Report Overview

Tripadvisor is one of the oldest and most venerated businesses in online travel. It is arguably one of the most influential sites in travel from the consumer perspective. Yet it faces challenges monetizing its user base, even before COVID-19. This is the core conflict at the heart of Tripadvisor: how to deepen supplier relationships to grow revenue and meet financial targets while not ruining the user experience and retaining consumer trust in reviews on its site.

This report dives into Tripadvisor’s core Hotels, Media, and Platform business as well as its newer, but fast-growing Experiences and Dining Platform. We look into the pain caused by Google’s growing metasearch offering and how Tripadvisor is responding. We also refresh our proprietary analysis of Tripadvisor’s competitive positioning in the tours & activities space.

Tripadvisor faces many challenges on the road back to recovery, both from COVID-19 and company specific problems that pre-date the pandemic. But don’t count Tripadvisor out. it will need to dedicate significant resources, but we believe it is possible for Tripadvisor to return to the position of strength it used to hold.

What You'll Learn From This Report

  • An understanding of Tripadvisor’s segments and their contribution to growth and profit.
  • The growth challenges the company faces and how it plans to overcome them.
  • The changing market share of Google’s metasearch and how it is displacing Tripadvisor.
  • A proprietary analysis of tour inventory on Tripadvisor’s platform and how that compares with competitors.

Executive Summary

Tripadvisor is one of the oldest and most venerated businesses in online travel. It is arguably one of the most influential sites in travel from the consumer perspective. Yet it faces challenges monetizing its user base, even before COVID-19. This is the core conflict at the heart of Tripadvisor: how to deepen supplier relationships to grow revenue and meet financial targets while not ruining the user experience and retaining consumer trust in reviews on its site.

In the coming months and quarters, Tripadvisor will have double the challenge. It will need to overcome the industry-wide slump from the pandemic while also charting its own recovery path, much of which was laid out before the crisis.

This report dives into Tripadvisor’s core Hotels, Media, and Platform business as well as its newer, but fast-growing Experiences and Dining Platform. We decompose the financial impact of each on growth and margin.

We look into the pain caused by Google’s growing metasearch offering and how Tripadvisor is responding. We also refresh our proprietary analysis of Tripadvisor’s competitive positioning in the tours & activities space. We find that while Tripadvisor remains a leader, its relative lead is shrinking.

Tripadvisor’s core metasearch, though struggling, is still a high margin cash cow. And it has a high-growth winner on its hands in the commission-based Experiences & Dining segment. Tripadvisor will need to dedicate significant resources to build these products into true stars. But we believe it is possible. And coupled with a growing wave of backlash against Google, Tripadvisor could well return to the position of strength it used to hold.


Tripadvisor has permeated pop culture, especially in the U.S., its home country, in a way other travel properties could only dream of – Schrute Farms, a fictional B&B from NBC’s The Office is to this day receiving new reviews from fans of the show after one character quipped that, “Tripadvisor is the lifeblood of the agro-tourism industry.” And jokes aside, Tripadvisor really is the lifeblood of many independently operated tourism businesses including hotels, tour operators, and restaurants. Its branded stickers – either asking guests to “rate us” or, far more prestigious, a certificate of excellence – can be seen in the windows of establishments from New York to New Delhi.

Founded in 2000, Tripadvisor has used its first-mover advantage to build the biggest user-driven website in travel with 463 million average monthly unique visitors in the peak third quarter summer season of 2019. And given the changes that have taken place in social media over the last two decades, with successful social media being built around generalist content platforms (e.g. Facebook, Tik Tok, Reddit, etc…) rather than industry verticals, it may well be the largest travel-specific social community that our industry has ever seen.

Oxford economics, in a study commissioned by the company, found that Tripadvisor had an influence on 10% of global travel spend, worth $546 billion. Of that figure, 500 million room nights, worth $80 billion, were estimated to have been caused directly by Tripadvisor and would not have taken place without the platform.

However, Tripadvisor, like many online media brands, struggles to convert its soft influence into hard dollars and cents. The company has taken a long and winding path towards monetization with many pivots and dead ends along the way.

Financials & Segments

With the outbreak of COVID-19, Tripadvisor revenues were down 86% year-on-year in the second quarter of 2020. To understand the pre-COVID performance trend, we look at full year 2019 revenue, growth, and earnings before interest, tax, and depreciation (EBITDA).

Full Year 2019 Performance

In 2019, Tripadvisor generated $1.56 billion dollars in revenue which represented a decline of -3.3% year-on-year.

Even before COVID-19, Tripadvisor had been struggling to show strong top-line growth, with modest low-to-mid single-digit growth in most trailing 12-month periods. There were even slight revenue declines in the 12-month periods ending 3Q 2019 and full year 2019.

