TripAdvisor, Inc.

We're standing by and welcome to the TripAdvisor fourth quarter and full year 2021 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Angela White, Vice President of Investor Relations. Please go ahead.

Thanks, Jonathan. Good morning, everyone, and welcome to TripAdvisor's fourth quarter and full year 2021 financial results call. Joining me today are Steve Koffer, CEO, and Ernst Tennyson, CFO and Chief Executive of Viator, The Fork, and Cruise Credit. Last night after market closed, we distributed and filed our earnings release and made available a shareholder letter on our investor relations website. In the release, you'll find reconciliations of non-GAAP financial measures to the most comparable GAAP measure discussed on this call. Also, on our IR site, 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, February 17, 2020. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release, as well as our filings with the SEC, for information concerning factors that could cause actual results to differ materially from these forward-looking statements. With that, I'll turn the call over to Steve.

Thank you, Angela, and good morning, everyone. We just finished our fiscal year, and I'm pleased with our rate of recovery. Thinking back to this time last year, things were still very uncertain, vaccines were not available, and many parts of the world were still in lockdown. We've come a long way, and as 2021 progressed, We saw our tourism industry begin its transition out of the pandemic, and our results followed. Across our segments, we exited the year in a much stronger position. Throughout the year, we remained focused on our partners, customers, and travelers. We continued to launch new products and improve the user experience for our travelers. And just a few weeks ago, we hit a tremendous milestone of a billion reviews and opinions. Now, all of this is a testament to our terrific teams across the globe and the brand that we've built, the foundation of which is the trust and engagement from our travelers. As we lay out in the shareholder letter, we believe that across our businesses, we are well positioned to execute our plans for 2022. We've provided updates on our key segments and areas of focus as we start the new year. I hope you've had a chance to read through that. One update that I did not provide in the shareholder letter was on the CEO transition. I can share that the board continues to search for my successor, and we will keep you updated as the journey continues. In the meantime, I remain fully engaged and focused on driving business results, innovation, our employees, and our customers. So with that, I'll turn it over to Ernst before we take your questions.

Thank you, Steve, and thanks, everyone, for joining. We were pleased with our 2021 financial results and are positive about the setup for 2022. We started last year with revenue that was one-third of pre-pandemic levels, yet as the industry recovered in the second half of the year, we exited at 72% of pre-pandemic levels, and our Q4 results were slightly ahead of the expectations we had communicated in December. As we saw the top-line return in 2021, we also managed our costs appropriately, maintaining fixed-cost savings and a reflection of the flexibility in our model as we balance future revenue opportunities with investment. In this new year, we see some exciting areas which we called out in the shareholder letter. For example, our experiences offering continues to deliver high growth, and we are expecting revenue for this line to be well above 2019 in 2022. As discussed in the previous quarter, we are looking at multiple opportunities to crystallize value of our experiences in dining business. An update this quarter is that we recently submitted a confidential S-1, which, along with other opportunities we are evaluating in parallel, puts us in a position for a potential sub-IPO of Viator, subject, of course, to market conditions. Our HM&P segment continues its recovery path, and while still a transition year, we expect to show great progress in all our revenue lines in this segment as well, in addition to meaningful year-over-year profitability increases. We look forward, in particular, to catching up in our more up-funnel B2B products for hotels and media sales. So in summary, we are very optimistic that consumer travel continues to transition back to full recovery in 2022, and that we are positioned to benefit from the return to travel in general and international travel, TripAdvisor strength in particular. With that, let's jump into Q&A.

Certainly. Ladies and gentlemen, as a reminder, if you have a question, please press star then 1. Our first question comes from the line of Nivit Khan from Truist Securities. Your question, please.

Yeah, hi. Thank you, and good morning. Just a couple of questions. Maybe on Viator, can you guys maybe talk about some of the areas where you see some low-hanging opportunities for investment, where you get the biggest ROI? And then in dining, beyond the recovery that is expected to happen over the next 12 to 18 months, just from the recovery and recovery and travel. What are the levers that you have to drive long-term growth in this segment?

