TripAdvisor, Inc.

Good morning and welcome to TripAdvisor's first quarter 2021 earnings conference call. As a reminder, today's conference call is being recorded. At this time, I would like to turn the conference over to TripAdvisor's Vice President of Investor Relations, Mr. Reliance. Please go ahead.

Thanks, Ludi. Good morning, everyone, and welcome to our call. Joining me today are TripAdvisor's CEO, Steve Koffer, and our CFO, Ernst Tonneson. Last night, after market closed, we distributed and filed our first quarter 2021 earnings release and made available our shareholder letter on our investor relations website. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. On our IR site, you will find supplemental financial information, which includes reconciliations of certain non-GAAP financial measures discussed on this call, as well as other metrics. I also note that comments we may make regarding cost savings levels referenced on this call do not consider depreciation, amortization, restructuring, and other related organization costs or stock-based compensation. Before we begin, I'd like to remind you that this call may contain estimates and other forward-looking statements that represent management's views as of today, May 7th, 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 or information concerning factors that could cause actual results to differ materially from these forward-looking statements. And with that, I'll turn the call over to Steve.

Thank you, Will, and good morning, everyone. Thanks for joining us today. As covered in our shareholder letter last night, I'm pleased to say that consumer demand and revenue performance as a percentage of 2019 levels improved sequentially on our platform in both February and March. This was led by the U.S. market, where vaccination trends accelerated during the period. Traffic to our U.S. hotel pages approached 80% of our 2019 levels in March. Two of our key offerings that lagged last year, our hotel meta-search auction and experiences, are showing nice improvements so far this year, again, due to increased U.S. activity. Europe lagged due to lockdowns, but demand picked up in April, and we're optimistic for a broadened international recovery as vaccination rates improve. Positive Q1 trends in the U.S. and some other countries contrast greatly with challenges in many other parts of the world, like in India. And I just want to say that our thoughts are with all of our colleagues in India, as well as their families, and of course, everyone who is struggling so hard with this terrible situation. These contrasting trends that we are seeing support our overall view that the road to recovery is in fact uneven. So travel is certainly not out of the woods, but we have a positive start to the year. We remain quite optimistic about the second half of 2021 as the number of people vaccinated increases, countries reopen, and the leisure travel recovery broadens. People want to travel, and we are certain that when they feel safe to do so, they will travel. But the TripAdvisor story is more than just the recovery. We have and will continue to position the business for future growth by leveraging our platform's breadth and our competitive strengths and executing on our strategic initiatives. Pre-pandemic, we grew many offerings by double digits, including our B2B business, display advertising, experiences, and dining. We've been actively improving these products as well as our tech and our go to market strategies in order to deliver customers the best experience possible and drive diverse growth. Add to that the innovation that we're bringing to travel in terms of our new subscription product TripAdvisor Plus. As many of you know from our last quarterly remarks, we see a huge opportunity ahead and fully expect that Plus is going to be a very exciting part of our future. We remain in beta in the U.S. today, but are pleased with our progress as we work to improve the product for consumers and work closely with partners to build out the offering. Converting even a small percentage of engaged TripAdvisor traffic, not to mention the hundreds of millions of visitors per month that are searching on TripAdvisor for hotels and experiences, implies a potential long-term growth opportunity of tens of millions of subscribers and a multibillion-dollar recurring revenue stream. I'll note that absolutely none of this is possible without the team, and I want to thank everyone at TripAdvisor for their ongoing commitment to helping millions of consumers and partners get back to travel. We've grown accustomed to executing through tremendous unpredictability, and I've been very proud of your continued resilience. I remain very optimistic about what's ahead. And with that, Ernst, let me turn it over to you for some additional thoughts.

