Q3 2021 Tripadvisor Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the trip advisor third quarter 2021 conference call. At this time all participants are in a listen only mode.

The speaker's presentation, there will be a question and answer session to ask your question. During the session you will need to press star one on your telephone.

Require any further assistance please press star zero.

I'd now like to hand to conference over to your speaker for today, Angela White VP of IR.

Sheila Please go ahead.

Thank you Jay.

Everyone and welcome to Tripadvisor as third quarter 2021 financial results call. Joining me today are Steve Kaufer, CEO, and Orange kind of Cynthia <unk>, Chief Executive <unk> increase correct.

Last night after market close we distributed and filed our third quarter 2021 earnings release and made available our shareholder letter on our Investor Relations website.

And the release, you'll find reconciliations of non-GAAP financial measures. The most comparable GAAP measures discussed on this call also on our Investor Relations 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 November nine 2021, 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 could differ materially from these forward looking statements with that I will turn the call over to Steve.

Thank you Angela and good morning, everyone.

So before I turn the call over to questions and further commentary from myself and Ernst I wanted to speak to my transition news.

Last night as you undoubtedly heard informed investors and our employees my intention to step down from what the company is CEO at some point in 2022.

Sunil.

It's a successor as seen by our board of directors.

I Cofounded Tripadvisor in 2000 with three other amazing people mix Shanny Langley Steinert and Tomahawk.

Our goal to help people plan and take extraordinary vacations all over the world.

Or by the knowledge of people like you who have been there before.

Now, while there's never a perfect time I feel very comfortable that now was the right time for me to announce my transition.

Hospitality industry successfully emerging from the pandemic with.

Profitable again.

He said leaders in the company and we were successful in using the time reported to us during this pandemic to reinvent ourselves delivering an enhanced focus on our experiences <unk> dining sectors in creating and launching our first subscription product.

We have a clear set of priorities and while we have a lot of work ahead to get there.

So the team members, who I know are up to the challenge.

This company has already changed the way billions travel and it's extraordinarily well positioned to create deliver a new set of innovations in the years and decades ahead.

As a trusted global brand is the most popular travel website and.

And as a major influence or five trillion dollar industry.

Still a story of upside potential massive and really fun category.

But as I said yesterday to my trip plus a family. The work continues I have complete confidence that our experienced board of directors will select a great successor does that Tripadvisor is next chapter will be just as exciting as the amazing journey over the past 20 plus years and.

And in the meantime, I will remain at the helm as fully engaged as I am that pricing innovation building teams and helping our customers.

With that I'll turn it over to <unk> before we take your questions.

Thanks, Steve and thanks for everyone for joining.

We're very pleased to see our revenue and adjusted EBITDA levels step up significantly this quarter from last quarter, reflecting signs of a continued strong return to travel.

We're very pleased to see the recovery in consumer travel continue and this is reflected in the gradual return to 2019 levels. We've seen over the last few quarters in some pockets.

Noted in our shareholder letter, we're actually starting to meet or surpass 2019 levels.

Our revenue in the third quarter was $303 million, reflecting year over year growth of 101% and reaching 71% of 2019 levels.

We call out that our experiences in dining revenue in particular is showing a very strong recovery that is not fully reflected yet in Q3 revenue.

For instance, on our booking level, our combined experiences businesses has been up versus 2019 October and the start of November.

We're not out of the woods, yet with Covid, it's still impacting us and although we are.

Cautious about Q4, we remain very optimistic that the recovery is taking root and are bullish about travel and our business in 2022.

With that let's jump into Q&A.

Thank you and as a reminder, if you would like to ask a question. Please press Star then the number one on your telephone keypad once again Thats star one on your telephone keypad.

Our first question comes from the line of Nymphet can of Q2 with security Your line is open.

Yes, hi.

Thanks, a lot.

Steve we're going to Miss you after the transition.

Came as a surprise.

But.

Hopefully, we'll see you for the.

The next call.

I just had a couple of head up I.

I had a question on the.

Can you comment on the call on the sorry on the comments on the.

In a letter.

You said youre considering options to crystallize the value before <unk>.

Maybe elaborate a bit on the range of possibilities here does that include a potential spin off or potentially a sale of the business or is it more around optimizing for growth and margins.

Hey, David This is Ernst I'll take this one.

We have two very strong assets in <unk> in the fourth.

