Tripadvisor, Inc. (TRIP) Q3 2020 Earnings Report, Transcript and Summary

Good morning and welcome to TripAdvisor’s Third Quarter 2020 Earnings Conference Call. As a reminder, today’s conference call is being recorded. At this time, I would like to turn the conference call over to TripAdvisor’s Vice President of Investor Relations, Mr. Will Lyons. Please go ahead.

Thanks, [indiscernible]. Good morning, everyone and welcome to our call. Joining me today is our CEO, Steve Kaufer; and our CFO, Ernst Teunissen. Last night, after market close, we distributed and filed our third quarter 2020 earnings release and made available our shareholder letter on our Investor Relations website. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Also on our IR site, you will find supplemental financial information, which includes reconciliations of certain non-GAAP financial measures discussed on this call, as well as other metrics. Before we begin, I would like to remind you that this call may contain estimates and other forward-looking statements that represent management’s views as of today, November 6, 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. And with that, I’ll pass the call to Steve.

Thank you, Will. Good morning everyone. Thank you for joining our call. I'm going to make some summary remarks about the quarter and then we'll pass the call to Ernst for some remarks on our financials before we open up the call to your questions. As described in our release in shareholder letter that we posted last night, our third quarter results improved versus second quarter in the midst of what has been an unprecedented period for our industry and for the world. Both consumer demand and revenue performance as percentages of last year's levels improved each month throughout the quarter. Our Q3 showed a nice recovery trend. In recent months, the travel industry's recovery progress has slowed, particularly in Europe, supporting our view that the near term path will be uneven. Fortunately, we have planned appropriately for a variety of recovery scenarios, and we are committed to supporting consumers and partners throughout. We also remain confident that with each passing month, the world is closer to important medical developments that will meaningfully restore consumer confidence in travel and allow for a broad based travel rebound. In the meantime, we remain focused on factors inside our control, maintaining focus on executing on our One TripAdvisor initiatives that deepen customer relationships, deliver more value to consumers and partners, and position the business well for many years to come. We're making great progress despite the challenging backdrop. In Q3, we expanded our travel safe initiative to include more than 120,000 hospitality businesses, enabling them to efficiently communicate pertinent health and safety information to prospectively travelers, drive engagement, and recover faster. We also recently launched two new B2B products for hospitality clients, further signaling our ongoing commitments or partners, and deliver them more value as travel and dining starts to come back. And finally, within the next few months, we plan to begin rolling out our first direct-to-consumer subscription offering and are very excited by this new opportunity to deliver meaningful value and delight to premium members. So, while it undoubtedly remains a very difficult operating environment, we are pleased with what we have been able to accomplish. Before I pass the call to Ernst, I want to once again extend a thank you to all frontline workers for their tireless hard work during this difficult time. Of course, I also want to thank each and every TripAdvisor employee for their talent and dedication. Better days will come and we are doing what's necessary to emerge stronger than before. And now, I'll turn the call over to Ernst.

Thank you, Steve and good morning, everyone. On our last two calls, I have described how we quickly adapted our business to its new reality. In the third quarter, we minimized operating expenses and generated positive adjusted EBITDA, despite the fact that revenue was only 35% of last year's comparable period. We remain squarely on track for over $200 million of fixed and discretionary cost savings this year versus 2019. That will be clearly more a variable cost like performance marketing are included. And our quarterly fixed and discretionary run rate decreased by $67 million in Q3 versus the first quarter of this year. It's a testament to our business model, our flexible cost structure, and proactive cost reduction efforts that we were able to produce positive adjusted EBITDA, even at such sharply reduced revenue levels this year. We also strengthened our liquidity position with a bond issuance in Q3. And at the end of Q3, we had cash of nearly $450 million, as well as $1 billion of undrawn capacity on our credit facility, which keeps us adequately prepared for a variety of COVID recovery scenarios. We believe that our conservative cost savings and our funding efforts combined with the many new revenue initiatives that Steve just mentioned, and we'll talk more about on this call, put us in an excellent position to benefit financially, when the travel market inevitably comes roaring back. With that, we will now open it up for your questions.