Exhibit 1: Tripadvisor struggles to show strong revenue growth

Before the epidemic hit, this growth challenge had been a Tripadvisor-specific issue and not an industry-wide challenge. We can see by ranking Tripadvisor’s short- and long-term revenue growth performance against other online travel and travel distribution companies that on both a one-year and five-year annualized basis, Tripadvisor’s revenue growth ranks near the bottom of the group.

Exhibit 2: Tripadvisor growth in an industry context

However, despite long-standing growth challenges, Tripadvisor is still able to generate strong profits. In 2019 it generated $438 million of EBITDA, a 28% operating margin. That is industry-leading and the fourth best EBITDA margin out of any travel company in our online booking and distribution and comparable set.

Exhibit 3: Tripadvisor still pulls down impressive margins

The profitability story is even stronger than it first appears, because Tripadvisor has been able to grow its profits in both absolute and margin terms. Over the last two years, the business has improved its margin trend by an impressive seven percentage points, up from a 21% margin trend at the end of 2017.

Exhibit 4: Tripadvisor showed a pre-COVID trend of margin expansion

Segment Overview

Tripadvisor began by primarily generating revenue from monetizing its hotel reviews and listings. But over the last half-decade plus, it has been trying to drive overall company growth and reduce concentration risk by diversifying into other parts of the travel ecosystem.

In 2012 96% of revenue came from the core hotel business; by 2015, that had fallen to 85%. This trend continued to the point that in 2018 management introduced new segments to reflect the more diversified business. The former catch all ‘non-hotel’ segment was broken out to provide more granularity into the new ‘Experiences & Dining’ unit, while still retaining an ‘Other’ category for all remaining lines of business. In 2019, the Hotels, Media, and Platform (most equivalent to the old hotels segment) generated just 60% of total company revenue.

This is an impressive achievement compared with the 2012 starting point as Tripadvisor moved from nearly 100% hotel revenue to the point where almost half of its revenue will come from its relatively new non-hotel business lines.

Exhibit 5: Tripadvisors shifting revenue mix

Hotels, Media and Platform

The Hotels, Media, and Platform business is the core of Tripadvisor and is built almost entirely around advertising. Tripadvisor further subdivides this segment into Tripadvisor-Branded Hotels and Tripadvisor-Branded Display and Platform.

The hotels subsegment is the much larger of the two, accounting for half of the total company’s revenue. It is primarily made up of metasearch auction-based advertising of which the leading participants are online travel agencies. It also includes Subscription products charged to hotel suppliers, but this is a small minority.

The Display and Platform subsegment accounts for 10% of total company revenue and sells more traditional online advertising formats based around display ads across the platform, mainly on a per-click or per-impression basis. The clients in this subsegment are primarily hotel suppliers and destinations but also includes a smaller slice of online travel agencies and non-endemic advertisers from other industries.

Exhibit 6: Hotels is 4x+ larger than display and platform

Experiences and Dining

The Experiences & Dining segment connects travelers with things to do in their destinations and is built around monetizing bookings through commissions rather than via ad dollars. Tripadvisor operates these two subsegments through subsidiaries: experiences come by way of Viator and dining via TheFork (formerly La Fourchette).


The Other segment includes smaller stub business. The most notable is Tripadvisor’s legacy vacation rental business, FlipKey, and its new China joint-venture with Group (formerly known as Ctrip). It also includes other smaller properties like CruiseCritic and SeatGuru.

Segment Performance

We can now decompose Tripadvisor’s consolidated financial performance into its segment drivers. Recall Tripadvisor’s middling revenue growth rates but, breaking it down by line of business, we can see there is quite a growth dichotomy.

The Experiences & Dining segment at Tripadvisor is in fact posting strong double-digit growth rates. For over four years now, Experiences & Dining has posted 20%+ year-on-year growth rate in nearly every quarter. In some quarters it has trended even better, as high as 38% in the fourth quarter of 2018. These are world class growth figures.

On the other hand, we can see that the Hotels, Media, & Platform segment is performing even worse than the headline figures would suggest. It is in fact slowly, but steadily, shrinking. Only four of the last 17 pre-COVID quarters even saw revenue growth. Instead in most quarters, the core hotels segment shrinks by an average of about -3% year-on-year.

Exhibit 7: There is a sharp dichotomy in revenue growth across segments

Whereas effectively all revenue growth is coming from the Experiences & Dining Segment, the opposite is true for margins. The vast majority of Tripadvisor’s EBITDA is being driven by the heritage hotels and advertising business.

Exhibit 8: Most margin is coming from hotels

As discussed above, Tripadvisor’s company-wide margin has been growing since 2018, but we can see that over the same time frame the Experiences & Dining segment EBITDA margin has been declining. Most of the company’s EBITDA growth in this time frame has been driven by the Hotels, Media, & Platform and Others segments even as revenue has been mostly flat. We note that while the Other segment has seen its margin rise dramatically, in dollar terms, it is not the main contributor.