They were strong growth companies before the pandemic.

There are category leaders in their markets by towards a global leader in experiences in markets with very big Tam.

<unk> is a European leader in restaurant reservations increasingly moving into more fintech areas with a fork pay and gift cards.

I know both are recovering very nicely and beyond our expectations and we believe coming out of the pandemic with even a stronger competitive position.

And strong leadership teams that operate with greater autonomy within Tripadvisor.

Now clearly the financial profile of these businesses is very different from our core tripadvisor business. They have higher growth, but also lower profitability due to the investment opportunities that we've been capitalizing on.

They also have clear identifiable improving lifetime value that we can.

Can ascribe versus the CPC a media model that we have in Tripadvisor of course.

Which makes us more comfortable to spend for a long term benefit and particularly provider where we ended the year in 2021.

Now we note that pure play category winners like visor in the fork in the private and the public markets.

Get substantial often revenue where gross profit related valuations rather than an EBITDA multiple which is the dominant way we believe our tripadvisor stock gets valued.

And a more pronounced sum of the part valuation will make it easier for us to to invest appropriately in these businesses.

Acquisitions in these businesses so as such we believe there are options to better crystallize the right valuation for these businesses, which.

Which we don't believe is currently reflected.

Outright sellers to respond to you one of your questions of either asset that we saw it in the near term and especially in the case of advice or Theres, a strategic importance to tripadvisor, having a significant influence in the company due to the importance of experiences to the tripadvisor value prop for our consumers.

And also we think there is a value growth opportunity for both.

<unk> over the years to come that we definitely want to be part of it.

But there are some some options so one area of options would be.

Disclosure in our segment reporting, but Theres also a family of options that we are considering that go a little further in separating out in <unk>.

Separately financing these businesses now.

We haven't got more details to share at this point and we haven't yet committed to any particular course of action, but we wanted to give you a heads up that we are considering options over the months and quarters to come.

Super helpful.

Maybe just a related question.

If I look at the sales and marketing line.

As a percent of revenue.

Hi.

And what we had thought.

I guess you are.

Obviously using some of the <unk>.

Some of the funds to kind of grow these businesses both experiences in dining so how should we think about.

Our investment level.

In 2022 as it relates to auto.

Timing.

Yes, as I said before for provided tour.

This year pushed further into our lifetime value model, we feel pretty confident that we see large consistency in the past.

How users come back and how they repeat.

So we feel confident to spend beyond just the immediate return.

<unk> has a near term impact on increases advertising, but is actually good for our long term long term revenue.

Positive.

Over that over a longer term timeframe. So we have gladly done this year and we've been actually very pleasantly surprised how much we could put to work this year at a good ROI levels and grow the bioterror business. We've been very successful in expanding the marketing program in that way and so we feel good about that it is.

Near term increase.

Marketing as a percentage of revenue issue as you highlight but we think it's a good ROI. We think is good business and it cements the very strong position that we have.

So you saw sales and marketing as a percent of revenue ticked down in Q3 from from Q2.

But we are leaning in on the experiences side.

There's a little on the on the hotel side as well in the in Q3.

Taper that into October and in Q4, but provides or will continue as long as we see the good ROI, we will continue to spend.

Okay.

Thank you Anne.

Thank you next question comes from the line of <unk> Li of Mizuho Securities. Your line is open.

Great. Thanks for taking my questions Steve.

Thanks for your leadership over the years.

And maybe can you talk about your decision to make that transition next year and also secondly in terms of finding a successor, what kind of background and experience you into boy looking forward is it more travel related or is it more technology related. Thank you.

Yes.

Sure.

Thank you James.

Let's see so.

As I said in my opening remarks.

I think this is while there is no right time I think this is a darn good time to be able to start to transition.

As I say sometime in 2022, I'm looking for it to be a smooth transition as possible.

Hi.

I certainly wasn't going to make any moves over the past 18 months. It was pretty dramatic go a little bit of travel industry, but when we look at our future now you see us clearly coming out of the pandemic.

The new initiatives at play a trip or overall.

All parts of the business overall, the business is recovering and all of its parts. So it's a pretty good.

Time, I think we have a.

Our strong management team, a new faces tenured faces.

So again, while no time is perfect I think now makes.

A lot of sense.

To the second part of the question as to what the board is looking for.