Thank you, Steve. Good morning, everyone. I first just want to echo some of Steve's comments. Uneven trends and uncertainty persist, but improvements have been encouraging. I remain pleased and impressed with our team's continued operational focus and how they rallied together to strengthen TripAdvisor, not for only a strong recovery, but for the long run. Q1 demand and revenue trends indeed reflected our commentary back in February with varied stories by geography and by offerings. Progress in the U.S. almost single-handedly drove sequential revenue improvements in our business in February, March, and in April. On the other hand, persistent lockdowns across Europe and challenges throughout international markets, as well as the absence of international travel, remain significant drags on our results. The good news is that there is a lot of room for continued improvement in the periods to come. In the U.S., but especially in Europe and beyond, as the number of people vaccinated increases, countries reopen, and the leisure travel recovery broadens. I want to quickly highlight three financial themes that remain within our control. Driving significant cost savings, ensuring a solid liquidity position, and laying the groundwork for compelling and profitable growth when the pandemic subsides. Firstly, regarding cost. We continue operating effectively and efficiently as a leaner company. Operating expenses in Q1 were 32% lower year on year. we expect the majority of the fixed cost savings that we generated in 2020 to persist, positioning us for operating leverage as the travel environment normalizes. On the liquidity front, in Q1, we completed an opportunistic convertible debt capital raise, which further fortifies our balance sheet. With $674 million of cash on our balance sheet at the end of the last quarter, plus an undrawn credit facility for which covenant flexibility was achieved last year, as well as enhanced operating leverage as revenues comes back, we believe we are in a strong liquidity position. And finally, throughout the pandemic, we have been focused on driving improvements across our platform. We expect that these efforts will pay dividends as faster growth and more efficiency across our various revenue lines as the market recovers. So in summary, much uncertainty remains, but green shoots have definitely started to emerge. We remain optimistic that leisure travel will come roaring back as early as the second half of the year and are pleased with the ongoing work that will enhance our positioning well into the future. With that, we will now open the call for questions.

Thank you. And ladies and gentlemen, if you have a question at this time, simply press the star, then the number one on your touchtone telephone. Again, to ask a question, please press the star, then the number one on your touchtone telephone. One moment, please, for our first question. And our first question comes from the line of Lloyd Gwamsloy of Deutsche Bank. Your line is open.

All right, thanks. Two questions if I can. First, just in the shareholder letter, you mentioned kind of credit card partnerships with TripAdvisor Plus. Can you just help us understand conceptually how something like that might work? Is that, you know, a credit card company paying some, you know, full freight, half freight, like how would that work in terms of paying for Plus benefits for their members? Would it be, you know, their cardholders would have to activate it? Would they just pay kind of in blanket? How do those deals work and what kind of, like, bounties come with those? If you guys can sign up credit cards for them, you know, if you can flesh that out a little bit. And then the second one, just on the U.S. auctions, it seems like it's clearly coming back at 80% of April levels or 80% of 19 levels in April. But that's a little bit behind at least some of the OTAs. commentary on US booking level. So wondering if you can help us kind of bridge the timing differences and you know, and how you guys think about the category of meta catching up relative to, I guess, OTA bookings and revenue. Thanks.

Sure. Thanks, Lloyd. This is Steve. Maybe I'll take the first question or still take the second. I There's a couple of different ways that we're looking to work with credit card companies. The first could be on the part of the more higher-end credit card that carries some interesting travel benefits already, or maybe a particular financial institution wants to break into that pretty lucrative category of travel. And so the travel reward or one of the travel rewards with the credit card would be a subscription to TripAdvisor Plus. That type of model would generally have the credit card or the financial institution paying trip advisor on behalf of the customer a perhaps a somewhat discounted off of list price rate, but but back every credit card company would I mean every credit card customer would would automatically become a TripAdvisor Plus subscription. That's a great deal for TripAdvisor. It's a way to enhance a credit card in a very meaningful and differentiated way for a financial institution. But obviously, those deals take a little while to put together. I have to find the right partner, and we're still in beta as a product. Another option is certainly being explored with other financial institutions. Just simply include a discount, perhaps, or a free trial. So a way to get started with TripAdvisor Plus subscription, reaching an interesting audience. And, again, it's something that the consumer would likely activate themselves, auto-renew on. We get someone to actually try the product, and we are completely convinced that once someone sees what TripAdvisor Plus offers by way of, discounts on all the hotels and all the experiences, the additional value propositions that we're bundling with the product, we think that that renewal will come rather simply. Ernst?

Yes. Hello, Lloyd. With regards to the auction, particularly the U.S. auction, seen significant improvement throughout the start of the year. We said in our shareholder letter that in September, In March, we reached in the U.S. about 67% of 2019. In April, that was nearly 80%. And right now, we're above 90% in the U.S. compared to 2019. So rapidly increasing performance, a lot of domestic U.S. travel that is helping us here, and we're pretty excited about that. The auction seems to be performing very nicely, CPCs, are recently roughly at 2019 levels. So the auction is very healthy indeed, and the OTAs obviously are actively participating in that. So very pleased with how that's going and a good sign for what may happen with our European business, which is now very suppressed in the second half of the year.

All right, guys. Thank you.