Thank you. [Operator Instructions] Our first question comes from Deepak Mathivanan with Barclays. Your line is open.

Right. Hey, guys. Thanks for taking the question. Just two quick ones from us. First, we're not looking to jump the gun, but can you provide more color on the subscription offering? What will it look like? And kind of what are your medium-to-long term goals with this product? You know, both on the supply side and on the consumer side? Who would be the ideal suppliers for this program? And then second question on the hotel business, can you talk a little bit about the competitive dynamics on the auction side that you saw as travel demand was rebounding during the summer months in 3Q? You know, were OTAs and suppliers coming back to the platform, how does the participation from hotel change in other suppliers during that time?

Excellent. Thanks Deepak. This is Steve. Hi, great question. So, the new consumer subscription offering launching in a couple months, we're looking to provide meaningful additional value for premium members. So, if you're buying into the subscription package, you'd be able to get discounts on tens of thousands, eventually, more and more hotels all around the globe, you'll get a discount off all the attractions we sell last count was close to 400,000 experiences. And there's plenty more if you think about the things that we can add to the bundle. When you think about our relationship with hoteliers, we have direct supply, and we have supplied through aggregators. And we're looking to present an offering to our travelers that not only saves them money, but gives them a – the traveler a special experience. Everyone loves to feel like they are treated special that they are delighted when they go traveling, not only by where they're going, but how they are treated as a guest at a hotel or, or on the experience. We feel that our demand on TripAdvisor side or relationship with suppliers put us in a wonderful position to be able to come up with the subscription offering in that thing. If you look at the overall picture, we have – pre-COVID times in north the 400 million unique users on our site that were looking to plan a trip. We feel that a good number of them would clearly be interested in that extra special perk, the discount, the better experience, the extra something. And then when you look at our supply side, we have relationships with all of the aggregators and tens or hundreds of thousands of properties and attractions throughout the globe. So we kind of have both pieces of the marketplace and our opportunities to connect them in a premium package. By moving on to the second question on the auction, we've seen the OTAs be quite rational in their behavior. They're looking for demand through all channels. Hotels are looking through demand through all channels, including the OTAs, as well as TripAdvisor’s. So, I think the easiest way to look at our option is that it's recovering in line with how the overall travel footprint or [the whole] travel ecosystem is recovering. Hoteliers need demand, of course, and they're coming to us and they're coming to the OTAs and via the OTAs to us. And so we’re – the option is essentially behaving as we would expect, and as much as that's a regional answer. It's behaving regionally in those same areas. Ernst, do you want to add anything to that?

No, on the auction, I would add clearly as the COVID unfolded in April and May, it was significant pressure on the auction in terms of volume, in terms of CPCs down, conversion rates being down, and also our partners bidding quite carefully. I think what we're seeing right now is obviously volumes have gone up in period since then. CPCs have improved because conversion rates have improved in the mean time, but volume and conversion rates are so down from pre-COVID and COVID times. In the early days, our take rates if you want to call it, the – how much we got paid per booking delivered for our OTAs was down as well as the bidding was careful. That has sort of normalized now. And so we're finding that our partners are willing to pay again for the bookings like they were before.

That's very helpful. Thanks, Ernst. Thanks, Steve.

Thank you. Our next question comes from Lloyd Walmsley with Deutsche Bank. Your line is now open.

Hi, thanks. So this is Chris on for Lloyd. Maybe one longer-term question on the hotel option. You guys have been de-emphasizing this business in your overall mix prior to the pandemic. So, just thinking longer-term, would it be wrong to assume that over time you're moving towards taking performance market effectively to zero for this business? Or is this really not the right way to be thinking about it? And then just maybe coming back a little bit and focusing on 2021. You talked about coming out of the quarter, results were better than internal projections back in August. So, to make be if you can just talk to us a little bit about how getting 3Q under your belt help refine your 21 strategy? Thanks.