Yes, thank you for the question. Let's talk about experiences first. Experiences was a tremendously strong year in 2021 and a very strong return to pre-pandemic levels in that business. We saw Traditionally, in this business, we had very strong city consumption of experiences, strong international consumption of experiences. And last year, we saw the opening up of a very strong U.S. domestic business in parallel or in replacement in large part, which was a business we hadn't tapped into so much. So we grew strongly domestic use cases of experiences. the jet ski in Florida, the canoe on the Colorado River, a helicopter tour in Hawaii, and that drove very strong growth for us. We also, as you alluded to, flexed our marketing spend in this area to a very great effect. We were able to get a lot more revenue by stretching our payback periods just a little, and this was a huge success. So we feel we've taken significant share in a market that pre-pandemic was growing at very high levels, and we are positioned really well with our experienced business going forward. The various initiatives that you asked about that we have in place and leverage that we have in this business, we talked in our shareholder letter about one exciting new product, which we accelerated for our operators, which is called Accelerate. And this is an opportunity for our operators to profile themselves more on the platform. And this has created great results for us, not only in bookings, but also in our take rate. Other initiatives, we have really improved the quality of the products that we have, the experiences products that we have, and how we show them to our users. A real focus on quality and showing only the best experiences to our users, which has resulted in great conversion gains. The last thing I would highlight is a strong focus on our app for Viator. We are under-indexing on our app usage, but have made great strides in developing that product over the last year and see tremendous opportunity going forward. One important feature of the experiences and shift in the experiences businesses is that increasingly consumers are one, investing in experiences rather than the place they stay or the travel to the place they stay, especially with millennials, that's a huge trend. A second important trend that we are seeing and tapping into is an increasing flexibility to book experiences really while in destination. And the app is a critical tool for us there. And so we're investing significantly in our app capabilities. On dining, the leverage that we have there is still increasing the penetration. We are, with the fork, indexing heavily towards Europe. We're a European business with the fork. And Europe is underpenetrated in terms of restaurant reservations compared to, for instance, the United States. And there's a lot of opportunity still to penetrate countries more deeply, go to secondary, tertiary cities, and sign up restaurants there, and to increase the user base that we have and the loyalty of the user base. And those are all areas where we invest. Another exciting area around dining is we're investing more towards more fintech type of applications. We have launched a payment option, PorkPay, on the app to pay on the app for – for your dinner when you're in a restaurant integrated with the restaurant, which is a very exciting way of creating stickiness and loyalty. And the other area where we have invested is in gift cards, which allow us to further penetrate the market and leverage the word of mouth of the great service that we provide. So levers are differentiating towards more fintech products, deeper penetration into markets, UK, Germany, markets where we're under index, we're investing in. And so we have for both of those businesses a huge time ahead of us, 80% offline in experiences still, a huge time ahead of us. And we think the competitive position to really take advantage of this market. And so we're bullish on both businesses, and as we highlight in our shareholder letter, continuing to invest in these businesses for long-term value creation for TripAdvisor and shareholders.

Got it. Maybe a quick clarification on something you said earlier. So the potential IPO you're exploring for Viator, along with some other options, are they mutually exclusive or not necessarily? How should we think about that?

Yeah, we have a range of options we're considering. We announced today or yesterday evening, that we have filed confidentially an S-1 for Viator. That puts us in a position to do a sub-APO as early as somewhere this year, and that's a great option to have. We're also looking at other things in parallel, some different, some more consistent with it, but this is one that we highlighted and is definitely an attractive option.

Great. Thank you.

Thank you. Our next question comes from the line of Richard Clark from Bernstein. Your question, please.

Thanks for taking my questions. Just first one on what you've been seeing for the last few weeks in terms of trends, both for your experiences in dining and your hotels business. Some of the other companies have commentated that Omicron has kind of eased off and things are getting better, and just maybe how you've reflected the last couple of weeks into your guidance for Q1.

Sure. This is Steve. I'll take this, Richard. We have seen and can echo some of the comments that Omicron does seem to have eased off January. I mean, December and January were pretty tough in the travel industry. I think everyone has seen that, and that's caused a material issue for what we would have hoped for in Q1. We're reluctant to make many forward-looking statements based upon days or a week or two of data, but we're certainly encouraged by what we see if we look in the very recent past.