And our next question comes from the line of Jason Bassinet of Citi. Your line is open.

I just had a quick question on Plus. As you've had discussions with sort of your hotel partners, are there any sort of broad parameters of things they're excited about or concerned about as they sort of contemplate, you know, putting some of their inventory into the program?

Thanks. Sure, Jason. Thanks much. We've certainly had quite a few discussions with hotel chains, independent hotels, and we feel we're making good progress. But look, let me kind of back up and just remind everyone that we're at super early days about bringing this whole new subscription model to travel. And, you know, hotel discounts are obviously a core part of that consumer value proposition. And, you know, in doing so, we're actively engaging with chains and independent hoteliers and listening closely for what they like, areas that we can improve upon, and ultimately how we get everyone to join the program. We're absolutely dedicated to making a win for hoteliers just as much as it's a win for the travelers. So what we've learned over the past couple of months is that a number of chains and independent hoteliers really like what we're doing. They're perfectly comfortable with how we're displaying the plus, how we're merchandising, how we're how we require a traveler to buy a plus subscription in order to book a discounted rate. And that's what we call a hard gate. And, and frankly, that's what makes plus so different from the legacy hotel discount sites.

If you go ahead, sorry, go ahead. I was just gonna ask you if you had to sort of rank order, you know, the risks of this not achieving your your expectations, what would sort of be at the top of the list? And what's at the bottom? Sounds like the value proposition to the consumer is easy, right? So that one doesn't seem to be a constraint. What would be towards the top of your list of the things that you're more nervous about?

Yeah, it's a great question. I do think a lot about it because I love trying to kind of punch holes in our thesis going forward. And, like, we have the traffic on the site. You know, we shouted about the 160 million shots on goal of people that are clicking on our meta links in 2019. It's a great opportunity. We're signing up independent hoteliers, and they're comfortable with the product. We've had some pushback from some chains, but they really don't speak with just one voice. So a number are coming forward saying, hey, it's exciting. Let's enter negotiations. We see this as a great channel for themselves, and they want to make sure their properties essentially get their fair share of bookings from this product. Other chains are a little bit more nervous about how we're showing the rate, and we've taken that as great sort of constructive feedback, and we're addressing it. So we're in conversations with, I don't want to say every single chain, about what it'll take to make them feel very comfortable about joining the program. You asked me about concerns, and I just kind of want to make the point that we don't need universal coverage for this product because we have travelers going to, say, Cancun, and they want to see some amazing deals, and we want to present dozens of deals, but we don't need to display hundreds of deals. And if you think all the way back to Instant Book, it was kind of different back then. But here we're able to promote the deals that we're getting from chains or independents, wherever we get them, And the better the deal, the more we're interested in promoting it to the traveler. And we've seen over the past several months, traveler savings, literally, our best savings is more than $1,000 every single day since we launched the product. And pretty compelling numbers there. And so when we talk about the demand we already have on the site, I believe, and partnerships, which I'm happy to go into more, On the supply side, we have independents joining, we have good progress on negotiations for the chains, and some of the chain, and we want to make sure that we have participation from as many as we can, because some of those chains have the absolute best properties, absolute best properties around. So we want every property to be able to join the program. The point I was trying to make is we don't need every property. We just need a few dozen in all the geographies that people are traveling to. So it may take a little longer than others for some of the chains to hop on board to see the benefit, but we want to make sure all of their properties, again, get the share of bookings that Plus will be driving.

That's a great color. Thank you.

And our next question comes from the line of Richard Clark of Bernstein. Your line is open.

Hi there. Thanks for taking my questions. A couple if I may. You provided some very helpful color there on where we are in terms of U.S. bookings, both for the auction product and the experiences. Would it be possible to get kind of a similar commentary for the rest of the world in aggregate or broken it down? Are we seeing any progress as we've kind of exited the quarter outside the U.S.? ? And then maybe just a quick follow-up on the Plus product. I think we've seen a few comments that supply has come down a little bit over the last month, and there isn't as much into Memorial Day as there was a couple of months ago. Is that just a natural result of the shift from wholesale supply to direct partnership supply? And where are you in that process of shifting to that direct partnership supply?