Thanks, Chris. Maybe I'll take the first one to the [SEC]. In terms of, I know a solid de-emphasizing the option, no, no. The option in that hotel search capability, finding the best hotel for your trip remains and will always remain a core asset, a core value that we're bringing to travelers. As such, as we get better added performance marketing in terms of us buying traffic to that shopping experience side, we would expect it would always remain when you add in the subscription offerings and the other sort of direct-to-consumer things that we plan, because as you know, we've already launched a couple, and this new subscription offering will be a third. It's yet another opportunity to monetize the traffic that we bring to the site organically or through paid channels or our repeat efforts, all the different ways that we get up to the hundreds of millions of users. And so for us with the subscription, with the option in the way it's running, we expect that to continue and performance marketing will probably always play a role in that.

In terms of your second question, our visibility, of course, in the near-to-medium term remains limited. We said last quarter that we think the recovery may have an uneven path. And I think we're seeing that right now. Q3 was stronger than we expected. Our European business performed very strongly in this third quarter. The fourth, our reservation business and the restaurants did very well in the third quarter. And now we're seeing at the start of the fourth quarter, some of these trends are different. And so, we see Europe now taking a step back with all the lockdowns that we're in. And so we're, you know, careful and conservative in our outlook for Q4. And we're seeing right now in our business that for instance, the restaurants in the business for the [fourth] is trending down from Q3 with all the lockdowns. And so it's going to be an uneven recovery. We remain bullish and optimistic about the recovery of the travel market in the next periods to come. We think travel will recover fully. I want to highlight sometimes last TripAdvisor skews almost exclusively to leisure travel. And we think leisure travel will be the part of the travel market that will come back the fastest. So, we're looking forward to 2021. We're looking forward to hopefully on the medical side seeing progress of vaccine being rolled out. And we're looking forward to a recovery of the travel market. But in the meantime, it's patchy. And we're seeing that right now in Q4, that doesn't take away from our enthusiasm of being ready to come back – [pouring] back when the market comes back. We've done everything we think that is prudent at this point. We've cut our cost quite significantly. We have the funding in place. We are able to weather these ups and downs that we are in right now. And we think we've actually adjusted our cost position very attractively now, because we might add back some costs when the market recovers, but not all. And so we think actually we will come out with an improved cost structure when the market returns. So we're waiting for that and in the meantime, we'll be patchy. Looking forward to towards 2021, we are focused on what we should be focused on being prudent on cost while the situation hasn't been resolved and the meantime, developing some exciting new tenants to our strategy. I think the revenue initiatives that we're rolling out right now could have some real legs, you're not going to see that in Q4, you're not going to see that in Q2, maybe we are going to see that when the market comes back. And so, we're excited about positioning ourselves correctly for 2021.

Got it. Appreciate the color.

Thank you. Our next question comes from Shweta Khajuria with RBC Capital Markets. Your line is now open.

Great, thank you. Let me try two please. Are you expecting, the first one is, do you expect to put some marketing dollars behind the subscription product? Maybe build that awareness so that when consumers are ready, they can subscribe as they see value in that product. And then second is, on engagement, any update on how you saw engagement trend among your members. So, not only members membership growth or improvement, but how are they interacting? Did you see improvement through the quarter? Thank you.