If you put it in the context of what we said about the first quarter, January clearly impacted by Omicron, and we saw December and January having impact. But as Steve is highlighting, trends are up. February is looking much stronger, and that makes us incrementally positive about the year, but Q1 will be impacted by that January impact. But it seems to have been a particular January issue. In terms of specifically your questions about experiences in dining, very strong performance there at the moment. Dining was significantly impacted also in January in Europe. And that is clearly easing now into February. And experiences has been strong in February too. So things are looking up in February.

Thanks. And if I could just ask one follow-up. In your shareholder letter, you mentioned you're not just going to put resources into experience in dining, but also into your core hotel and media offering. Is that a reference to the leaning into paid search, or is there some more product investment going into those areas as well?

The total investment we're making in HMMP is incrementally quite limited. We called that out in our shareholder letter. There is some inflationary pressure on wages, and we're making some hires, but by and large, the increase in fixed cost is quite but we are shifting resources around within our portfolio there. As we were waiting for the pandemic to come back, we were focusing less with resources on relaunching, for instance, our B2B business, and we are addressing that this year by shifting more resources towards that. So there's more resources going to the core parts of the business that will drive revenue in-year. Okay, very helpful. Thank you.

Thank you. Our next question comes in line. Jed Kelly from Oppenheimer. Your question, please.

Hey, great. Thanks for taking my questions. Just circling back on experiences, you mentioned you had pretty strong share gains in the U.S. Can you talk just regionally how your experience is doing in different regions, including Europe and APAC? And then just on the plus subscription, I know last year when you were first rolling it out, it was a lot of discounting. So have those $99 subscriptions renew. How is that occurring? Are people churning off that? Are you alerting people? Or can you just talk about how you're managing through the discounts that people received last year? Thank you.

Hey, Jed, I'll take the first one on experiences. Our experience as business is a global business, and we have experiences in Europe, North America, and in Asia Pacific. Our audience, our points of sale have skewed to more English speaking, so we're strong on the U.S. point of sale, U.K., Australia historically, and Europe point of sale is an opportunity for us where we still have a lot of room to grow on the POS side. What we saw last year in terms of trends was where historically we had seen U.S., U.K. travelers making city trips and city experiences and or make international trips, the American going to do a Coliseum tour in Rome, for instance. We saw last year very strongly a shift towards the U.S. market and U.S. domestic consumption. And Europe now coming back. And so we have seen at the back end of the year and early this year, Europe coming back and increasingly international travel coming back. And so what makes us so enthusiastic about our experiences business is that We captured this strong domestic U.S. business last year. There will be, to some extent, some move from domestic consumption to international consumption, but we also believe that we have really demonstrated that use case of domestic U.S. consumption to our users in a way that will be sticky. And this year, we're expecting an increasing recovery of Europe as well as international trips that our audience is making. So all things that bode well in combination with the various improvements we're making to the product. I highlighted some of those. We're set up for a strong year.

Jed, I'll take the plus question. It's still pretty early days for us to get a good handle on churn and redemption. You have to remember we weren't fully rolled out this time last year, nor nor would I counsel us or I do not read a lot into churn on the very first set of customers, the early adopters or the other industry folks who might sign up to try something. I would add that we don't view ourselves as having been dependent in our early set of customers on the discounts. We did try discounting, the $99 price in a variety of different matters, but I wouldn't, I mean, it's a perfectly fair question, but I wouldn't particularly worry that the discount level would be a major factor in churn versus usage over the course of the year.

Thank you. And just to follow up, Ernst, when you talk about, you know, expanding Viator into non-English speaking countries, do you expect it to grow organically or would you look at acquisitions?

Mostly organically, we have a strong footprint, and it's not so much supply growth. We have very strong supply in Europe, but the audience, the points of sales in European countries, particularly continental Europe, have under-indexed for us, and we think that's still a growth opportunity that we'll tap into. We'll do that with product and marketing, not with acquisitions necessarily. Thank you.