Yes, thank you, Richard. I'll start with the commentary about outside the U.S. Much more muted, more like Q4 throughout Q1. More green shoots more recently, starting in Q2 in April and in May, but more depressed in the U.S. because of the lack of the rollout of the vaccine in Europe and the lockdowns, many lockdowns by countries. But it is starting to change. We see that the U.K. is... very much ahead with the vaccines and travel intent is increasing there. We see a thawing in our restaurant business. And reminder, last year, as soon as the restaurants opened in Europe, our fork business bounced back to 2019 levels very quickly in last Q3. We're starting to see restaurants open. There is a timetable for restaurants to open in Europe now, which is in the next few weeks in most countries. Italy is partially open. Spain is partially open. And in those markets, Berber partially, UK has just opened. In those markets where we're partially open, we immediately see revenues jump back. So recent green shoots across Europe, and we anticipate that Europe is, although behind the U.S., is going to catch up with the U.S. in the back half of the year.

Thanks, Richard, for the plus question as well. I give a short answer by saying simply, we're in discussions with a number of different aggregators, the ones we brought on originally that helped us deliver such a comprehensive amount of supply right out the gate, as well as independents and chains through our direct supply effort. That's caused some variation, as you noted on the site. I'd say it's less seasonally related and more an aspect of how we're going to market with our direct connectivity, direct supply, and how we're working with a different set of aggregators. I'd say expect more change going forward. We're a test and learn company. This is a brand new product. We're innovating about the best ways that we can display inventory, display great discounts for travelers while at the same time respecting the wishes of hotels who want to make sure their inventory, their prices are displayed in a way that they're comfortable with. As you continue to look at the site, you'll see some more tests coming, some more changes coming in the next weeks and months. And that's part of the reason why we're still in beta, as we hone in on what makes for a great consumer experience with a nice breadth of inventory coverage.

Wonderful. Thanks for the call. Thanks.

And our next question comes from the line of Navid Khan of Truist Securities. Your line is open.

Yeah, thanks a lot. Maybe first on Trip Plus, maybe can you give us a sense of the scope of the beta, how much traffic was exposed to it, and has the beta so far caused you to recalibrate your expectations up or down? Any color on that would be great. And then on the Plus traffic, I think last time you disclosed more than 100,000 properties. Do you have an updated number you can share? Has that number grown versus when it was previously?

Sure. Thanks, Naveed. So we have been, since we rolled out in beta earlier in the year, which was on a very small percent of our traffic, we rolled it up to north of 75% in the U.S. in terms of chances of seeing TripAdvisor. uh because we want to get as kind of as much experimental data as we can for how consumers are interacting on any sort of given day you might have four or five different plus related tests running as we again hone in on kind of what makes the best uh style of merchandising how the checkout flow works how we're sorting different properties to the top of our list you know lots of different things that uh that are all part of the equation uh what I've been, uh, you asked, uh, Hey, calibrating up or down, I'm getting more bullish on the opportunity because I see the types of savings that consumers are, are achieving. And, and they're pretty compelling. Our average savings North of $300. And there's, you know, several times every day when someone's saving more than a thousand dollars. And that's a meaningful number for changing the type of the trip that that traveler can have. And as word spreads that, hey, all of this is available with this new TripAdvisor Plus subscription product. I look three to five years out and I say, of course, somebody and darn it, that's going to be us is going to have a travel subscription product with tens of millions of subscribers because it's such a logical fit into the ecosystem. subscriptions, clearly proven in so many different categories now. And, you know, we've priced this We feel appropriately so that a lot of people can afford to subscribe. I mean, do the math. At $100 a year, it's less than $9 a month. What a great deal to be able to get the type of discounts on hotels. 10% off all the bookable experiences on TripAdvisor. You'll soon see some of the other things that we're adding into the package. And it's just a great notion and, frankly, a great business model for us. So I'm getting more bullish on the opportunity as I've seen more of the customer reaction. And frankly, I'm getting or I'm being careful myself to temper my enthusiasm about what this looks like in five years with how quickly we can get there because I'm constantly reminded that there isn't another travel subscription product out there. People aren't comparing this with something else. It's a new concept that we're introducing to people. And I have to be a little bit patient about, uh, the time it takes to educate folks, the time it takes, even though we have these no brainer moments, the time it takes to, for us to help persuade them that it's a, it's a very clear savings. Uh, so, uh, I, I, I am reminded by my team, I remind everyone that this is really early days in a great new product category and success is measured in years, not months. And that's the way we're approaching it because it's, again, I'll try to be more succinct here. I believe even more in the category. Love it. It'll take us some time to get there. I'm impatient by personality, but I understand these things. It will take some time. And super excited. To your property count question, I don't want to hang too much on specific property counts because what we found is it's really the combination of the discount level we're getting, how that compares to other partners, the prices that we're showing, that drives a lot of the booking. So not surprisingly, a very small discount. If we have a lot of properties with a very small discount, it doesn't move the needle for us. But when we're getting the 10%, 15%, 30%, 40% discounts, those become bestsellers pretty quickly. And we're really helping those hotels fill that empty room. And that's why the whole model is so powerful.

