TripAdvisor Strategy Reversal: Viator to Operate Independently

TripAdvisor’s long-rumored restructuring poses big questions for operators.

Reading Time: 5 mins

TripAdvisor’s long-rumored restructuring poses big questions for operators.

“Effective immediately, Viator and TripAdvisor Experiences will operate as separate organizations.”

This statement is from a letter sent Jan. 23, 2020 to all TripAdvisor employees following an announcement that the company planned to restructure key segments of their business, and lay off approximately 200 employees

The letter also reports that Dermot Halpin, TripAdvisor’s president of experiences and vacation rentals, is leaving the company, and that CEO and Co-Founder Stephen Kaufer will run the Experiences team for 90 days in the interim. Ben Drew, vice president of development and strategy, rentals and vacation for TripAdvisor, will become president of Viator. 

Changes at the online travel agency were expected following TripAdvisor’s challenging third quarter. Citing strong headwinds including pressure from Google, total revenue decreased 7% to $428 million; net income was $50 million, a 28% decrease year-over-year. The day after the Q3 earnings call, TripAdvisor stock plummeted by 20%. 

While in Q3 TripAdvisor’s Hotels, Media & Platform segment revenue comprised a larger chunk of TripAdvisor’s business at $238 million, Experiences & Dining has consistently been the fastest growing segment, up 19% to $141 million. However, Experiences profitability suffered in 2019 versus 2018 as the company made investments to drive that growth.

“Right-Sizing” Experiences

At the core of this decision was the drive to “right-size” the Experiences group, according to TripAdvisor.

“We are prudently reducing and re-allocating expenses in certain parts of our business to preserve strong profitability, while also enabling us to continue to invest in strategic growth areas,” says a TripAdvisor spokesperson, which includes “right-sizing our Experiences & Dining segment to grow more efficiently following a period of considerable investment, reducing other targeted costs across the company” and rethinking advertising strategy.  

In November, Kaufer said the company’s deep investment in Experiences & Dining was a key reason for the category’s meteoric growth over the past four to five years, but that investment priorities were now changing.

“What we’re really talking about is shifting some of that investment from the building of supply … to leveraging the demand that we already have,” he said in an earnings call, adding the Experiences team would work on converting the hundreds of millions of travelers seeking things to do by finding the right product for the right individual.

Dermot Halpin, TripAdvisor’s (now former) president of experiences and vacation rentals, said during an interview at Arival Orlando 2019, much of the Experiences investment over the past years has been in technology, such as recreating the payments infrastructure, instant translation of products to expand audience, and the acquisition of reservations technology provider Bokun.

Heavily Funded Startups Squeeze Traditional OTAs 

Kaufer said Google’s shifting SEO was a chief reason for TripAdvisor’s missed Q3 targets. But increased competition from privately held OTAs also factor into the equation.

Both Klook, founded in 2014, and GetYourGuide, founded in 2009, are now big players in the experiences distribution scene, and given their monster fundraising over the past year, they have the advantage of investing in growth without the quarterly reporting pressure faced by public companies.

Are Klook and GetYourGuide chipping sales away from TripAdvisor and other larger OTAs?

At least one European tour operator, who asked not to be named, thinks so. “I feel their position in the market is getting weaker,” said the operator. “Viator/TripAdvisor is still our biggest account, but TripAdvisor lost quite some market share last year … Meanwhile GetYourGuide and Klook had exponential growth.”

What’s The Operator Impact?

The planned split between Viator and TripAdvisor raises significant questions for operators of tours, activities, attractions and experiences who rely on these platforms for bookings. What will happen to existing products that are listed on both platforms? Are Experiences only going to be bookable on Viator? How will operators’ TripAdvisor listings be affected? 

These questions are yet to be answered.

TripAdvisor isn’t the only OTA that has seen structural shake-ups in the past year. In December, Booking.com representatives sent letters to some tour operators and attraction partners stating they were, at least temporarily, not adding more Experiences to product sets—and restructuring their team. Expedia also weathered a significant reorganization in 2019, which ultimately ended in the resignation of CEO Mark Okerstrom and Chief Financial Officer Alan Pickerill (a replacement CEO has not been named) and included a reorganization within Expedia Local Expert.

As for potential operator impact? It could vary. 

As Google squeezes OTAs and operators alike, the pay-per-click cost will continue to increase, predicts Peter Syme, founder of 1000 Mile Journeys and strategic advisor for tours and activities. 

The medium-to-longer term trend for us all is that we are going to have to pay more to acquire a customer, be that from an OTA or a direct customer,” says Syme. He advises operators to weather such distribution changes by building a direct business, if possible, nurturing your customer relationships, and supplementing with OTAs to diversify channels.