This tells us that management has been investing more cash into Experiences & Dining to drive its growth while simultaneously optimizing the cost structure of its hotels business to generate more cash from this slowing business.

The Boston Consulting Group has long used a growth-share matrix to characterize and understand businesses and products. The matrix runs along two axes. The first is for growth rate, with fast growing products requiring the business to invest a lot of cash to sustain that pace. The second is for the relative positioning of the company and its product. High market share products tend to generate a lot of cash flow and vice versa.

High growth and market share products are stars, well positioned for success as leaders in fast growing segments. High share and low growth products are cash cows, they generate a lot of money for relatively little investment; these are often mature products and the goal is to milk these businesses without killing them.

Question mark products have high growth potential but mixed competitive positioning. They require investment to gain market share and become stars. The final segment, with low growth and low share, are dogs. These business lines should be eliminated where possible.

We believe that using this framework makes it easier to understand the challenges currently facing Tripadvisor with regards to its two key segments.

Exhibit 9: Skift Research take on Tripadvisor’s product segments

The Hotels, Media & Platform business is a cash cow. It is one of the first and most venerable players in the travel metasearch and online travel advertising and this is backed up by Tripadvisor’s 400 million+ monthly unique visitors. But this market has become saturated and growth slowed. This segment won’t power the future of Tripadvisor, but it’s $329 million of EBITDA in 2019, 78% of the company’s profits that year, are not to be scoffed at.

The milk from this cash cow is the lifeblood of Tripadvisor and so management must be very careful to ensure the cow stays alive and does not turn into a dog. As the matrix indicates, the core hotel business risks backsliding into being a dog by losing relative market share and competitive positioning. This risk is very real when thinking of the potential competitors in the space. Google’s new travel metasearch products have gained notable market share over the last few years and put Tripadvisor at risk of exactly such a scenario happening. (We discuss the Google challenges facing Tripadvisor in greater depth later in this report).

On the other hand, the Experiences & Dining segment is a question mark line of business with the strong possibility of becoming a star. The markets for online bookable restaurants and tour & activities are fast growing, fueled by rising demand for experiential travel and by a shift from offline to online booking methods. But the relative positioning of Tripadvisor in these markets is not so overwhelmingly dominant in-destination as it is in hotels, which are instantly associated with Tripadvisor reviews.

La Fourchette, the company’s online restaurant booking platform is a challenger brand but not the global leader in the space. It is strong in Europe, particularly France, but does not have the same presence outside its home market. The online reservation space is competitive with well-funded rivals like OpenTable, backed by fellow travel site Booking Holdings, and Resy, owned by American Express. Viator, Tripadvisor’s tours & activity subsidiary, is currently a market leader in its sector but the size of that lead over rivals is shrinking and it, in our subjective opinion, does not stand far enough outside the rest of the pack for us to call it a true star. (See our deep dive into Viator below for more details).

For both experiences and dining, Tripadvisor will need to pour substantial and ongoing resources into building a competitive mount around these products to truly move them out of the questionable quadrant and make them into stars. To their credit, management is already doing this as reflected in the segment’s break-even EBITDA margins (which is actually a good thing if it represents growth investments).

One of Tripadvisor’s challenges is that the business philosophy to run a cash cow product is quite different from what is required to build a star; in the one instance you are playing defense, in the other, offense. Companies often struggle to build and maintain one internal corporate culture, let alone two. Usually one culture tends to dominate the whole company. Finding staff with the right cultural fit for each different line of business can be difficult.

The other problem will be prioritization. Building a star product will require ongoing cash injections which, especially given the unprecedented challenge facing the travel industry today, is a difficult thing to stomach.

We note that, in the past, Tripadvisor has struggled to turn question mark products into stars. The prime example is Tripadvisor’s vacation rental business FlipKey. Tripadvisor struggled to capitalize on its early 2008 entry into what was soon to be the booming vacation rental market. Instead, even as many vacation rental companies have succeeded, FlipKey became a dog for Tripadvisor which it is now reportedly attempting to sell.

This stands as a clear warning to Tripadvisor’s management that success is no guarantee even if you have a hot market and product on your hands as they do in Experiences & Dining. They will need to continue to invest in smart people and products, despite the challenges of COVID-19, to drive long-term future growth.

Hotel, Media & Platform: Monetization Challenges and New Paths Forward

Tripadvisor has a large user base of 400 million+ monthly unique visitors but that’s worth very little to the company’s bottom line unless it can monetize that traffic. The challenge of monetizing a large online user base is not unique to Tripadvisor. All forms of online media have struggled with this challenge, be it traditional news or social media.

Challenges Growing the Display Advertising Business

Tripadvisor primarily monetizes through advertising, but it earns less per user than other digital platforms that follow similar strategies. In 2019, Tripadvisor earned 31 cents per user while peer Yelp, which also specializes in user generated reviews, earned more than twice as much, 63 cents per user. Industry leader Facebook earned a whopping $2.41 per user via advertising revenue.