Excellent, thanks, Shweta. So in terms of do we need to apply or do we plan to apply marketing dollars on the subscription. The way we look at it is, we have 400 million unique users on our site. They are planning a trip, they are in some stage of planning that trip. They are already in a plan/buy mode. So, our opportunity with this subscription product here is, while they are on the site, present the value proposition in such a way that it becomes a no brainer, really simple. So imagining you're planning a trip to Cancun, you're examining a couple of hotels. It's a consider trip, it's a trip that matters to you, it's likely to be on the higher-end, and you're going to be doing some activities there. And then you get an opportunity to see a subscription product, that or to see a product offering that saves you meaningful dollars on the hotel that you wanted to stay at anyways, offers discounts on the tours and activities that you want to do in Cancun, and maybe, as you look at the savings that we can offer instantly on this trip, versus the subscription price, that becomes kind of a no brainer, becomes a very easy opportunity without, your question, any incremental marketing costs for us to educate a consumer at the time they're ready to buy, that this is a great deal. And we of course, expect the consumer will continue to shop around to make sure that this is the hotel they want to stay at that this deal that we're offering is in fact better than what they can find on other sites. And when that consumer is convinced that well, yes, it actually is saving money for them. And that hotel is offering a chance for a free upgrade or a spa or dining credit or something else that can make that stay extra special. You combine that kind of win for the consumer, with the ability to use the subscription product for the next entire year. That's kind of the experience we're aiming for. And then of course, when that traveler is on trip experiencing the benefits, you know, the money they saved on the hotel, they might be able to do an extra special meal, the upgrade with the ocean view, how exciting is that? So, remember that it's TripAdvisor that brought them this enhanced experience, like that subscription. And of course, that flows into the logic of whether they renew a year later. To your second question on engagement of members. Yes, certainly, members are as engaged as the average traveler during this pandemic. I'm not sure we see a particularly different type of behavior on the site. Everyone, a member not is super concerned about safety, they want to go to the more outdoors, more less urban, more suburban more out of the way more National Park type trip. I don't think we've seen a split along member, non-member lines. And of course, because the members we have the ability to suggest they come back for some of those types of trips that are more likely to take via our CRM channels. So, as you suspected, membership continues to grow, but I can't point to anything particularly meaningful that's different in members versus non-members at the moment.

Okay. Thanks, Steve.

Thank you. Our next question comes from Naved Khan with Truist Securities. Your line is now open.

Thanks a lot. A couple of questions for me, can you help us with your fourth quarter outlook a little bit maybe? So you expect revenues to be – performance to be modestly below the third quarter? Can you maybe talk about the state of revenue for the hotel business between U.S. versus non-U.S.? I kind of remember it being two-thirds U.S., one-thirds international. And then, the restaurant segment is all European. How should we be thinking about that amidst the lockdowns?

Yes. Naved, hi. The – our euro business is, a, we don't break it out, but is a minority of our business that has impacted and U.S. is more significant. The trends that we're seeing right now, for instance, in the hotel business is that the U.S. is, compared to where we were in September, holding up more or less at the same sort of recovery levels, so not too much change moving from September to October into November. The big change we have seen is in Europe with the lockdowns that have been introduced there. We've seen that on the hotel side and we've seen it on the restaurant side as well. You're almost correct about your statement about dining and the skew to Europe. TheFork is almost exclusively in Europe, our reservation business, a bit in Australia, a bit in South America, but almost exclusively in Europe. And so, that's very significantly impacted by the lockdowns and it's the majority of our dining revenue. But there is also a component of our dining revenue that is in the U.S., which is our – it is our business-to-business component of the subscription services and other marketing services we sell-through at restaurants. But the largest part is Europe of that business, you're correct about that.

That’s very helpful. A quick follow up if I may. So, on the fixed cost savings of $67 million that you had in third quarter, if I just analyze that that equates to around $270 million, but then obviously, you did say that you expect to return most of it, but not obviously all of it when things do turn around. So if I had to think about 2021, can you give us some [guide post] about how much of this can be sustained in terms of cost savings?

Yes. There are – when the market comes back, there are going to be some costs that we will naturally have to add back. Just as an example, we are not operating any offices right now. Our offices are – most of our offices are closed. At least the larger ones are closed. And when we reopen, some of that infrastructure costs will come back. There's always some other inflationary pressure to cost. And when the market comes back, we may invest behind some strategic initiatives like our subscription product. But we have found after taking out this much cost, as you often do, is that we have become more efficient. We're targeting much more on the things that really matter for our strategy. And we're looking around and we're saying, hey, this actually works for us as well. We don't have to add back all this cost. So, I didn't have a specific number for you yet for 2021, but will add back some cost. I believe that we’ll not add back all the cost even if the market comes back.

Great. Thank you.

Thank you. Our next question comes from James Lee with Mizuho Securities. Your line is now open.

Thanks for taking my questions. Steve, I was wondering, you know, given the fact that we see a pretty meaningful mix shift towards alternative accommodations here. I was wondering maybe what do you think about your strategy, vacation rentals, will you be more focused on going forward like making more investments in that segment? And also, secondly, you know, with TCOM CEO on your board right now, anything you learn from the company specifically? They certainly have a reputation of merchandising and bundling. I was wondering anything you can pick up from their perspective. Thanks.