Thank you. Our next question comes from the line of Lloyd Walmsley from UBS. Your question, please.

Uh, thanks guys too. If I can first, um, the shareholder letter mentions experiences, even top being kind of like a mid to high twenties range. Historically, you've talked about the targets being hotel like, so wondering if there's anything, uh, that changed to kind of lower that, uh, target margin and then, uh, The letter also talks about revenue from free traffic recovering faster in 2022. Is there any changes to Google SEO we should be keeping in mind, or what is your plan in terms of brand advertising spend in 22 versus the past that we should think about for kind of traffic driving?

Yes. I'll take both questions. Hey, Lloyd. On the first one, no, our long-term outlook for E&D hasn't really changed. We said mid to high 20s, which we said in the past as well. And it could go beyond that, but that's sort of an intermediate long-term goal. The economics of both businesses are very healthy. If you take experiences, we have take rates in the mid-20s percent, which is very healthy. We have a cost structure. that is comparable to one of a hotel OTA business. And the microeconomics on a consumer level are attractive as well. We see nice repeat rates in our user base, et cetera. And so we think the economics are very healthy. And so as we compare ourselves to hotel OTAs and their development historically, we think that those are the kind of margins that we can target for this business long term. and we are going to benefit, we believe, long-term of being a market leader in that area. On the restaurant side, the economic model is slightly different, more focused around getting a bounty-per-seated diner from restaurants, and that's a business that can scale very nicely on that model. We are currently investing in expansion of markets. I talked to you about that. We're acquiring customers. The repeat rates of customers that we acquire for our dining business are attractive and so generate a nice NPV. And so we're building that base as we go forward and expect to see real leverage in that model going forward as well. So we feel good about the long term, but as we highlight in the near term, we're more focused on getting the growth and taking advantage of the TAM and of our market position and are more focused on top-line growth than on bottom-line growth. Your second question, free traffic. Yeah, we saw in the pandemic last year, and we've highlighted that in our core auction, that our pay traffic was growing faster than our free traffic or recovering faster than our free traffic. It's largely a function of very healthy CPCs that we have seen and we've called out, particularly in the U.S., which allow us to, in our turn, spend more on paid marketing channels, on Google and other paid marketing channels. And that has, with still lower number of shoppers from free channels coming in because of the pandemic, has shown a mixed shift in our total portfolio towards more paid As the pandemic unwinds and as we're getting closer to a more normal, we expect that balance to shift back to more historic levels. And as such, in this year, in 2022, we expect free revenue to grow ahead of pay traffic and get a not full but partial rebalancing towards the historical levels. In terms of brand spend, We have some brand spend that we have been doing in last year around the fork, and our bigger brand spend historically, of course, was in for TripAdvisor. We currently don't have any plans to return to significant brand spend budgets for TripAdvisor.

Okay, and anything on SEO today? Google algo changes to be mindful of? Ernst?

This is Steve. I'd say, as you're probably aware, there continue to be a set of changes. Google continues to push pretty much everyone else further down in the organic list, but I can't cite any big moves over the past quarter.

Okay, thanks, guys. Thank you. Our next question comes from the line of James Lee from Mizzou. Your question, please.

Great. Thanks for taking my questions. A couple questions follow up on TripPlus. I think on the shareholder letter, you guys talk about not making much progress, you know, as expected. Maybe you can clarify that statement a little bit, Steve. Is that in terms of supply or the benefits you're offering to consumers or the uptake on the memberships? And also curious, what are your key focus plus for 22? And also maybe help us understand a little bit of consumer behavior. I'm sure you guys have done a lot of surveys. Help us understand what the key reason people are not signing up for your service.