Exhibit 10: Tripadvisor monetizes less per user peers in other industries

The problem, in our view, is two-fold. The first challenge is that modern online advertising is a highly technical affair. It is built around constructing detailed profiles from user data which is then used to serve those consumers with carefully targeted advertisements. Collecting this data, building user profiles, and serving users with ads is all done automatically on the back end and requires large and sophisticated teams of engineers and data scientists to be done at a high level.

The more data points available on a user, the better. This gives a distinct advantage to broad-based general platforms over specialized ones. A website for car collectors only reveals us one facet of a personality with which to target ads, whereas Facebook will likely have a more complete picture of that person, e.g. a married car collector with one young child who lives in a Texan suburb and runs a small business.

Failing that, a specialist platform can still win by driving high user engagement. A website or app that is used daily (e.g. Snapchat) has a clear advantage over one used monthly or weekly because it creates more ‘at-bats.’ When the user visits daily, it gives the platform more inventory to advertise on, so even if that ad unit is slightly less valuable because of limited targeting data, the quantity outweighs quality.

As a specialty website in an industry with low frequency purchases, Tripadvisor faces an uphill battle to ad monetization. Tripadvisor’s disadvantage in these respects is most obvious in its Display and Platform sub-segment. Until recently, it just has not had the tools or ad inventory to effectively compete for non-travel advertiser’s dollars.

In late 2018 Tripadvisor redesigned its home page, arguably its most valuable asset, to display a news feed. The design was clearly inspired by the design of Facebook but also of social sites like Twitter and Reddit and built to attract advertisers that were not direct travel suppliers.

Exhibit 10: The Tripadvisor homepage in August 2018 (top) and its redesign in November 2018 (bottom).

The old site was clearly designed with travel in mind, the top of the fold immediately asked users to search for a hotel or destination and scrolling further down would suggest locations by themes such as “top beaches” or “popular destinations.”

But this page was explicitly tied into foreign destinations, leaving no ability for other media content to be surfaced. The late-2018 redesign was far more ‘neutral.’ Rather than prompting users for a destination immediately, it encourages them to scroll through generic content not tied to any specific locale.

The intention here was clearly to allow Tripadvisor to sell its advertising inventory to companies that were not immediate travel suppliers tied to a specific location or property. The new content feed design let Tripadvisor sell against travel media brands like Travel + Leisure or National Geographic, consumer products like GoPro, and financial services like Chase.

But even with this redesign, Tripadvisor lacked the advanced targeting databases and tools to match the capabilities of leaders like Facebook. It would take a full year after the website redesign for Tripadvisor to launch off-platform targeting and self-serve advertising tools.

While there is still potential in display and platform advertising, the segment has struggled to gain the traction Tripadvisor initially thought it might, gaining just $5 million in new revenue between 2017 and 2019.

In May of 2020, amid the coronavirus pandemic, Tripadvisor rolled back its homepage design, killing (or at least deeply burying) its content feed concept. The new homepage once again simply asks users “where to?”

This move seemingly concedes the non-endemic advertiser strategy and re-focuses Tripadvisor on its core hotel metasearch product.

Exhibit 11: Tripadvisor returns to a destination-linked homepage, May 2020

The Google Gorilla in the Room

Metasearch is the heart of Tripadvisor and, troublingly, it is shrinking. We can begin diagnosing the problem by breaking revenue down into its two components: volume and pricing power.

Since 2015, Tripadvisor has been growing its web traffic, adding more than 100 million new monthly unique visitors over the last four years. There was a decline in traffic in 2019, and of course a huge decline due to COVID-19. But on the whole, Tripadvisor has been posting user growth which, for a 20-year-old company is nothing to scoff at.

The main concern is that its ability to monetize those users is slipping, falling from earning 40 cents per user in 2015 to 31 cents per user in 2019. Tripadvisor has been clear about what it believes the issue is – it places the lion’s share of the blame on Google.

Exhibit 12: TripAdvisor’s revenue per user has been falling

Google has clearly been a source of rising anxiety for Tripadvisor for many years now. The search engine has gone from being discussed on earnings calls eight times in 2014 to 19 times in 2019. Our earnings transcript analysis also helps pinpoint the main pain point that Google is creating – Tripadvisor believes it’s in search engine optimization or “SEO.”

Exhibit 13: Tripadvisor calls out Google

Here’s the issue: Google is typically higher in the consumer funnel than Tripadvisor. Google has a 92% market share in the worldwide search engine market. In other words, most consumer trips begin on Google.