Travel experience would be great subscription experience would be great.

E Commerce, I mean, thats, a core part of our business today and going forward. So I don't.

I wouldn't.

Theres no reason anyone should read into anything about my transition other than kind of what it is.

What it says on the base company is in a good position I've been at the helm.

By the time my departure will be 22 years.

It's a good opportunity tons of potential in front of the company and so this isn't a question of needing change. This is a good question.

Looking to do something dramatically different than that.

But I wanted to give the board plenty of time to.

To select truly the best leader because it's.

It's a gem of a company with a ton of upside.

Front of us.

Great. Thanks, Steve.

Thank you.

Question comes from the line of Jed Kelly of Oppenheimer. Your line is open.

Hey, great. Thanks for taking my questions.

Just two if I may one just just on the sales and marketing. This is that this quarter I think it was <unk>.

90% of our 2019 levels can you speak is that being more invested in the core hotel platform subscriptions are in experiences <unk> dining and can you just speak to the change in the subscription policy going forward and sort of how you.

Think about.

Tripadvisor plots into 'twenty two thank you.

Hey, Jed I'll take the first part and then I'll hand over to Steve for the second part.

In terms of advertising, yes, we have.

<unk> told you before about the.

Leaning into provider for marketing at good Rois that we've seen in our hotel business and ability to spend more compared as a percentage compared to before because <unk> has been very strong.

In our hotel business in the third quarter, particularly in the U S was very strong.

Our U S auction was above 2019.

In the quarter.

So we've seen favorable pricing levels, which disproportionately.

Disproportionately favours pay channels. So we've been we've been able to lean in there as well as I said before we have on the hotel side. We have started to taper that in October and into further into Q4, we wanted to spend into the holiday season.

In the summer vacation season in the summer.

But that is driving the relative performance versus 2019.

Over the longer term, we expect that to start to normalize again for being here for the hotel business is just a phenomenon of good CPC.

Thanks, Jed I'll take.

Part two there regarding plus.

Couldn't be more excited about what vacation funds this kind of.

Change in the model can deliver for.

Our travelers and of course, how well it works for our suppliers.

The original instant savings model had us offer a discount rate upfront.

But that did cause more supplier facing problems than we had anticipated. So we're.

Nothing it's not a nimble company able to adapt and when we heard that feedback and when supply started to be a bit constrained we shifted and so we're in beta testing now with vacation funds, which again offers the hotel rates at retail.

Within offers the same economic benefit that just comes.

A little bit later and so at the at the actual stay time.

We're working on kind of the flows to make sure that that's well understood.

Literally the same cash that the end user is going to get so they're benefiting by being able to achieve an impressive savings be able to.

Stay an extra night dining at a restaurant save it up for the next trip or put it straight to your bank account as cash and spend it any which way the traveler wants so for Tripadvisor.

For the benefit of the product.

This unlocks supply so we're able to get a lot more supply a lot more hotels available for sale as part of our plus offering.

Then we were before that's really exciting it's easier for us to onboard independent properties onto the program because we're not asking them to load the what's called the right code a special rate just for Tripadvisor. This is the regular retail rates, it's not competitive with their own website.

And just organizationally tactically it's easier.

On the part of the Hoteliers, So you bring all that inventory on.

We're highlighting great discounts at the top of our saltwater delivering really nice additional value to customers.

And then kind of how we think about it in 2022, we remain focused on the U S market, we want to make sure we get to that product market fit before we expand the energy to roll it out to the rest of world audience.

As everyone understands the U S is a very big market. So it's plenty big for us to test against and we'll continue iterating until we have that fit.

And then.

And then as I say, we go internationally.

So just so im understanding the hotel would pay that initial discount.

Back to the travelers that's coming out of the <unk>.

Hotel, even though they are seeing.

Retail rate.

So you can think of it.

As the from the travelers perspective, they're looking at a regular retail rate.

They use our meta search engine, they compared any way they want and they see that they are paying the same rate that they would pay anywhere else and then as they go through the shopping funnel. They learn and they will also get a $150 back $300 back whenever the.

The vacation funds number is based upon where they are staying and how long those stay.

As soon as that traveler makes that stay or has this day.

They get paying with a congrats to your $150 is now.

In your bank account.

As vacation funds for you and the travelers can then do whatever they want with those funds that's a pretty.