Thanks.

Great.

Yeah. Thanks for the color. Maybe a quick question maybe on the Viator distribution deal. Yeah. When can we start to see the P&L impact? Obviously, the economies are still reopening, but maybe talk about that, maybe how the economics might be structured, and is there potential to do more distribution deals such as this?

Sure. So I'll try to answer that. and then I'll let Ernst comment, part of Viator's business model is as a player for all the different points of sale. And so whether that be a booking.com, Expedia, other OTAs, including kind of the traditional offline travel agencies. So they're very good at, we are very good at distributing that type of, inventory. And again, it's early days in the recovery of all experiences, thrilled with the partnership with booking.com. Great company to work with, obviously work with them for a long time. They're excited on the experiences side, they have some of their own plans, and we're able to complement globally for them. And that's, from our perspective, quite exciting. Ernst, do you want to add anything?

Yeah, I would add is the fact that we are able to do distribution deals like this is a reflection of the power of the supply aggregation that we put in place with Viator, second to none across the world. And we have very attractive connections with very attractive supply in experiences. And that makes a partnership with players like booking an attractive proposition for both sides. It will allow them to scale their experience in business faster and will allow us to create even more scale in our supply aggregation.

Great. Thank you.

And our next question comes from the line of the Department of World Research. Your line is open.

Hey, guys. Thanks for taking the question. A couple ones. So first, can you talk about the auction participation at this time? Are you seeing more participants come in, either hotels or more OTH beyond your large partners? Just trying to get a sense of how various players are reacting during the rebound and what the marketplace could potentially look like post-recovery. And then second one on plus, I know it's a small data point given it's a beta right now, but as you assess the ROIs based on early data, how are you thinking about currently the potential cannibalization of meta revenues because of this product. Thank you.

I'll start with the first one, Deepak, on the auction. Yeah, we're pleased with increased participation. The auction, especially in the U.S., is coming back to life. I was describing that CPCs recently have been sort of close to 2019 levels, which is an indication of sort of the health that you see emerging I said that our revenue very recently has been above 90% in the U.S. versus 2019. And so the auction is regaining help sequentially, and we're very pleased with that.

And I'll jump in on the plus question. So why? uh we certainly keep a very close eye on cannibalization and when we put a plus offer at the top of the sort order uh while one still can click on a meta link for that plus offer and many people do we're obviously trying and succeeding at driving a bunch of traffic into the plus flow i too hard to say what the complete roi is going to be because we really don't have data on renewal rates. But if we make reasonable assumptions and we clean up a few of the loose ends on the conversion path to make that more effective, I'm quite confident that we'll get to a positive, a clearly positive draw on the dilution for the auction in place of the subscription revenue. The other thing that clearly helps the cause is that folks who become subscribers of Plus come back more frequently. And whether they're coming back to book another Plus hotel or a hotel that's not Plus but, in fact, is a regular auction Metaclick, they believe and they are much more loyal to TripAdvisor. And so we're also looking at that repeat behavior and seeing how that boosts our domain direct traffic, which in turn boosts our overall auction revenue outside of Plus. As you point out, very early days, pretty hard for us to measure right now. Those kind of medium to long-term benefits, but what we're seeing so far looks positive.

Got it. Okay. Thanks, guys.

Our next question comes from the line of Shweta Kaduria of Evercore ISI. Your line is open. Shweta Kaduria, your line is open.

Oh, I'm sorry. I was muted.

Can you hear me?

Yes.

Okay. Sorry about that. So could you please remind us how the pricing will work with TripPlus I know there was a question asked. There's wholesale pricing, there's consumer pricing, but how are you thinking about that? It's a $100 night. You just pass the discount through to the subscriber and you get a subscription fee, but the subscriber sees $85, something like that. Would it be different in terms of how much you pass through, whether it's a chain or an independent hotelier? Could you please remind us how you're thinking about that? And then the second is, What are you looking for in terms of supply on the platform, in terms of engagement that will trigger a full launch out of beta? So what are some of the metrics that you think will let you launch the product fully, whether in the U.S. or globally? Thanks.