Sure. Thanks for the question. When I talk about kind of plus not quite meeting our expectations, we did believe with the traffic and the brand trust and the number of folks that were looking to plan their vacation on TripAdvisor that a travel subscription would resonate faster than 2021 has shown. Yes, we had some supply challenges, but we did some changes. And as you look on the site, you can see some pretty nice discounts across the board in the markets that we're rolled out in. I'd say the biggest learning for us, and as we say, we're still hugely invested in making a travel subscription product work. But we have to recognize that at this point, we haven't found the product market fit that we're looking for. So as you point out, we do our customer surveys, our focus groups. One of the things that I can share is that as we get people down the purchase path for a hotel with the big savings, the decision to... Actually, customers are telling us the decision to make this big hotel purchase while at the same time signing up for a travel subscription service is perhaps a bit more of a load than that customer is ready to decide. And that makes some intuitive sense. If you have a big choice, where am I going to stay for my vacation? It's an expensive purchase. And yes, you're saving real money, but it's not just whether to buy a travel subscription. It's whether this hotel is the right one for you. And so some of the things that we've been trying have been presenting the opportunity to buy a travel subscription at different points. And I think it's fair to say we have quite a few other things in the hopper that we look to as we respond to this customer feedback that we've gotten where we look to find different ways to present the value proposition in a way that consumers will say yes at a higher volume. The 2021 learnings is that we were too optimistic in the consumer uptake, and we tried to share that in the shareholder letter with you, but that we're still very excited about the prospects of a travel subscription based upon all of the trust and traffic and capabilities that TripAdvisor has to offer.

All right, thanks, Steve. If I can ask a follow-up question regarding a new CEO search. I think previously you said you guys were looking for potentially an executive with travel and tech backgrounds. I was wondering any changes to your search criteria. Are you expanding that? I'm just curious kind of where you are in the progress.

No, I don't think there's been any change in job description. The board, obviously, for very good and appropriate reasons, wants to be thorough in their evaluation. And I've given them the ability to be thorough with my time frame of evaluation. of, look, find the ideal successor and then it could be a very smooth transition. So I wouldn't read anything into the lack of a candidate yet. The search hasn't been going on for that long. And, no, the criteria still is it's a fantastic company with a tremendous brand and someone with e-commerce, tech, travel, all the things you mentioned, it would be perfect.

Great. Thanks, Steve. Thank you. Our next question comes to the line. Deepak Manivanen from Wolf Research. Your question, please.

Thanks. This is Zach on for Deepak. Just on Viator, you know, as you explore kind of various different options for the business, how do you think about how important the kind of core TripAdvisor platform is to the long-term growth outlook for Viator? And then I appreciate the kind of mid to high 20s, like long-term margin target for the E&D business. Is there any kind of meaningful difference between kind of the experiences and dining portions of those in terms of the long-term margins? Are they meaningfully different or roughly the same? Thanks.

Hey, Deepak. In terms of the Viator and the TripAdvisor point of sale, within our portfolio, within Viator's portfolio of revenue, by far the largest component of that revenue is the Viator point of sale. It's the Viator.com app where people go to book directly, book on Viator, book experiences. That's the largest channel. A significant but smaller channel is the TripAdvisor point of sale. Viator is the fulfiller for TripAdvisor. TripAdvisor is the sales channel for Viator. So someone can book on TripAdvisor.com an experience as well, and that gets fulfilled by Viator. Customer service gets done by Viator. Viator is the merchant of record. It gets fulfilled through Viator, but it's an important channel. And then the third much smaller channel is other third parties that Viator integrates with and has a range of different arrangements with. And that's an attractive long-term growth channel for us as well. For TripAdvisor, experience is an important strategic vector. For TripAdvisor, the brand. Increasingly, it becomes important for our travelers when they're in market to really look at and figure out what to do and what interesting things they can do. The fact that we have Viator as a company in our portfolio and later perhaps with a more arm's length relationship is important for TripAdvisor the brand and the strategic focus for TripAdvisor the brand and TripAdvisor has ambitious goals to grow its channel there. And so Viator will benefit from that in the future as well. In terms of your question to long-term margin differences, Both businesses are attractive long-term, have long-term profiles. I would highlight that what I really like about the experiences profile is what I said, a very attractive take rate, which is, compared to the hotel industry, very attractive, with very similar economics in terms of rollout of supply and marketing to users. And so I believe that setup is very attractive going forward in particular.