Raising savings underneath the covers what's happening is we are funding that tripadvisor is funding that as a.

The benefit of a plus membership.

Hotels are paying us the regular commission.

They would paid essentially to any online distribution platform. So from a hotel's perspective, it's clearly a pay for performance when we send the booking and the booking at the hotel pays us that's what they're used to doing all day long with every other.

<unk>.

And essentially we're not treated much differently.

We look to get an additional.

Or two from the from the properties otherwise improve the value proposition travel or to make that stay extra special but to the economics.

We're funding an amazing discount far more valuable than regular sort of loyalty points. If you will from from other folks.

The traveler gets that benefit and we get the commission from the hotel.

Our financial gain is all of the Tripadvisor as wind as part of that subscription fee.

So the $99 that we're charging that lands for us and generates the renewal rates the ongoing revenue stream.

As essentially we have the opportunity to fund the loyalty program with the commissions from the hotel program.

Thank you and good luck in next year Steve.

Thank you.

Thank you next question comes from the line of Deepak <unk> Bandon.

Research Your line is open.

Great. Thanks for taking the question.

What I mentioned that we will Miss you.

So just a couple of questions a follow up to the question before thanks for all the color on the plus is very helpful. But curious how are your conversations with the hotel chains and Otas partners. Both the model change announcements has been are they now more comfortable to come onboard should we expect kind of a big change to participate what are your expectation.

Is there and then sort of a second question also related to the prior one about the economics I mean would you funding.

The books for the travelers offset by the commissions that you get from.

Hotels, and then also the costs from traveler does how does it compare to kind of like the core.

Cost per click fees that you would generate I mean do you think this model is going to be accretive.

Under this arrangement thanks, so much.

Thanks Deepak.

For your kind words, two excellent questions in there.

So how are conversations gone with hotel chains, let me back it up and sort of.

Point out or explain our supply perspective, when we were doing instant discounts we needed to have the the chain participation.

Our chain blessing because.

It was actually lower than what was on their own.

Lower than what was on their own site and we thought that would work because we would have a paywall. This was a gated to very very closed user group.

But it turns out that that wasn't enough.

Now that we've moved to a retail model.

We would love absolutely appreciate the chains participating but to be clear in beta site right. Now you see a lot of chain properties already on the system showing the exact same rate is on the brand dot com website.

It's a regular retail rate we're not.

<unk>.

It's not bothering the chains in terms of.

Violating any rate parity.

That allows us through other aggregators not the change to be able to represent that we have.

Some of the best properties in the World from the Hilton Marriott and IHG is it's.

It's because we're getting them through other sources, sometimes directly through channel managers, sometimes through other aggregators and.

And I would say.

It's not violating the rate parity piece so while.

Invite all of the change to participate we're in conversations some will join now.

Some will join later predict.

But the point more economic models, so I don't actually need them to participate because we have aggregators.

Including.

Our very public partnership with Chris Dot Com, who has access to two a lot of global inventory and that inventory can show up on our site in a.

Safe manner.

To the second question on economics.

Versus our CPC model do we think that this will be accretive.

We think it's going to be wonderfully accretive so.

Part of the.

Part of the challenge slash opportunity of having so many.

Travelers looking at hotels on our side is that we offer a lot of kind of free browsing and we don't make much money because somebody doesn't click and then when the traveler does click on our metal offering over to Ta.

<unk> vast vast majority of those Clickers don't actually book, just they're not ready to or whatever reason.

Therefore.

Equally we got paid on a CPC, but in reality since it did book you didn't generate any profits for our clients.

It's in effect lowering the value of the next click that that we're going to get so.

Mean to say is.

The.

The number of travelers that we send to the Otas that still are not booking is the opportunity that we see to make this a much more accretive model.

Because we're sending people into our own transaction flow.

We're giving them a very clear incentive on why they should book with US which is all of this.

Cashback on vacation.

And if theyre going to save more than $90 million on the very first booking it becomes as we.

We expect a very simple equation.

Okay.

Charge $9 million from subscription they have $150 cashback, maybe they don't even have to pay anything upfront and we just give them $50 cashback in lots of ways to get folks too.

Hi.

To sign up and then Thats $99, we werent seeing.

We werent seeing in the CPC model.

Take it the next step and now you are a paying member to a travel subscription to a travel club.