Thanks, James. So to begin with, on the alternative accommodation question, absolutely accommodations are – alternative accommodations are a key part of our future. We have a reasonable footprint that we're looking to augment. And the trick, if you – well, the challenge the opportunity, if you talk to TripAdvisor or almost the other OTAs is figuring out the way to mix in that alternative accommodation mix into the default. So the opportunity to help teach travelers that there are these great options out there because it is a growing category and we fully expect to have that a growing part of our mix as well. I don't think the TripAdvisor brand will stand for alternative accommodations in any particular point. We are looking to help travelers plan those big trips that matter and that involves any type of accommodation, fantastic experiences, helping you get there, delighting you with inspiring content out of the way things to do, helping make that trip as memorable as possible. And so, alternative accommodation does the lodging type, plays a role in that, but it's not kind of the [around the center] for the company. To the question on having Trip.com on our board, Jane Sun a perfect addition for us. I can't – you know, it wouldn't be right for me to kind of disclose any particular learnings. It is – I can say however, it's fabulous to have the perspective of one of the major global OTAs that has tremendous operating experience not only in China, but in so many other parts of the world as we operate very complementary businesses, but obviously very much in the same category in the same space, so I enjoy our interactions quite a bit.

Okay, great. I just would guess some clarification on your strategy on vacation rentals. It sounds like your strategy going forward to help to do more help [travelers] do more planning towards accommodation, pushing traffic to your suppliers as opposed to sourcing the inventory directly, am I reading that correctly, Steve?

Well, it's a fair statement that we don't plan to sort of compete with the number of sales reps sourcing supply directly versus everyone else because we feel we can do a better job for our travelers by taking inventory we have, augmenting it with inventory sourced by other players to present a more comprehensive experience. What we bring to the equation is demand. What we bring to the equation is the travelers looking for a very considered trip. And since alternative accommodations do play an important role in that, we just want to have that supply on our system, certainly regardless without necessarily investing and building or growing our supply organization in order to get it.

Great, thanks.

Thank you. Our next question comes from Lee Horowitz of Evercore ISI. Your line is now open.

Great, thanks for the question. Two, if I could, maybe on the subscription product, in a more normalized demand environment, how do you think about the advertising investments needed to support the subscription product? Ultimately, how do you balance paid advertising versus leveraging your owned and operated space in order to drive subscription growth? And then, maybe on the revamp cost structure, can you help us size the magnitude of these fixed cost savings across your business lines? I'd imagine that given the relative size of businesses that much of it is coming out of the hotel, but any help on hotel versus non-hotel would be helpful? Thanks so much.

Sure. Thanks, Lee. So certainly, at some point, we will be looking to build a brand around the subscription offerings. I really do want to drive home the point though that we have north of 100 million members. We have tens of millions of travelers planning a trip visiting our site every single day. These are all folks who we have the opportunity to introduce our subscription product to at the right moment. They are already in travel planning mode. Or if they're a member, they already know TripAdvisor and have been using us, perhaps for years. So, we think the success of the subscription product will revolve around the value that we're providing to these travelers, helping them understand we're just making sure that that math works, that the perks, the extra experience, the delight, and the savings that we're offering the traveler is worth that subscription fees. Unlike another business, if you were to start up a travel subscription business, and not have our demand asset, your question would be spot on, how much do you have to spend in order to acquire and what's the lifetime value going to be for the subscription and can you make that math work? For us, it's really quite different because we're confident we already have the traffic, so – or the demand on the site each and every day. Obviously, we will be – obviously perhaps, but of course, we will be spending some marketing dollars, if we have some folks going through a path to buy the subscription product, and they abandon, we would naturally seek them out to remind them to come back and finish the transaction. But the big win, the big opportunity is to leverage the traffic that we already have. And as others have done, do a consistent job improving the value over time with our content, additional discounts, special treatment, upgrades, credits at hotels, experiences that are in destinations that are unique to a paid membership value offering. And, you know, we're – there have been others’ programs in travel. There's certainly been plenty of programs like this in other verticals. But again, to your question, it's not a question of cost back consumer acquisition for us because they're already on our site. Ernst, do you want to take the second one?