Great. Thanks, Sweta. Excellent two-part question there. So the basic model we're working with, and there perhaps are some exceptions, is that we're encouraging hotels of all types, to identify a discount that we are able to pass along to the traveler. We're, in fact, passing along the entire discount, whatever they're able to offer, to be kind of the most beneficial to the consumer to get that consumer to book the property. So if an independent hotel ABC says, look, really interested in demand for these dates, We'll offer a 25% discount. That 25% discount flows straight through to the consumer. That means when someone's looking for a couple of nights a day at a 25% off at a decent average daily rate, that might now be a $300 savings for that trip. And the consumer sees, wow, that's a great savings. Love this hotel. Highly ranked in the location I want. And consumer saves 300, we charge them 99, net savings of $200, and it's a win, win, win all around. A different hotel may only choose to offer a 10% off, which is something, you know, we would still offer, but it's not as compelling to the traveler. For an existing Plus subscriber, hey, that's still nice. For a brand new Plus subscriber, for a One night stay, that's probably not or perhaps isn't going to trigger a subscription purchase. But that same hotel 10% off for seven nights stay probably does add up to quite a bit of savings. So we leave that up to the hotel. I mean, there's a minimum discount when we sign up the hotels. But that is something that they can kind of toggle up and down depending on their demand needs at particular points in time. I mean, I hope that kind of answered the how we kind of deal with discounts. Of course, down the road, we could always choose to not pass along the full discount to the consumer, but that's not our plans at the moment as we want this to kind of catch fire with consumers as quickly as possible. Maximizing the discount is one way to do that. And we're still making our money on the subscription and growing that recurring revenue stream. In terms of the plus supply slash launch criteria, supply is one aspect of it. We're looking to kind of hone the consumer experience, kind of make the conversion flow as straightforward as possible, make sure all the ticks and ties, the nuts and bolts of building this and making sure it's working on all of our devices is up to snuff. We don't have, and we don't feel it's necessary, a hard and fast, we must have X number of properties at Y discount level. But we do look around at, obviously, our major geographies. We look and say, are we offering a set of hotels that are compelling in terms of discount and compelling properties themselves? And we know we'll never get it. We're not waiting to have every city looking great before we launch. But again, the product is available to most of the clear majority of our traffic right now. We simply haven't launched it to our members and started up our PR machine and the rest of the ways one goes about launching a product. But as I say, that will come soon. And we'll just put the finishing touches on it is how I'd phrase it.

Okay. Very helpful. Thanks, Steve. Thanks.

And our next question comes from the line of Tom White of DA Davidson. Your line is open.

Great. Thanks for taking my questions. So will you give us an update on your progress around leveraging the massive amount of customer data that you guys have and making it more actionable? Any way you can kind of quantify the potential benefit to the business maybe you hope to see from that, be it more repeat rates, higher conversion, and also where does this rank kind of on your priorities? Maybe it's kind of fallen down the pecking order just given the focus on plus and making sure you optimize around the recovery. And then just a quick follow-up on Plus. Steve, you remarked how, you know, no other online travel platforms has kind of launched a subscription offering for consumers. Just curious on that. I mean, is that just because maybe the OTAs from day one have sort of been set up to kind of optimize around transactions and kind of e-commerce conversion, or do you think there are other reasons why no one else has done something like this?

Sure. a couple of questions there. So I'll try to do the first one. First, data to make it more actionable. We certainly have, I haven't talked about it a lot, but we have been continuously doing that in our CPM, our display ad business, helping to target with audience segmentation, not only by geography, but lots of different aspects. And that's what enables us to command a premium CPM in most of our display business. So we are doing that and have been making progress. When it comes to TripAdvisor+, certainly our go-to-market plans do involve looking at a lot of our internal historical data, the travelers who we think would be great plus customers, how we approach them with an offer or something different than how we're mass marketing to all of our visitor audience. So I'd say the data and analytics part is important. in service to that plus subscription priority as we launch when I look at a bunch of the activity that's going on. We are doing a lot, as you haven't seen on the site, in terms of pure recommendation-type capabilities. We're adding a bunch. You'll see some of it in experiences going forward. But again, it's a matter of priorities. We have a bit more focus on plus than hotel auction in that regard at the moment. But suffice to say, We do have teams working on bringing that data to life. I just haven't given it a lot of airtime historically. So the second part of the question, yes, TripAdvisor Plus, we expect to be the first kind of mass market travel subscription product, and we're investing a ton behind it. And it really is a very different model than the traditional store. And so OTAs like InXpedia or Booking are tremendous companies, have super brand awareness, a great product offering for travelers. They're both wonderfully global, but they've built their business around a commission orientation, which to be clear is a great business. We've been in the lead generation business for hotels, the transaction business just like the other OTAs for experiences, and now we're introducing this new direct-to-consumer subscription model. it's not that other folks can't, it's that it's a new way to think of something in travel. And because of, well, the challenge with somebody else doing it, a startup or a new company, is that they may not have the traffic to expose to the subscription, expose the subscription product to. But that's not TripAdvisor's challenge. We already have so much of traffic so I the opportunity to sell a subscription product For an occasional use, unlike a Netflix or an Amazon Prime, you're not watching a movie or buying something every week or every month. Travel's more episodic. But the value that we're presenting in this form of subscription is oftentimes much higher and can offer that instant savings. Because we have the traffic is why we think we'll be successful where others might be challenged.