Does that answer your questions? Yes, thank you. Thank you. Our next question comes from the line of Mario Luke from Barclays. Your question, please.

Great. Thanks for taking the question. So in terms of, you know, your reviews and getting to $1 billion, you also announced earlier this month a new partnership with TIAC to show your reviews on its website. So just wondering if, one, you could elaborate on this partnership and how this benefits TRIP. And then, two, if potentially in the future it could extend beyond cruises to better monetize these one billion reviews externally. Thank you.

Sure. So, obviously, clearly we're very proud of the billion reviews and opinions. It's a testament to everyone coming back, a reminder of the power of the network effects in our industry. I believe the kayak relationships you're talking about are cruise critic subsidiary powering the kayak cruise tabs. And what a great way for for Kayak to be able to expose cruise to their users and for our cruise critic company or sub to be able to gain access to those additional customers when they might just be thinking about, hey, how much does it cost to get to Miami to take my cruise? And here Kayak can offer more cruise information and cruise critic powers it. So Kayak's a very A strong company, a lot of traffic, perfectly good notion of why these are powerful together. I'm not sure I would read too much more into that to the rest of TripAdvisor.

Got it. Thank you. Okay. Thank you. Our next question comes to the line of Tom White from DA Davidson. Your question, please.

Great. Thanks for taking my question, guys. Two, if I might. I guess first, Ernst, you mentioned B2B subscription revenues having a strong recovery in 2022. Can you maybe just elaborate on that a bit? Is that kind of just more of a slow build due to the subscription nature of some of that stuff, or are there any kind of new products or new ad formats that should move the needle? And then on experiences, can you maybe just share your view on that? how we should think about the long-term competitive differentiation for you guys and experiences. I think Airbnb said on their earnings call that they're going to kind of renew their focus on their product in that space. But long-term, do you guys win or stay one of the long-term leaders due to supply or breadth? Is it the consumer experience? Is it linking experiences up with other parts of Trip, like maybe Plus, stuff like that? I'd be curious to hear your thoughts. Thanks.

Yes. Tom, the first question on our B2B business. So in our shareholder letter, we showed a graph of our TripAdvisor other branded hotel revenue, which is very largely the subscription business. and its percentage to 2019 throughout 2021. And you see that compared to other parts of the business earlier in the pandemic, the business was doing relatively well as a percentage of 21, which is the nature of a subscription product. And you see that as we were recovering throughout the business in 2021, you see that this line of the business recovered some, but not as fast. And that is, again, the nature of the subscription business. We also are now currently aggressively rebuilding our Salesforce capability for this product. Of course, we did not invest as much in Salesforce during the pandemic and we are rebuilding that right now to capture the recovery in 2022 that we expect. But you're correct to point out, Tom, that this has a lag effect because if we sign up subscriptions the revenue recognition of this will be trailing that. So this is a business that will continue to be – will not snap back as fast with a recovering travel market, but we will believe does recover on a sales basis. And as we move further into the recovery, we'll catch up on a revenue recognition basis as well. Then in terms of experiences, long-term differentiation – The way we think about this marketplace, there are going to be players like TripAdvisor that target an integrated trip, a full trip, and use experiences as an add-on to the overall marketing of a trip to their consumers. We also believe that there is going to be room for a few pure play experiences providers, like there have emerged other verticals in travel. And we believe that we are uniquely positioned with our Viator brand to capture that pure play experiences OTA space. and there will be competition, but we believe that we have a fantastic position to be positioned long-term as that player. And the differentiation comes in the breadth of supply that we're aggregating, and we have about 300,000 experienced products today. Breadth of supply, a differentiated way of marketing that to our users, and just a brand recognition for that product. one place you go to if you really want to book an exciting experience. And that's the space, competitive space that we're capturing. So we're playing it from both angles, from that angle plus the more integrated play that we make with TripAdvisor. And that combination, we think, is going to be very differentiated.

Thank you, guys.

Thank you. And as a reminder, if you have a question at this time, please press star then 1. Our next question comes to the line of John Colantoni from Jefferies. Your question, please.