Yes. Lee, in terms of your question about the magnitude of the fixed and discretionary savings across segments, similar on our – similar level of savings year-over-year as a percentage between our hotel, media and platform business and experiences and dining more on the other segment.

Great. Thanks so much.

Thank you. Our next question comes from Tom White with D.A. Davidson. Your line is now open.

Great. Thank you for taking my question. Steve, earlier, when you were talking about the subscription offering, you mentioned how kind of your direct connectivity with hoteliers and properties play a role there. Could you maybe comment on sort of what percent of your overall properties on the site, you guys have maybe some level of kind of direct connectivity with, i.e., you know, not through an OTA or through a hotel, GDS or something like that? And, you know, just curious whether kind of driving more of that direct relationship with properties is a big strategic focus for you guys, and, you know, how you might monetize that if so?

Hi. Thanks, Tom. So, as you saw, we announced a couple of additional products in our hospitality solutions offering, two new B2B products that enhance your reputation, as well as deliver business insights to help on your business. So, we're constantly evolving in helping the sort of tens of thousands of hoteliers in these and then as many of the [chains] as are interested to help them grow their business and grow their business using TripAdvisor. To the question on the subscription product and how it relates, we obviously view that channel direct-to-hoteliers as a tremendous asset being able to deliver unique value in the subscription product. So, if you can imagine a hotelier that might have a shoulder season and might be perfectly happy to provide a discounted room or an extra piece of – an extra credit, an extra part of the experience at their resort to TripAdvisor members behind our pay-gate. So, if you think of the overall ecosystem, there tends to be [euro] many hotels aim for rate parity across the various channels. But behind a paid gate or a subscription gate, there's lots of new things that hoteliers can choose to do and we're not, by any means, inventing this model, the price line, the outlier. There have been plenty of other very successful examples of how discounted rates and other packaged rates are in established distribution channel for hotels. For the first time, we're bringing that to TripAdvisor in the form of this subscription offering. So we shall see and we will learn what hotels are interested in offering to get access, preferred access, in some cases, to those – to the travelers on TripAdvisor. Specifically around connectivity, we have connectivity to the OTAs, through the GDSs, through hundreds of different internet booking engines that hotels have been using on our site. It's not an easy part of the equation, but through previous efforts, we have quite a bit of experience establishing the connectivity that will enable many [indiscernible] that would be interested in our audience to be able to establish that direct booking or that direct offer capability.

Great, really interesting. Thank you.

Thanks.

Thank you. Our next question comes from Heath Terry with Goldman Sachs. Your line is now open.

Great, thank you. Steve, just to dig a bit deeper into the direct opportunity, I mean, we're – you know, we're obviously seeing Google and sort of other metasearch models tend to enable the loyalty program efforts that hotels are, you know, certainly pre-pandemic, but even through this pandemic are attempting to build out. During the pandemic, though, we're seeing the shift in consumer behavior towards more direct booking via the phone as consumers try and, you know, get more information about health protocols and check-in and that type of thing. What kind of opportunity do you see for TripAdvisor to play a role there short-term? And then, you know, certainly to the extent that we're all focused on the longer-term to use that, and, you know, the environment we were in just sort of benefit TripAdvisor’s more direct relationships with, you know, with these hotels, you know, and sort of around the OTA eco-system?