We believe a number of people are going to say well I belong to the Tripadvisor plus therefore im starting my next trip on Tripadvisor looking at the plus hotels and experiences and all the other offerings and so we will get repeat business and a much higher degree because youre belonged member.

And then.

Whether youre, making additional transaction. However, many additional transactions that travelers doing over the course of the year that's all.

Generally speaking incremental revenue to us.

We monitor that.

What tripadvisor plus does with.

CPC clicks and obviously, we have to keep a careful eye on that.

Sure our own conversion flow more than makes up for the clicks that don't go over to meta clients.

Thanks very helpful. Thanks, Steve.

Thank you next question comes from the line of Brian Fitzgerald of Wells Fargo. Your line is open.

Thanks, guys.

Congratulations.

And we will Miss you.

Couple of things I wanted to ask about was the pullback that you saw in September was that consistent across regions.

Did Europe stay strong in September and then on <unk>.

On plus.

Wondering if you're seeing any early.

Indications are dynamic in terms of.

Maybe the customer cohorts, there and are you seeing a differentiated use of experiences or virus or.

The fourth anything with these these plus members that are saying hey, they are converting.

Into other product usage.

Better.

The first question is yes go ahead orange on the first.

I'll take the first part Brian I'll give it over to Yossi.

In terms of September we saw more of an impact in the U S.

On the Delta Europe had been recovering the U S. What's the first to recover as you know in Q1, and Q2 much stronger than Europe, but Europe sort of caught up from a traffic perspective.

In Q3, and we saw revenue.

Improved throughout Q3, including September now.

Is that was that impacted by Delta and maybe maybe it would have grown even more without delta that we saw more of a.

But it's sort of a step back as a result of Delta in September.

In the U S now.

In October that has been moving up again in.

In the U S.

That was the more pronounced impact geographically of Delta for us.

Thanks, and with regard to <unk> plus.

I candidly, we've been really focused on our shift to vacation funds and how we clearly present this value proposition.

To the travelers so excellent questions on have we seen cohorts of existing plus subscribers.

Now move over to experiences.

But truly we havent been kind of focused on building that up yet with our with our efforts clearly targeting the.

The Golden part of $160 million.

At times that people click over on expensive trips that should be great plus candidates.

Got it thanks.

Thank you next question comes from the line of Mark Hughes Barclays. Your line is open.

Great. Thanks for taking my questions.

Two more follow up on <unk>.

You already mentioned.

Essentially hotel chain Aggregators are added to the platform.

Any way to help quantify how meaningful the number of hotels were added two plus after that changed.

<unk> tons was made.

And then similarly on the all in.

On the customer side.

Any color you can provide.

And if this change.

<unk> <unk> conversion our user engagement.

Thanks, Warren excellent questions. Those are the kind of the exact ones that we are studying looking at and trying to grow with respect to the number of new hotels.

It's simply pointed out we're able to tap into a lot more of the trip Dot com inventory as an example, because they.

They had.

A bunch of properties that had a special rate that we had put live on instant discounts, but obviously they have way more properties at a regular retail rate and what's the vacation funds model all of a sudden all of those properties can can come online.

Similarly, with some of the other Aggregators, we work with there was just more flexibility in being able to bring on more inventory. So long as we kept the rate.

Parody with with.

Other sites.

We also had our independent supply efforts and this would go back several years, but we had signed up quite a few independent properties that connected directly with our backend.

That would all their rates and by not having to go reach out to those properties and negotiate a specific discount we're able to bring all of those properties live essentially immediately because they were kind of already signed up.

And thats in thousands but it's.

It's closer to a handpicked.

Thousands.

Hi.

The most interesting part of the question is really that conversion rate and how is it going and I cant offer much at this point because we just rolled out to a fraction of just our U S audience.

But thats key.

We need to make sure that the.

Language on the site, explaining the value proposition the flow.

The ability to.

Easily book, a vacation from property plus property because the.

The photos are good.

Rooms are well understood.

The.

The payment had been smoothly the errors.

Don't exist getting the bugs out of the system and Thats basically the stage. We're at now as we tested on a small slice of the traffic so.

As we make improvements and as it becomes better and better we rollout more and more and obviously, we hope for a 100% rollout as soon as we can.

Great. Thanks, Steve that's very helpful.

Thank you next question comes from the line of Tom White from D. A Davidson your line is open.

