Tripadvisor finished 2020 with its revenue down 61% to $604 million compared to $1.6 billion in 2019, but president and CEO Steve Kaufer says the company is entering 2021 “with optimism,” largely driven by the potential to develop a recurring revenue stream through its new Tripadvisor Plus subscription service.
Reporting its financial results for the fourth quarter of 2020 and the full year, Kaufer says the company has “taken exciting steps to orient the business to emerge from the pandemic even stronger. In 2021 and in the years to come, we will remain focused on building direct, durable customer relationships that will enable us to more effectively convert Tripadvisor’s
influence into monetization.”
Tripadvisor revenue was $116 million in the fourth quarter of 2020, down
65% compared to the same period a year earlier. For the year, losses were split roughly evenly between the company’s three business units – defined as hotels, media and platform; experiences and dining; and other.
Adjusted EBITDA loss was $33 million in the fourth quarter and $51 million for the full year, compared to 2019 figures of $92 million in the fourth quarter and $438 million for the full year.
Monthly unique users on the site in the fourth quarter came in at 68% in October, 58% in November and 59% in December compared to the same period a year earlier but well above the April level of 33% compared to its comparable period.
Tripadvisor says it achieved more than $200 million in workforce-related and discretionary fixed cost savings in 2020 versus 2019.
“In 2020, we successfully navigated the most challenging period our industry and business has ever faced. Our concerted actions throughout the year – rapidly reducing our flexible cost structure, raising debt capital and renegotiating our credit facility – have ensured our strong financial position ahead of a variety of recovery scenarios,” says Tripadvisor CFO Ernst Teunissen.
“In 2021, we will continue to execute our business with prudent cost discipline, balancing persistent savings with targeted investments in exciting long-term strategic growth initiatives.”
Two of those initiatives are Tripadvisor Plus, the platform’s $99-per-year subscription product, and Reco, a marketplace for trip designers, both launched in 2020.
In a call with analysts to discuss the results, Kaufer says Tripadvisor Plus will be coming out of beta soon and adding more discounts and perks for subscribers as it expands throughout the United States and next to other English-speaking markets.
Kaufer says Tripadvisor Plus is targeting travelers interested in longer, more complex trips where the discounts on room rates and perks such as upgrades, in-destination benefits and access to exclusive experiences and reservations make the subscription fee a “no brainer.”
The program is structured to also be a “win” for hoteliers, says Kaufer, since it gives them access to these potentially higher-end travelers and also preferred placement on Tripadvisor, all for no additional distribution cost.
“We are changing the model whereby folks like Tripadvisor would ordinarily take the commission on the hotel sale and we’re… saying instead of paying us let’s offer that discount directly to the consumer,” he says.
“When you add the value of the perk and you add the value of the discount it becomes something pretty compelling for the consumer… and something that’s well within the availability of the hotelier to offer that package at the same or better travel distribution cost as they go to for other channels.”
Along with developing Tripadvisor Plus, the company says priorities for 2021 include “continuous improvement in our auction and our hotel B2B services,” and in the category of experiences and dining, “unlocking growth opportunities across Tripadvisor, Viator and TheFork.”