Yes. Thanks, Heath. Interesting question. So, we were pretty quick to market with our Travel Safe initiative that grew – in previous calls, I think it was talking about 50,000 businesses, advertising their information about safety. Now, it's up to 120,000. So, I think our traveler has clearly received benefit those that are clicking on or those properties with travel safety information are getting a higher percentage of our traffic. We share that with hotels all the time. It's fairly obvious to think about travelers want to know what the hotel is doing to keep them safe. And so, I think we've earned some bonus points with travelers by presenting the information in such a comprehensive way. And with hoteliers, we’re making it available to hotel hoteliers and restaurant tours for free to help them address the concerns that their customers have. We do quite a bit for hoteliers and restaurant tours for free. We let them sign up. They can add photos, they respond to reviews, all of that is part of just our ongoing relationships with our registered owners. When we offer products that – all the ones that we've brought to market so far, [they're ready] to help leverage some additional information on TripAdvisor or get additional bookings, direct bookings from our site, and which again, helps them to grow. The subscription offering brings yet another model that is very demand-oriented and extremely easy to measure because we are actually providing more bookings based upon the offer and it's, kind of in a no-risk situation for a hotelier who wants to test participating in our program, and they will see the bookings come through whatever connectivity we've established with them, if we are successful in driving more, and that makes it a win for them and our traveler obviously gets the benefit, the perk or both that the hotel is offering.

Great, Steve. Appreciate that. Thank you.

Thanks.

Thank you. Our next question comes from Jed Kelly with Oppenheimer. Your line is now open.

Hey, great. Thanks for taking my question. So just looking at your traffic patterns, your traffic's, obviously, ahead of where some of the OTAs are [indiscernible] it seems good. You know, it seems to be more of a leading indicator. As you think about travels coming back, is there a way sort of any products you could potentially introduce to kind of control your own destiny in terms of revenue and, you know, generate revenue, more revenue, either through your media platform ads, you know, more consumers look to book to travel before actually traveling?

Yes, I don’t think. It’s Steve, again. So I think you've seen some of the leading indicators, the destination marketing organizations, the geographies that want to start attracting tourists are leaning in a bit more heavily into the display space, one of our product offerings, than the chains. And that's, you know, a combination of dollars available, but also they recognize – those organizations recognize that people are even in the midst of both pandemic planning, still making some of the decisions for well, when all this craziness is over, where do we get to go? The [DMOs] want to be there and that's arguably a bit too risky for the hotel chain to play in that leveling decision process. We have no doubt that as demand picks up because people feel safe to travel, again, not next month, not even next quarter, necessarily, but as the recovery happens, all of the eco-system will rebound to where we were. The chains will be super active, the destination marketing organizations because so many destinations. Tourism is a critical component. We'll be back on the site in [indiscernible] and OTAs and our traditional clients will all be back in force looking for that demand. Got one other thing I wanted to kind of add on that subscription product, because we're talking about sort of chains and the loyalty programs is that, of course, we believe that the loyalty programs that the chains offer, and that the OTAs offer will obviously continue. Those tend to be reasonably strong programs or subscription offerings, not meant in any way shape or form to pull people away from those. It's very – we view it as very complimentary to those systems. And so nothing that we're doing product wise would make it any less interesting for hotel chains, for instance, to be terrific advertising partners for us.

And I would underline the point that you're making, Jed, about leading indicator of traffic, we had – in September, we had – we were at 74% of the previous year in terms of unique users, which is obviously way ahead of the 35% we were on revenue compared to last year. And so, we look at those trends. We were – even in the depths of April, May, we had about a third of our traffic still on our site. So, we’re seeing engagement, continued engagement with the TripAdvisor platform even when conversion rates are low. That's very positive for us. The other sort of leading indicator I would point out is, if we get into a situation next year where there is more certainty on the ending of COVID, because there is a vaccine and it's not just about the logistics of rolling it out, we may see our hotel auction, which is mostly pay-per-click, of course, we may see as a leading indicator there because people will start to engage and start booking for further out. It's another area where we might need the recovery.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Doug Anmuth with JP Morgan. Your line is now open.

Okay, good morning. This is [indiscernible] for taking the questions. I had two, just [indiscernible] hospitality of B2B product that you recently rolled out, could you elaborate a little bit on that and give us some more details on what you're doing there? And then, looking more broadly across the B2B opportunity, are there any other unique opportunities or interesting things that are popping up that could, you know, come down the pipeline? And then, looking at the trip.com partnership, it's been about a year since you announced that partnership. Do you have any updates to share around how the partnership has progressed so far?