Thanks for taking my question. I just wanted to ask about cost savings. It sounds like you're expecting to attain a majority of fixed cost savings in HM&P, but reinvest fixed and variable cost savings in E&D. Maybe you could just help outline out of the $240 million in total cost savings in maybe just walk through what portion you're expecting to retain going forward versus spend back into growth initiatives. Thanks.

Yes. I think the additional disclosure that we gave in our shareholder letter, which we believe will be helpful, is that we split out our fixed cost and variable cost by segment. And this allows for better modeling for you, analysts and investors, and allows us to talk about the different trends we see in different segments because that's clearly what we're seeing. Of the $240 million of fixed cost improvements, we've highlighted that within HMNP, that was about $100 million of that was in HMNP. And we're adding some back, but it's very modest. A bit of inflationary pressure, a bit of hiring, sales force, etc., but it's very modest, and so those savings, by and large, are very sticky. We've also highlighted in the shareholder letter that about $90 million of costs came out in our E&D segment, and there we want to reinvest, and we think the majority of that $90 million is going to be reinvested this year into product development, technology development, capability of our supply organizations, and all for driving revenue in the year, but more importantly, positioning as well for the years to come. In other, the remaining fixed costs came out in sort of other. There, we're making very minimal cost increases, and so those savings are very sticky as well. I hope that's helpful.

Yes, it is very helpful. And one quick one on travel spend and the recovery of travel spend. I just wanted to clarify here, do you anticipate spending for the full year will recover to pre-pandemic levels? Or is the expectation that, you know, at some point during the year, maybe in the second half, spending will return to pre-pandemic levels? Thanks.

Yeah, so we're bullish about 2022. We obviously started in January with the impact from Omicron, but we expect to see a continuation to the path to return to relatively normal travel levels, which started in 2021 and we expect to continue in 2022. And we assume a progressive return to pre-pandemic levels of the leisure travel market, and we expect to be there at some point this year. without putting a finer point on it. So as a result of that statement, as we look at our own business, you would expect that our revenue recovery would follow a similar pattern throughout the year. And our EBITDA, as we highlighted, particularly will be second half weighted in the full year. Appreciate the questions. Thank you.

Thank you. Our next question comes from the line of Dan Wasiliak from Morningstar. Your question, please.

Good morning, guys. Thanks for taking the question. So as I understand it, one of the existing advantages for your experience business is the ability to tap the cash generation from the core hotel platform for investment purposes. Just was wondering, so regarding the potential sub-IPO for Viator you guys are considering, is the thought that experiences would still be able to use the cash generation from the core hotel hotel platform for future investment needs if you decide to go that route?

My lawyers advise me not to be too specific about what the IPO means and how to market the IPO, but let me just take the general. Part of the more independent structure and independent financing of a business would be that you would have independent financing of such a business.

Okay, that's fine, understood. And then just one more if I could. So regarding, I guess, the percent of dining that's booked online, I'm wondering if you can give or if you know like a penetration rate for that in the U.S. and then Europe, and then that's it for me. Thanks.

Yeah, without putting a finer point on it, it is lower in Europe. In Europe in particular, a lot of dining is done offline, reservations is done offline. And that is a market that we are tapping into, getting people into the habit of grabbing the fork app to make their reservation booking. And we do that through providing a great service, but also we have marketing tools like loyalty programs, Yum Points, we call them. We're increasingly integrating, as I said, with payment capabilities on the app, with gift cards. And so we're creating that flywheel of making online booking a habit, which we're successful at, but we think there's a long runway there in Europe.

Great. Thanks, Scott.

Thank you. Our next question comes from the line of Brian Fitzgerald from Wells Fargo. Your question, please.

Thanks, guys. A couple on Viator. We wanted to parse apart the improved experience you called out in the letter. You mentioned supplier trust and quality standards. You also said looking at payment flexibility, access to customer service. Are those things more a function of just a larger base of suppliers? Is it culling off less performance supply? Is it new tools and innovation? Maybe it's a bit of all three of those. And then As you contemplate the Viator IPO or other alternatives, it might be premature to ask, but I'm wondering how you would plan to maintain the operational synergies you have between Viator and the Experiences business on TRIPS POS.