In the past Google delivered up only what its algorithm determined to be the most relevant third-party results and maybe one or two sponsored links to the top. This is called horizontal search, because it operates the same way across many different industries. The paid blue links could be bid on, called search engine advertising, and the rankings of the non-paid results are based on content relevancy. Many businesses redesign their websites to be Google-friendly so they could rank highly in the organic results, called search engine optimization (SEO).

This old system worked well for Tripadvisor which has always dedicated much energy to SEO and ranks very well in organic results. The challenge has been that in the last few years Google has debuted new vertical search features for the travel industry. Rather than the one-size-fits-all blue links and text descriptions that come with horizontal search, the vertical search modules have been customized to display additional relevant search information specific to individual travel segments. The three travel segments Google currently operates in are: flights, hotels, and short-term rentals.

Technically, these vertical search units rank organically on results pages and their appearance on the page is contextual to the terms searched. They do sometimes rank below other organic blue links, but more often than not, the industry module ranks towards the very top of the results page.

The below screenshots show examples of how the Google Hotels vertical search model operates in practice. In the first example, a generic search for hotels in a city, Tripadvisor is the first organic link but gets pushed towards the bottom of the page by the Google Module. In the other examples where a specific brand or property is searched for, Tripadvisor still ranks high in the organic results but is pushed even further down and sometimes off the first page entirely.

Exhibit 14: Examples of how the Google Hotels module changes with different search terms

Compounding the problem for Tripadvisor is that Google has increased the ad loading of traditional paid links on its site, oftentimes displaying three or four blue links rather than one or two. The damage is particularly bad on mobile where space is at a premium. In a mobile search for ‘hotel in Boston’ earlier this year we had to scroll down four pages before reaching the very first organic result, which in this case was Tripadvisor.

Exhibit 15: Organic search results keep getting pushed lower, particularly noticeable on mobile

Google’s vertical travel search offerings have grown rapidly in prominence, both as a function of their convenience to travelers and due to strong promotion by the algorithm. Their success can clearly be seen in the web traffic data with Google Flights and Hotels receiving 674 million direct visits in the U.S. in 2019. That’s more than three times as much direct traffic as Tripadvisor received.

Exhibit 16: A comparison of direct traffic in the U.S. (non-SEO)

Adding insult to injury is that Google verticals and Tripadvisor are effectively competing to offer the same thing, Metasearch. The online travel agencies and hotel brands have a point of differentiation in that they offer booking capabilities, something Google has been hesitant to fully embrace.

The result is that you have two near-identical products, but the Google version does not pay for customer acquisition since most searchers start on Google and do not need to leave the site. And analyzing web traffic data shows that Tripadvisor, and metasearch more broadly, have borne the brunt of the pain from the growth of Google’s travel search offerings.

SimilarWeb analysts collected and aggregated web traffic visitation data on a variety of prominent travel industry websites. Representing hotel brands, direct visitation data was aggregated from Marriott, IHG, and Hilton; from OTAs:,,, Priceline, and others; from vacation rental companies: Airbnb and Vrbo; and finally Tripadvisor, Kayak, Skyscanner, Trivago, and other metasearch sites. The data was then normalized to show a market share for U.S. desktop direct visits over time.

The analysis clearly shows the rise of Google travel search units and that the majority of its growth has come from the pocket of Metasearch sites like Tripadvisor. Google Travel rose from a 1% share of U.S. desktop web visits in 2017 to 8% in 2019 while metasearch share fell from 22% of traffic to 17% today.

Exhibit 17: Much of Google’s hotel travel growth has come at the expense of metasearch, not OTAs or suppliers

Unlike other booking site CEOs which typically prefer to walk a more diplomatic path with one of their largest advertising partners, Tripadvisor CEO Steve Kaufer has been vocal in his criticism of Google. He has previously told Skift that, “Tripadvisor remains concerned about Google’s practices in the U.S., the EU, and throughout the world. For the good of consumers and competition on the internet, we welcome any renewed interest by U.S. regulators into Google’s anticompetitive behavior.”

Kaufer may well get his wish, as regulatory pushback against Google seems to be growing across the world. The European Union has already levied a cumulative €8.25 billion in antitrust fines, most notably against its vertical search product for retail shopping. Even in the U.S., where the bar for antitrust is higher, the Department of Justice seems to be building a case that is expected to be unveiled shortly.

The results may already be beginning to show in Europe, where Google has been testing a new search results page that would display links to metasearch sites on top of Google’s own organic results.

In two examples below, both live results from the United Kingdom, searches for both hotels and restaurants in London now include a top ribbon that allows users to “find results on” Tripadvisor and other specialist sites before leading into Google’s own vertical search product.

Exhibit 18: The new Google search result page in the EU

This change, especially if rolled out worldwide, should help rebuild Tripadvisor’s organic search traffic. Still, the Google issue is ultimately not within the power of Tripadvisor to directly fix. They will need to keep the pressure up on regulatory bodies while building out new products that avoid the Google challenge. This includes the businesses shift away from advertising and towards commissions through its experiences and dining segment. It has also led the company to consider new ways to monetize.