Thanks, So much does it turn this on for Tom first question I was wondering about your monthly unique user trends in Q3, it seemed to improve in sort of in line with the trajectory of revenue recovery can you talk a bit about specifically what you're seeing in terms of user engagement, maybe the specific region. The type of trip the willingness to book in Spain.

And whether these engagement differs in any meaningful ways than from earlier.

To make thank you.

Alright.

Yes, we saw a step up again.

End users as a percentage of 2019.

In the third quarter.

We're at 70% in the <unk>.

Second quarter, and we went up to 76%.

In the third quarter.

I think the most important trends to point out our geographic.

So where we saw that.

U S was clearly your head in terms of traffic recovery in the first and second quarter and through the rest of the world Europe really caught up to it and so in the third quarter.

Europe and the U S versus it very similar in.

Traffic as a percentage of.

2019, so thats one important trend Europe, starting slow this year, but catching up in the third quarter the rest of the world.

A significant part of our.

Usual traffic outside of the U S and outside of Europe has been much slower to recover.

Therefore, dragging down the overall.

76% versus 2019, that'd be reached in the third quarter.

Thank you and then for my second question I was wondering.

In regards to the HMA MP segment.

Mentioned that the monthly revenue.

It took a little bit in September versus July August and September as a percentage of 19 could you elaborate a bit on that and talk a bit more I know you discussed briefly about October but a bit more on how October looked in that segment. Thank you.

Yes, So September was.

I want to ask the question before about the impact of of Delta, We saw an impact of Delta we believe.

In September in the U S. So that impacted <unk>.

The.

CPC is continuing to be strong.

In September.

The behavior of our partners in the auction has been very consistent and similar but volume was impacted as a result in September we've seen improvement of that environment in October.

We I also said earlier in the call that we've tapered some of our marketing in October and into the fourth quarter, So thats going to.

In fact, we spend more we leaned in more in the third quarter with the the general environment in October for the U S.

Has improved from from September clearly.

Great. Thanks, so much and congrats on the new chapters team.

Thank you.

Once again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.

Next question comes from the line of Vince Stifle.

And then research your line is open.

Great. Thanks for taking my question I'm curious when you look at the existing base of trip plus members now it's still a newer program, but seeing anything interesting in terms of engagement a repeat booking activity of trip plus members versus the average user on tripadvisor.

Good question Vince.

We do see.

We do see repeat bookings from plus members.

That's nice.

Fortunately, we don't really have a great way to compare that to whether those are just people, who travel a lot and would be repeat bookings through our meta auction.

We don't always see.

We don't see their actual booking behavior. So.

Yes. It is.

Nice to see we have more plus bookings than we have plus subscribers. If you will because people are coming back and booking more.

But.

And clearly that's benefiting us, but I can't compare it to another to another site terribly well at this point.

One of the things that we watch in terms of.

And we think the vacation pumps model will give us kind of yet another data point on that.

There is there is a reasonable thesis that says.

An instant discount kind of sounds great you get the money right, there, but a vacation funds model, where you're sort of building up a bank knowing that you can take that bank and take it as cash anytime you want it's as good as catch it.

One way to think about it as an extremely rich loyalty program.

But the other way to think about it or complementary way to think about it is it's building up a bank of things that you can continue to do on Tripadvisor and so.

People have expressed to us they like the notion of saving for that next trip. They like the notion of doing a few more purchases on tripadvisor. So that they'll have some more funds saved up again for the same trip or the next trip, but it's a.

It goes back to the to the travel jar that some folks used to have where you just saved some extra money along the way to go spend on that wonderful trip.

I think we're tapping into a bit of that for the segment of our audience and.

And we see that I think some of our repeat bookings.

Thanks, and my second question I think earlier on the call you mentioned that the commission the hotel would be paying wouldn't be that dissimilar to.

What they would pay other otas, but then I'm trying to think about the economics from a hotel perspective, if theyre paying a similar commission as well as providing an amenity and a potential upgrade how does this channel compare and total cost relative to other distribution channels with with plus.

Excellent question so.

We are quite flexible on the hotel side. So when we approach an independent hotel you for instance.

<unk>.

We have perhaps a minimum commission, but then.

We point out the better.

Deals that we can present to our traveler means.

It means youre going to get more visibility on tripadvisor. So.

Let's say <unk>.