Excellent question. The push over the last year has been much less on adding more supply. We have very significant supply. We had a a big job last in the pandemic to reorient that supply that we have towards the use case that was much more relevant in the pandemic, which was the U.S. domestic use, which was one area. Other areas that we've been really focused on, how can we help these suppliers, operators we call them, how can we help these operators profile themselves better on TripAdvisor? And in particular, how can we make – on TripAdvisor and on Viator, how can we make – On Viator, the experiences that we believe have the highest quality, and the highest quality is they're exciting. They convey clearly what the experience is and why it's an exciting experience. It has a very clear description of the experience. We have privileged those and helped our suppliers to improve those products. And that's been a huge help in conversion because it will not surprise you that products that are of a high standard on our site have much better conversion rates than products that are not. So a big focus on how do we help operators improve their content, but particularly how do we privilege the content on our site that is really high quality has been a big push. I talked about the Accelerate program, which we piloted throughout last year and are currently implementing with great success. which is helping operators to play with the levers that they have at their disposal, take rates that they give us, for instance, to better profile themselves on Viator and help sell. That's been, in our trials, a huge success, and operators are very excited about that. And we are rolling that out in 2022 with UpSight there. So those have been some of the important focus area. I mentioned the app, which is an important focus area as well. So really the focus on and a huge runway we think in how do we better present the use case in experiences. Other big focus area for us is How do we retain as many of the users so they come back and book again? Booking on the same trip is a huge opportunity that we've been focused on. So someone's already booked an experience and we know they're traveling to a certain destination. How can we communicate with them so they have a repeat purchase even on that same trip? But then beyond that, how do we make people come back and how do we communicate with our users in a way that stimulates that? That's another important area of improvement. In terms of the operational synergies between Viator and Core TripAdvisor, we are currently set up with different intact teams that operate Viator and the Viator business, which includes having TripAdvisor as a merchant, a customer, as an affiliate customer, and the TripAdvisor team, which is integrated with the total TripAdvisor user experience. And so we already have separation of teams to a significant extent. And both businesses have a different go-to-market strategy for the experiences business. And so we've already internally carved out these businesses as separate businesses.

Got it. Thanks, Ernst. Appreciate it.

Thank you. Our next question comes to the line of Kevin Coleman from Cowan. Your question, please. Great. Thanks a lot.

Could you give us any more color on the consolidated revenue recovery strategy? in February. If you compare that to February 2019, have you gotten back to those kind of minus 30% type levels that we saw in October? Thanks.

I don't want to put a finer point on it than we have already done. We've given you some indication of where we expect the quarter to net out. But let me leave it with there has been a market improvement in February in the business from January. January, across the board, in our hotel auction, in our dining business, you can see from the graphs that we produced that the dining business was already impacted in the fourth quarter by Delta and Omicron. Dining has proved to be maybe the most elastic of all our businesses to any news or actual COVID cases. And In 2020, in the summer of 2020, when the COVID cases dipped so far, our restaurant business roared back very quickly. And we've also seen on the reverse that with COVID cases rising as they were strongly in Europe in the back half of the fourth quarter and in January in particular, we've seen the dining business have an elastic impact. And we see that elasticity right now in February as well. We see the market, the consumption come back very strongly again. So I want to leave it at significant difference between January, which was significantly impacted across the board, and now in February coming back. And that has resulted in the forward-looking statement that we made about the quarter.

Okay. Thanks, Ernst.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Stephen Koffer for any further remarks.

All right. Well, thank you, everyone. And thank you to our teams around the world who are working tirelessly to help our fellow travelers, our hospitality partners. and everyone to navigate and find the bright spots through these still uncertain periods. As Ernst just mentioned, we've seen some nice signs in February, but that's relatively recent. We expect things to be coming back over the course of the year and to reiterate a nice recovery over the course of 2022. We remain optimistic about the industry, the resilience we've seen so far, and the booms that we expect over the course of the year. We thank you very much and wish you a good day.

Thank you, ladies and gentlemen, for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.