel auction have remained strong (even stronger than 2019 in the U.S. at points in 2021). As the market continues to recover, we expect that we will benefit from the return to international travel and upper-funnel marketing - two historic strengths of our business,” says the letter.

Average monthly unique users on Tripadvisor-branded websites – which the company says is a leading indicator of consumer travel demand – were about 73% of 2019 levels in Q4 2021, down slights from 76% in Q3.

Selling and marketing costs were $469 million for the full year, up 48% year-over-year, and $126 million in Q4, up 91% compared to Q4 2020.

“The progress we made between the first quarter of the year and the last quarter of the year was remarkable,” Kaufer says.

“Despite unexpected periods of virus resurgence, the teams continued to execute to our operating plan, and innovate with sights set on the future. Now with over a billion reviews from our customers - driven by their enthusiasm for travel and willingness to share their experiences with the Tripadvisor family - we are more focused than ever on continuing to create value for those on their travel journey.”

On the analyst call, Kaufer says there shouldn't be anything read it a lack of named successor thus far, adding: "The search hasn't been going on for that long. It's a fantastic company with tremendous brand and someone with e-commerce, travel [experience] would be perfect."