Is Direct to Consumer the New Path Forward?

The other way that Tripadvisor has responded to the Google threat is by doubling down on building engagement and loyalty with its users to drive direct traffic. The company has launched what it calls “One Tripadvisor” which aims to be a comprehensive funnel for users to discover, plan, and book complex “trips that matter” on the site.

This is a wise decision as it lies entirely within Tripadvisor’s power to control. It is ironically, the same strategy that hotel owners and operators were forced to pivot to years ago in order to compete against the first wave of online booking platforms.

As part of this effort, Tripadvisor is launching direct-to-consumer product offerings to complement its primarily business-to-business revenue model and has already launched its first two products.

The first product is travel insurance, branded Trip Protection. It is being sold as an annual subscription, with the basic level costing $135 a year to protect all trips taken in that year. An upgrade to the “Prime” level which offers expanded coverage is available for full year protection at a cost of $275.

The insurance is effectively a consumer marketing deal as the insurance plan is actually being underwritten by Allianz, and in fact, the consumer actually has to file a claim through Allianz Travels’ website or app.

The other product, called “Reco,” is in the travel agent space. It is effectively a lead-generation and match matching service that pairs Tripadvisor users with registered “trip designers.” The user pays a one-time fee to buy the connection with a pre-screened travel agent.

Building on the two D2C products already launched, CEO Steve Kaufer said that, “You can extrapolate further and say, ‘Hey, are there guides that Tripadvisor could offer that have specialized information that was so valuable that someone would pay a $20 subscription or a $20 onetime fee for?’”

Kaufer has teased more direct-to-consumer launches to come, promising a new consumer subscription service in the third quarter of this year. This will be a challenging line of business to build but potentially game changing in terms of diversifying the business away from the whims of Google SEO traffic. Progress is ongoing but worth watching closely.

Experiences & Dining

Tripadvisor operates leading platforms in both the restaurants and tours & activities space. Both markets generate over $100 million in revenue and operate primarily on a commission basis. While specific financials are not available, we believe that Experiences is the larger of the two subsegments.

Dining Overview

Tripadvisor’s Dining component is primarily operated via TheFork, which has over 84,000 bookable restaurants in Europe, North America, South America, and Australia. This has grown from 52,000 in 2018 which was in itself a large jump from 12,000 listings in prior years. TheFork is strongest in Europe where we believe it has a ~40% market share.

Tripadvisor has been investing in this segment, making three acquisitions in 2019 for $110 million. Two were to add inventory and geographic territories. This was UK-based Bookatable, which added 14,000 restaurants, further cementing its position in Europe, and Argentina-based Restorando that added 3,500 restaurants across South America.

The final acquisition gives us a clue as to other business opportunities Tripadvisor is pursuing within this segment. It was NYC-based SinglePlatform which helps restaurants publish their menus online across many platforms like Yelp, Facebook, and OpenTable. This acquisition is part of a strategy to grow Tripadvisor’s B2B Restaurant non-commission revenue. The idea is to offer management and advertising services as an upsell to restaurants using the platform for Bookings.

A lot of recent growth has been inorganic, but that is not necessarily a bad thing. The restaurant industry has large potential for Tripadvisor and complements its reviews and experience offerings well as they all revolve around things to do in destinations.

Experiences: Deep Dive into Viator

Tripadvisor entered the tours and activities sector when it acquired Viator in 2014 for $200 million. The market is worth an estimated $183 billion and 80% of bookings still happen offline. Unlike its advertising-based hotels business, Tripadvisor is positioned as a distribution broken in this market and collects a commission on each tour that it helps sell.

Tripadvisor’s “Things to Do” segment is run separately from Viator and includes business listings for tour operators that are not directly bookingable on the platform. However, our understanding is that all of Viator’s inventory is available to book on So the main Tripadvisor brand effectively works as a distribution channel for Viator with additional contextual information available. Despite these minor differences, we refer to Tripadvisor and Viator interchangeably throughout.

Viator’s Market Position

We believe that Tripadvisor, through its subsidiary Viator is the largest online booking site for day tours and activities in the world. Based on its latest filings, Tripadvisor has over 395,000 tour listings available for sale on its sites. For context, we believe that the next largest platform, Expedia, has 210,000+ listings available. And the five largest tours and activity booking sites have a collective 705,000+ listings, meaning that Viator/Tripadvisor contribute just over half of that total volume.

Exhibit 19 : Listings on leading tour and activity platforms, concentration in top 100 tourist destinations

Viator has aggressively grown the size of its experiences platform over the last two years, but during the same time the competition has gotten much tougher.