Certainly. So I can start [indiscernible]. Two B2B products recently released, and then, a subscription component, we can talk about if you want. In no particular order, there's a reputation pro, which enables hotelier – I mean stepping up level, a hotel's reputation on TripAdvisor is for many, many properties around the globe critical to their success. It's a ton of absolutely free visibility whether the client to us or not. It’s visibility for them. It’s reputations. I read about it on TripAdvisor, they're very proud of their awards. And so, hotels naturally do what they can, or many, many hotels try very hard to improve their reputation on TripAdvisor because, as everyone knows, you can’t kind of buy your way in the [sort order]. So, one of the best ways that we recommend hotels to improve their reputation on TripAdvisor is to actually deliver a better customer experience no surprise, and then, to get their travelers, their guests to write about their experience on TripAdvisor. And we've just seen a stunningly consistent correlation between the more guests that write about the hotel, the better, the overall average score of the review is. So, Reputation Pro helps automate that process, so hoteliers are able to essentially set it and forget it so that the review request goes out to all the guests. It can also add some extra questions, the hotel you get some extra insights into, you know, what guests are saying. But most importantly, the review volume goes up, the reviews tend to be positive, which helps their ranking on TripAdvisor. Again, they can and many hotels do it independently. They e-mail their guests, they ask them to write reviews on TripAdvisor. We love that. But for those that want to have it a bit more automated, to be able to check the reviews on TripAdvisor and Facebook and Google or one spot, it's a very nice relatively simple offering. Second product is Spotlight. It’s a business insights product. It looks round at – this is in partnership with another company. And using TripAdvisor data and the other technology really helps deliver insights into how to run your hotel business, what price your room’s at. It's a relatively established category, but penetration is now what one might expect because it's expensive to have a trusted sales force that runs globally. Well, we have that. So in partnership with some extra bells and whistles, we've put together a product and we're bringing it to market now. We think those are two very valuable products to hoteliers. They're also sticky products. They're helping them run their business and build their reputation over the long term. So we look to form relationships that – with hoteliers that are really helping them in a permanent sense. To the degree that some hoteliers will also be very interested in our – in offering something special in our subscription business, that's another more on the demand side, but hoteliers care about filling the rooms. And so, that will be, not yet, but will be another opportunity to engage with hoteliers and help them grow their business.

And I would add to that just as a reminder, our strategy to grow revenue outside of our hotel auction is not limited only to experiences and dining. Last year, our non-auction hotel products, the B2B products, were growing double-digit year-over-year. And so, we have a lot of plans to keep growing that hotel B2B part and these two new products that we've introduced are important tenants of that. So big focus internally here to keep growing our hotel B2B business, as well as our media business, as well as our experiences in dining and now these added consumer – new consumer streams as well. To your second question…

[Indiscernible].

You know, I’ll start Steve and you can add. The TCOM partnership, yes indeed, almost a year since we inked that joint venture. Very positive about what we're doing together in China, as Steve was talking earlier about the benefits of having Jane on our board, but in China itself, we're working on – the team is working on the joint venture. We're excited about what we can do together in that marketplace. Obviously, COVID has impacted the plans, at least the revenue for that business as well. Although the Chinese market, domestic market has recovered quite nicely, actually, the focus, the main focus for the joint venture is China outbound traffic, international traffic and that part of the market hasn't recovered very well. So, in terms of revenue, not on track where we hope to be because of COVID, but in terms of the team building the product that we need for the future, very happy with progress.

Great. Thanks for the color.

Thank you. There are no other questions at this time. I will now turn the call back over to Steve Kaufer.

Thank you everyone for joining the call. I just want to reiterate my thanks to all TripAdvisor employees. Your dedication is an inspiration. We are truly living one of our company values of being better together. To our investors, we are constantly in the signals of pent-up consumer demand and we believe our continued disciplined balance of cost savings and targeted investment in our future will enable us to emerge leaner and stronger than before. We'll get through this. Time and time again, travel has rebounded and travelers have come back to TripAdvisor. We will continue executing our strategy [in this short] TripAdvisor plays an influential role with consumers and partners worldwide in this recovery and beyond. So, thanks and stay safe everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.