<unk> might pay a let's call it a 15% commission.

That's probably less than what they are paying to other otas. So it's a bit cheaper of the channel.

And that might be hooked for us to.

To.

Persuade the hotelier that its worth signing up mind, you, it's very easy to sign up so so there is no.

Organizational.

There's no logistical or.

Technical <unk>.

Barry are there so we get the hotel the sign up and then the <unk>.

<unk>.

And if you add PERC and it could be as simple as a bottle of wine of crude slate.

Free upgrade if available.

A little bit of.

Very small amount of cost.

Maybe.

And then because of that offer it looks more compelling on tripadvisor. It rises higher in our sport quarter, and hopefully that hotel receives more bookings and they don't have to have it.

But many properties are.

It's relatively easy for them to offer a.

$20 off $50 dining charge and so it helps get them in in the restaurants helps get them spending the money on premises.

And the whole notion of vacation funds.

Allows someone to buildup this credit and we encourage the hotel and we can help the hotel market the ancillary services.

Those credits can in fact be spent on property hotels love that.

Travelers appreciate the.

The ability to get the extra amenity or the extra thing at the hotel.

And it's all it is.

All up to the property if they want to participate in exchange for more demand. So that's how we view our ecosystem market.

Thanks for the color, Steve and best of luck in the next chapter.

Thank you.

Thank you next question comes from the line of Catherine Colton of Cowen Your line is open.

Thanks, So much I had a couple of questions.

First could you talk about.

How do you think about television advertising and whether.

Now that we are.

We are in the recovery, whether you would consider.

Returning to TV.

Okay.

I can start.

Yes.

With regard to Tripadvisor plus.

As I've said before we feel we have an extremely highly qualified audience already on our site, who we have the ability to educate as they are shopping for a hotel. So LTV is.

The only effective for overall brand advertising for raising overall awareness, we feel we have plenty of traffic on our site today at the right point in time that we can educate and drive home the benefits of Tripadvisor plus without spending an incremental gone.

Once you have.

Arctic market fit and are on the growth ramp that we're really excited about.

Aim into all different vehicles that enable us to put fuel on the fire.

But I'm pretty clear I wanted to be able to show we need to be able to show ourselves and then we would be sharing with you.

That this thing is a rocket ship and here's why put more fuel on the fire would make a lot of sense I don't think.

I'm of the mindset that I should do that level of branding on the speculative nature.

I think there is another angle as to weather.

We approach television for our <unk> and <unk> businesses, because they are in a different investment mode. They have a different.

Opportunity to capitalize on share gain.

And they're also doing extremely well right now without any of those other media pieces. So.

I don't view it as something that is necessary.

But certainly.

Be additive over the course of next year and those on the brands.

If we choose to do so.

Thanks, and if I can ask an unrealized question can you give.

Could you give any more color or detail on.

How we should anticipate that the experiences and dining are let me, let me rephrase that how how well it did in the month of October for revenue because I think.

You alluded to the bookings.

The bookings being higher than the revenue trend for Q3, so any color on how that trended into October.

It would be helpful. Thanks.

Yes, we saw a bit of an impact from Delta in September also on the experiences business, but experiences roared back in October doing really really strongly and as we called out on a bookings level and of course bookings.

We are a leading indicator of revenue because the revenue recognition is at.

Consumption rather than at the time of booking.

But on the booking level. So the combined experiences points of sales by George Tripadvisor Third party.

We're above 2019 levels, which is very very encouraging.

<unk> has been sort of the.

The last step in a in a very strong recovery. This.

This year getting bookings above 2019.

What is strong about that as advisor was clearly leading the way earlier in the year <unk> is well above that level up above 2019 on a bookings level, but keep advisory has been catching up and so to be above 2019 on a bookings level for the combined points of sale and experiences is just a very strong signal for us that this market is coming.

Back strongly and our position is very good in it. So we're very pleased with that.

Great.

Steve I will definitely Miss you on the calls and best of luck.

Thank you. Thank you very much.

Thank you next question comes from the line of Doug Anmuth of Jpmorgan. Your line is open.

Good morning, this is David.

Thanks for taking the question first of all in regards to your strong performance and experiences are you seeing evidence that travelers are increasingly looking ahead because of the pandemic.

The behavior.