In Skift Research’s 2018 State of Tours and Activities we conducted a proprietary analysis of tours and activities inventory on five major online distribution platforms: Viator, Expedia, Airbnb, GetYourGuide, and Klook. The goal was to understand approximate current market shares and regional presence. For all sites, we compared how many listings were offered to consumers across 100 of the most popular tourist destinations worldwide. By holding the selected cities constant, we were able to make an apples-to-apples comparison of how these booking sites stacked up directly against each other in key markets. The original February 2018 study collected data on nearly 70,000 activities which we believed to represent nearly 46% of the total volume of tours available on these sites.

Skift Research updated this analysis in October of 2018 and then again in September of 2020, giving us time series data on the evolution of the tours and activities platforms on these sites.

Viator grew by 54% in just that first six-month period in 2018, going from 38k listings in those top tourist locales to 59k by October of the same year. It continued to add supply at a breakneck pace over the last two years with tour inventory more than doubling from October 2018 through September 2020, growing at a 56% compound annual rate. Overall, from when we first started building this dataset, Viator has added more than 105k listings in the cities we track. We believe it has added more than 265k listings across its full platform.

Exhibit 20: Viator lsiting count and relative positioning for top 100 cities over time

However, while Tripadvisor has been growing the supply of tours available to book on its site, so too have its competitors. Most notable is Expedia, which converted its Local Expert platform to allow for self-serve onboarding and saw listings grow dramatically. As a result, Viator’s market share of listings in the top 100 destinations we tracked actually declined, from ~57% in 2018 to 48% in 2020.

Exhibit 21: Change in listing share at top platforms over the last two years

Uneasy lies the head that wears a crown

In October 2018, in the top 100 destinations, Viator boasted nearly 4x the listings of it’s next closest rival, today it has a 25% inventory lead. And while Expedia is challenging Tripadvisor on quantity, other players, like Airbnb Experiences, are building curated platforms that offer value based on the uniqueness of their offerings.

Tripadvisor is still the single largest OTA in the tours and activities space, but being the biggest is no longer as much of a platform differentiator as it once was. Tripadvisor has tried to bridge this gap by pivoting to put a greater focus on the quality of activities it offers. Viator recently announced a new quality review process that will apply to all activities on its platform. All experiences will receive a rating of ‘good’ or ‘excellent’ or will be removed from the platform.

It’s an admission that customers were struggling to search out high-quality experiences and that tour operators in crowded markets were not getting the exposure they hoped for. This shift is a nod back towards Viator’s pre-acquisition days when the platform was fully curated, though not a full reversal by any means.

The new on-boarding process will still be self-serve for tour operators but each listing will be subject to a manual review, which Viator has promised to complete within 7 days. The manual review process and tight self-imposed deadlines will also clearly impose a fairly large and expensive staffing requirement in a division that already has low margins. Tripadvisor has imposed a new $29 review fee to submit a new product listing to cover these costs though the timing during COVID-19 has raised eyebrows amongst operators.

We will be watching closely to determine the net margin impact of these fees and if they will be neutral or perhaps even turn into a profit driver. In any case, this shift will dramatically limit the company’s inventory growth going forward, though would not be outright negative if Viator’s loss of scale advantage is offset by higher conversion rates amongst the products on its platform.

The competition is already intense, and it is only getting tougher. There are well-funded startup challengers like GetYourGuide and Klook, existing travel incumbents like Expedia Group and Booking Holdings, and to make matters worse, Tripadvisor’s long-standing nemesis, Google is experimenting with tours and activities as well now.

In a certain sense, this is a good thing; online tours and activities space is still young and at this stage investment from travel platforms helps mature the market and accustom consumers to booking experiences this way. A rising tide lifts all boats, including Tripadvisor’s.

Tripadvisor has the first-mover advantage and is the current market leader. But many companies have squandered an early lead in the past. That includes Tripadvisor itself which is now trying to sell its struggling vacation rental segment despite entering that market in 2008 – before Airbnb’s meteoric rise.

“Uneasy lies the head that wears a crown.” Experiences is currently Tripadvisor’s fastest growing market and management is making a big bet on winning in this market. They have the lead for now. The challenge will be holding on to it.

COVID-19 Response and Closing Thoughts

In January 2020, acknowledging many of the challenges outlined in this report, Tripadvisor announced a corporate restructuring and executive shake-up. This new direction was to focus on deepening customer relationships, hotel B2B paid products, the experiences and restaurants segment, and media advertising.

The customer engagement part in particular is a powerful new initiative. CEO Kaufer has described how he wants to build a “One Tripadvisor” vision that will own the full travel funnel from travel inspiration to research and booking. It involves a website redesign and new marketing campaigns to encourage users to make accounts and log-in. It also led to the launch of two new direct-to-consumer products (which we discussed above) with the promise to launch a redesigned mobile app and new D2C subscription product this year.

There was also a focus on growing the Experiences & Dining platform, hotel B2B solutions, and media advertising, all of which have $100 million-plus revenue products.