One thing is certain: It will be evermore important to keep an eye on TripAdvisor and Viator’s evolution in the coming months—and their fourth quarter earnings, which will be released in February 2020.

Stay tuned on Arival.Travel as we continue to cover this important news, the implications for your business, and what’s next for this big change in distribution. 

Have thoughts or concerns on the split between Viator and TripAdvisor Experiences? Email Jenna Blumenfeld ([email protected]) to share what you think. 

trending

already a member?

Lost your password?

NEED TO REGISTER?

Become an Arival Insider
THE ARIVAL INSIDER PRO ACCESS MEMBERSHIP; YOU GET ALL THIS TO HELP YOU ADVANCE YOUR BUSINESS.

Included in Free Membership

Included in Arival Pro Membership

The Arival on-demand video library archive
Access to the entire library of over 150 video sessions and webinars

Arival.guides
Short, digestible research & trends reports delivering insights into our industry, such as The Tour Operator Outlook for 2021.

Arival.travel articles
Topical articles about marketing, tech, operator business and operator stories in all areas of tours, activities & attractions & experiences

Job board access
Find a job from our regular listings, post a resume to the talent network and learn strategies from the job resources articles

New webinars
Helpful, instructional sessions covering subjects such as Mastering Facebook Ads, Grow Your Business and How To Work With OTAs — topics to help advance your business.

Discounts on all Arival in-person events
20% Discount on all Arival in-person events (save up to $300)* based on business type

Arival ProShield – Insurance program
Access to tailored insurance solutions by Granite Insurance is available exclusively for Arival Insider Pro Access Members. Insider Pro Access Members also have access to a suite of resources from Granite Insurance including templates, forms and other informative documents.

Insiders Pro Access member exclusive webinars
Paid membership-only webinars to deepen your understanding of important industry topics.

Job postings & talent directory
Post jobs & connect with candidates most applicable to your business.

Private roundtables to connect, learn and engage
Small, focused and intimate discussions exclusive to Arival Insider Pro Access members.

Full access to Arival’s library of in-depth reports
Up to date, deep analysis of tourism topics ranging from Self-guided Tours to Sales & Distribution Trends and Outlooks, based on the data that defines the industry.

The latest on-demand videos
Over 350+ on-demand videos featuring hot topics in tours, activities & attractions

Insider discounts in digital marketing, tech, e-learning, and more
Save money on additional tools, services and learnings you need to run your business. Exclusive to paid members.

Membership Overview
ARIVAL CODE OF CONDUCT​
CONFERENCES AND COMMUNITY SPACES​

At Arival, we believe travel can make the world a better place. Our mission is to establish and inspire a diverse community of individuals and companies in the In-destination Industry by providing opportunities to gain insight, share knowledge and build connections. To make it possible for true collaboration, creativity, innovation, and idea exchange to thrive, we are committed to facilitating a welcoming and respectful community for all. This Conference Code of Conduct shares our community expectations and applies to all attendees, employees, exhibitors, speakers, sponsors, volunteers, and other participants at Arival- produced and sponsored events. We empower all participants in our community to actively engage in creating a friendly, inclusive and safe environment for all.

Arival’s core values include the following, and create an expectation for conduct at our events and in online community spaces:

We demonstrate a deep respect for human beings inside and outside our company and for the communities in which they live.
We value integrity and strive to consistently interact with others in ways that are authentic, ethical, and fair.
We are dedicated to transparency, committing to clear, open and honest communication.
We actively pursue and advocate for inclusion, diversity and representation of varying cultural backgrounds, perspectives and ideas

Arival welcomes people from all cultural backgrounds, and does not discriminate on the basis of race, color, creed, gender (including pregnancy, perceived pregnancy, childbirth, breastfeeding, or related medical conditions), gender identity, religion (including religious dress and grooming), marital status, domestic partner status, genetic information, age, national origin or ancestry, military or veteran status, sexual orientation, physical or mental disability, or any other basis protected by federal, state, or local laws.

Accordingly, participants must refrain from displaying any demeaning, harassing, aggressive, or intimidating behavior or materials that would interfere with others’ experience and participation in our community.

If you witness or are subjected to inappropriate or disruptive behavior or have any other concerns, notify an Arival staff member as soon as possible.

Inappropriate or disruptive behavior will not be tolerated. Arival reserves the right to refuse entry to or remove any party from any event or community space at any time when participation or behavior create a disruption or hinder the event or enjoyment of the event by other participants. All determinations are at the sole discretion of Arival, and the decision of the Arival team will be final. Severe breaches of this Conference Code of Conduct may result in disqualification from participating in future events. Individuals expelled due to violating this Conference Code of Conduct will not be eligible for a refund or other consolation.

If you have questions regarding this Conference Code of Conduct or its implementation, please contact us at [email protected].