So it's just the behavior that you think could accelerate the adoption of online booking and experiences coming out of the pandemic and secondly for trip plus in the letter you talked about for <unk>.

Travelers coming to your site, removing the paywall deceiving on hotels can you elaborate on that comment a little bit.

Yes.

On the first part of the sound quality. It wasn't it wasn't a great. You were asking is this experience as evidence of what sorry, Please say that again.

How are you seeing any evidence that travelers are increasingly looking ahead because of the pandemic.

This is a behavior that could accelerate the adoption of online booking and experiences coming out of the pandemic.

Yes, I think I think we're seeing a number of very important trends.

One was a direct result of the pandemic is that we've seen a lot more domestic domestic.

Domestic experience consumption.

It was very strong we attended to index on Internet.

International travel American's going to Rome, where to Paris and London.

But we've seen such a strong performance of <unk>.

Our U S and European.

Customers actually consuming experiences locally and so domestic.

Strong.

Pre pandemic, we skew to city experiences, we start to skew to more outdoorsy experiences either watersports or are hiking or canoeing.

And that was a lot.

Big market that opened and what makes us feel very optimistic now that we have clearly established and the ability in the minds of our consumers to be very relevant in these more domestic and more outdoorsy experience is great we expect that to stick.

<unk>.

We recover from Covid, and then city travel is coming back, but not yet at the levels that it was before and international travel definitely is lagging at the moment, where we were before and so.

What makes us optimistic as we've established now deeper penetration in domestic and outdoors and when international and city comes back in full force, we think that will be that will be adequate for the business. So.

Strong signals, we think.

I would I would add that.

I think we're playing to a very.

Very macro trend.

Of people looking to do more on their vacations.

Bind with your ability to book on the phone and combined with the <unk>.

Bringing all this inventory online over the past decade.

I think we're seeing the tipping point, where more and more folks are planning to book, what theyre going to do online and.

We're in the pole position that we've got.

<unk>.

Beautiful business strategy licensing their inventory to all the major distribution channels of course trips go ahead Sir.

Also one of them.

But having a tremendous supply footprint great products most inch.

All interesting markets key things that you want to do and that you want to make sure you have a seat on the tour before you get there because if you are.

It's too scary to arrive in your destination and not know if you can do it.

Covid I believe accelerated because you wanted to know whats open you unveiled the cleanliness safety concerns all the rest of it.

But then again.

We've taught people how easy and convenient it is to book in advance experiences has always been referred to as the last of the major categories to come online after air and hotel and so we see COVID-19 having taught people.

The ability and sometimes the necessity of doing this booking online and I think we're going to benefit.

From that trend.

For decades to come.

To your simultaneous.

Okay.

There is a simultaneous trends.

Next to the planning in advance which is.

Because.

Phone has become much more important also for experiences Theres also an increased ability to actually book things, while you're on the trip and so one of the big opportunities that we have and have been capitalizing on is if someone has plans and events.

Periods, we can help them do another experience.

The trip and so it is both increased planning upfront, but also increased ability in market to market to them.

Sequencer and then to your second question on <unk>.

Tripadvisor plus the paywall sorry for the.

For the the screams referenced in the current instant savings model some of the properties that you click through you with to find the discount you can book immediately.

The properties you have to actually.

By plus first and then we will show you what the discount is on all of those rooms, so we refer to that as a.

Paywall experience.

Hi.

In both cases.

In the first case, youre buying plus with the transaction, but in the second case, you actually have to make the purchase before you can see all the gloom details in that.

It's a natural barrier to customer adoption is something we had to do because the supply challenges and that whole aspect.

<unk> goes away in the vacation from this model.

So we know that thats going to be a big win from the consumer side of things and so it's another reason why I'm, particularly excited about the upcoming launch of a vacation months.

Great. Thanks for the color good luck Michelle.

Michelle as well.

Thank you.

Thank you there are no further question at this time and I would like to turn the call back to Steve for closing remarks.

Terrific well. Thank you. Thank you everyone.

A very special thank you to all of the Tripadvisor team members all around the world, who continue to put their all into helping hospitality businesses travelers diners emerge from this pandemic.

We are quite optimistic.

Greenlee optimistic about the recovery of our industry and look forward to updating you next quarter on our core businesses and all of our new initiatives. Thank you again stay safe.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect have a great day.

[music].

<unk>.

Okay.

Yes.

[music].