Finally, Tripadvisor entered into a promising new joint venture with Ctrip to market itself in China. Exactly what this entails and any financial benefits are not clear at the moment, but Jane Sun, CEO of group, joined Tripadvisor’s Board of Directors in July.

Then, of course, the COVID-19 pandemic hit, turning the whole world, and travel especially, upside down.

Tripadvisor responded quickly, laying off more than 900 employees, about a quarter of its then ~4,000-person workforce. A further 850 were furloughed, primarily at TheFork. And we believe that many remaining staff are subject to partial furlough or a pay cut. The company is closing offices and reducing marketing expenses. These cuts saved the company $100 million in the second quarter of 2020 and are expected to add up to more than $200 million in savings for the full year.

Tripadvisor bolstered its cash backstop. In March it borrowed $700 million from a pre-existing line of credit. In July of 2020 it transferred much of that balance to a more permanent financing structure by issuing $500 million of bonds that went to paying down that prior lending. This leaves $200 million outstanding on the line of credit, but the full facility has capacity for $1 billion. This means, Tripadvisor, if needed, could pull down an additional $800 million of cash on top of the $700 million it already borrowed this year.

In the first half of the year, Tripadvisor burned through $182 million of cash to run its operations and invest in capital expenditures. But because of its financing operations, it ended the second quarter with $698 million of cash on its balance sheet.

COVID-19 has put a big pause on the travel industry. And as a result much of this report has been backward looking. Lockdowns and quarantines are industry-wide challenges. But the company-specific issues addressed in the body of this report will likely remain mostly the same in a post-pandemic world for Tripadvisor. After all, rival platforms like Google and Booking Holdings won’t be going away. And the structural offline-to-online shift occurring in experiences & dining will, if anything, only be accelerated by this pandemic.

The same goes for Tripadvisors new business initiatives to restart growth. They were announced in early 2020 and meant to roll out throughout the year and as such, haven’t had much of a chance to take root. Whether they will succeed in righting the ship remains to be seen.

CEO Kaufer himself told us that, “I don’t think for an instant that travel is going to be fundamentally different post-COVID.” And so the company has continued to push forward its previously announced initiatives, mostly unchanged, despite the surrounding industry turmoil.

Tripadvisor is in a relatively strong position as far as travel companies during COVID-19 go. It has a sound cash balance, and should be well positioned post-COVID. During this crisis, the key hurdle for travel bookings will be trust. And as a long-standing trusted source of reviews, Tripadvisor can take advantage of this.

As the crisis shifts from one of public health to an economic recession, distribution companies should benefit from hotels looking to fill rooms. Tripadvisor, with its relationships to the long tail of independent hotels could potentially benefit.

But on the other hand, the fundamental customer acquisition and advertising hurdles that have been dogging Tripadvisor for years will likely persist as well. Tripadvisor will still have a core metasearch business that is in distress due to Google. It can’t give up on this business because of the high profit it generates but it will struggle to regain substantial growth rates without government intervention.

Tripadvisor will still need to drive revenue from business lines outside of metasearch. This search for growth has led Tripadvisor to incubate a number of new products in the hopes they can restore growth. This has included: display advertising, sponsored content, business subscription products, direct-to-consumer offerings, tours & activities, restaurants, and vacation rentals.

All of these are good ideas on their own, but all require resources, both monetary and in terms of institutional focus. The risk is that Tripadvisor chases too many ideas at once and winds up with a large product portfolio, all of which are still subscale.

This, in our opinion, is one of the biggest challenges that Tripadvisor faces. Not a lack of ideas, but a lack of focus. In trying to incubate many different businesses, the company becomes a jack of all trades, master of none.

The downside risks from this strategy will be even greater in the post-COVID-19 world. Cash is dearer than even for Tripadvisor, but at the same time it has at least five lines of business that it wants to invest in as laid out in its January 2020 plan.

And Tripadvisor will emerge from this crisis as a significantly more indebted company than before. Debt is not a bad thing per-se, but it limits corporate flexibility. It makes the company much more fragile to shocks in the business as there are now large claims on corporate cash flows. The dangers of unfocused investment in many sub-scale products are greater than ever.

Tripadvisor is a well-respected company and a powerful platform for the travel industry facing steep challenges. But don’t count them out just yet.

In the coming months and quarters, Tripadvisor will have double the challenge. It will need to overcome the industry-wide slump from the pandemic while also charting its own recovery path, much of which was laid out before the crisis.

Tripadvisor’s core metasearch, though struggling, is still a high margin cash cow. And it has a high-growth winner on its hands in the commission-based Experiences & Dining segment. Tripadvisor will need to dedicate significant resources to build these products into true stars. But we believe it is possible. And coupled with a growing wave of backlash against Google, Tripadvisor could well return to the position of strength it used to hold.