Great. Thanks for the call.

And our next question comes from the line of James Lee of Mizzou Securities. Your line is open.

Great. Thanks for taking my questions. A couple questions on Plus here. Maybe can you guys talk about the checkout process here? Is the entire sign-up and booking flow on your website, or do you need to actually click at a website here? And just curious, what is your cancellation policy for membership? And lastly, I think, Steve, we talked about, The deals in general, that's great, saving about 30% to 40%. I'm just curious, are these hotel deals you're able to negotiate? Are they exclusive to TripAdvisor? Thanks.

Great. Thanks, James. Excellent questions. Going forth, the checkout flow is all on TripAdvisor. We're not sending you to any other website. We are... the entity that's making the reservation for you. If there's anything wrong or you want to change, you're calling us, and we're helping you through the process, whether that be for the attraction that you booked with a discount or the hotel that you booked with a discount. We're it, and that's a very deliberate choice. We're also in terms of hoping to get that second booking for the same trip or the very next trip. We operate on very hotel-friendly policy in terms of when someone books the hotel on TripAdvisor, we're sharing the full name, information, everything directly with the hotelier as part of the reservation. And we're encouraging the hotelier to try to upsell that client with spa treatment or whatever room service, whatever else that they might well be able to do or have them join the hotel's loyalty program, everything like that. So that's all good and, in fact, encouraged from us. Cancellation policy for TripPlus, super consumer-friendly now. It is. Essentially, if you look around and you're not going to use the subscription, we'll let you cancel. I think it's currently 30 days, but we'll probably extend that. And then you can envision kind of going forward. It's not a monthly subscription. It's an annual subscription. If you, for whatever reason, haven't been able to use the product, we don't feel you should be paying for it. But if you have used the product, then it's not refundable. You have it for the whole rest of the year. And frankly, if you're using it once a year, you're probably making your money. And if you're using it twice a year, it's clearly a great savings. Third part of the question, are the deals exclusive to TripAdvisor? They can be. That's really up to the hotel. As we contract with the hotels, we are not demanding that it be exclusive for other channels. But what's going to happen is that if a hotel offers us a 15% discount to be part of PLUS, and they simultaneously give that 15% discount to an OTA, then it will never be merchandised on TripAdvisor as a plus deal because it's not cheaper than what's showing up in our meta auction. And the reason again we're different is because we're requiring our travelers to buy the subscription product before they can book this discounted hotel. And that's the hard gate, that's the pay gate that enables hotels to give us a discount that they're not putting out there on their own website or through other channels, and that's what makes our deals special. So, you know, in the weeds, I guess, if the hotel is offering this discount, same discount on some other opaque discount site or packaged with an airline flight, that would be fine with us. But if it's also on a deal that's also on their own website, then it's not going to work. We're not going to merchandise their property as a plus property on TripAdvisor because it's not a compelling value proposition.

Great. And just a follow-up question here on a separate topic. And this product you guys haven't talked about in a while, which is News Feed, or you guys call it Feed Products. Any progress on that front specifically? And, you know, this is a couple quarters ago you talked about fees are very important for you guys to drive lock-in users. And any update on that too? Thanks.

I'm sorry. I want to make sure I understand the question. Could you re-ask it? I wasn't quite catching it.

Yeah, Steve, I think a couple quarters ago, you guys introduced very much a news feed-like product, very similar to Facebook, where people can put inspirational pictures, videos onto your app. Sure, I got it.

Yeah, certainly more than a couple quarters ago, that was what threw me. A couple years ago, we had... did a social feed to the product. A lot of that is still live on the site. You can still post. You can still follow. It was a great way to engage more users. It generated a lot more sort of content and guides for us. That was all very helpful. And, and we had been investing in it, then, you know, pandemic and TripAdvisor Plus came along, and we realized that this opportunity is kind of far more interesting, far more sustainable, and kind of didn't have, I want to call it a perceived competitive threat from other social networks. And we were not at all trying to be a social network. But you know, short answers. Yes, that's still live on the site. We're, we're adding, I think the numbers were adding more than 100,000 new members every day just as part of people joining TripAdvisor. because it's a great site to join, and so we're able to market to those people. So growing membership is something that we're already, I think, quite good at. Engaging those members in our newer offerings like TripAdvisor Plus and our focus on experiences, I think, is the fun part of the game right now. So at the... At the end of the day, we look at how can we best deliver an amazing vacation, amazing travel experience to consumers, and we're doing that with the content on TripAdvisor, the content you're used to in terms of reviews and photos, the new content, the guides, and the and the new ways we're educating users about destinations, the new COVID information that we're adding, as well as, obviously, Trip Plus, the ability to save a ton and have a much better vacation because of your ability to stay an extra night or to take that extra special tour to otherwise see the location in a way that you hadn't been able to before. Thanks, Steve.

And our final question comes from Vin CPL. Your line is open.

Great. Thanks. You mentioned U.S. auction coming back to life. Your peers have alluded to much stronger booking trends in the domestic market. And amidst that backdrop, just kind of curious how you've seen RICO and the insurance product progress, which was a direct-to-consumer offering that you rolled out. And then, A second part, a different product, B2B, I think it was Reputation Pro and Spotlight. Curious how those are progressing as well as demand is improving.

Thanks. Excellent questions there. So, RECCO, really fun product. but definitely aimed at the bigger, usually more international trip. It's where you get to connect with a travel agent that's really an expert, or a trip designer we call them, really an expert in the field that you're interested, the type of trip that you're taking, and people have not been taking those types of big trips over the past couple of quarters. We launched the product right as the pandemic was starting, and we chose not to put the product on ice and wait. We chose to continue to iterate and improve, even though we didn't have a lot of usage. As travel comes back, as Europe says they're open up to U.S. travelers this summer, we look forward to being able to really give the product a great test run out there with tons of users connecting and looking at – and hopefully the NPS scores that we're seeing continue to shine and let that product sort of gain some organic traction. All right. For the second-party question on the B2B side, Spotlight, Reputation Pro, excellent products. Again, launched, revamped in the middle of a pandemic when it's both tough to reach hoteliers as well as tough to sell something new to them. So I think the 2021, certainly the back half here, will be a great time for us to be looking and saying, How are these doing? Hotels are clearly opening up. Demand is growing here in the U.S. We're getting some stronger upticks of interest now, at least in the U.S., but it is a worldwide product set, and so it'll be a great question for us to update you on in in another quarter or two. It's been slow over the pandemic time, but we're not discouraged because we actually think these products, we know these products are really quite valuable to the hotels that we're selling to.

And Vince, as we are sort of filling out the tour of all the different revenue lines, I also want to highlight experiences, which we haven't talked about. We talked a bit about the Viator deal, but experiences is really a highlight in this past quarter and right now. experience is very much lagging in 2020 during the 2020, but really coming to life in the U.S. this quarter. We said in our prepared remarks that U.S. point of sale booking levels reached 50% of 2019 in March. That was substantially up from early in the quarter and from before and has moved further up in April and now into May. and the U.S. as a destination has been very powerful for us and a good driver of the business. So experience is coming back to life, and we're looking with enthusiasm what we can do for the rest of the year there.

Thanks for all the details. Thank you.

And there are no other questions at this time. I will now turn the call over back to Steve Koffer.

Super. Thank you, everyone, for joining the call. Time and time again, travel has rebounded and travelers have come back to TripAdvisor. We'll continue executing our strategy and ensure TripAdvisor plays an influential role in travel's recovery. Again, I want to thank all of our employees globally, as well as all of our TripAdvisor customers worldwide. I also want to thank our shareholders for their shared belief that TripAdvisor can play a key role in shaping travel in the years ahead. Please get your vaccines and stay safe. I look forward to updating everyone on our progress next quarter.

And this concludes today's TripAdvisor's first quarter 2021 earnings conference. You may now disconnect.