Tripadvisor, Inc. (TRIP) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the 4:30 U.K. time, 11:30 -- sorry, 11:30 Eastern Time out to a few U.S. sites in of the SEC and last session of this year's European SDC. So thanks so much for joining. I'm Richard Clarke, I'm the global hotels and measure analyst here. Delighted to be joined by Ernst Teunissen, the CFO of TripAdvisor for first appearance of the SDC. So very, very welcome to have you. [Operator Instructions] I noticed there some questions already in there. So thank you so much for those. You can also vote to questions if there's particular ones you want me to hear more problems. Obviously, I've got plenty of my own questions as well. And Ernst, I believe you're going to give some short introduction remarks. I'll hand over to you, and then we'll jump into the Q&A. So thank you, Ernst.

Well, thank you, Richard for having me in this conference, and hello to everyone who is joining us virtually. Yes, maybe a couple of comments before we get going with your questions, Richard. Firstly, maybe on the travel recovery front, it's a question I'm often asked, what are latest observations there. A few points I'd like to make. Q3 performance as a percent of 2019, while somewhat uneven month-to-month due to the Delta, has been pretty much in line with our commentary that we made back in our earnings call in August. Our expectation is that Q3 revenue and EBITDA will be materially improving versus Q2, both in absolute dollars as well as a percentage of 2019. So that we continue to remain and feel good about that. Stepping back, maybe the pandemic developments and restrictions and headlines, they are impacting the travel landscape. But importantly, what we have observed is that travel comes back really quickly when government restrictions are easing. We saw that even in the summer of 2020 with our restaurant business when restaurants in Europe started to reopen. But we've seen that in space in the U.S. in Q2 and I commented that earnings that we saw, for instance, our hotel auction in the United States in June be above 2019 levels. So the good news is the market comes back very, very quickly when things open. And we have, of course, a pretty diverse set of revenues and geographies and ways to monetize. And so what we've also seen as the recovery sort of unevenly developed by geo or by product category, we've been able to benefit from being broad, and that has been good for us. And we remain pretty confident that leisure travel will recover and regain 2019 levels. Consumer surveys that we have on our site continue to indicate that there is very, very significant pent-up consumer demand for travel, and we expect the recovery will remain uneven. But, we are pleased where we're going, and we see some relative stability in the industry even in the face of the Delta impacts. And this resilience, we believe, show the potential for renewed recovery in 2022, and it could be very -- 2022 could be a very positive catalyst for leisure travel. The second point I'd like to make is -- has been often covered, but I want to keep reminding people about it. We are operating with a much leaner fixed cost structure than we did before the pandemic. And we've said before that although we will strategically add back some fixed costs, we do believe we can operate with a more lean fixed cost structure than we have done in the past. We have ruthlessly focused on the key priorities that we have as a business. We have, therefore, become much more streamlined, and we will continue to operate in a streamlined way, which means a favorable P&L structure going forward. And the last point I would like to make, Richard, is we have significant opportunity across the different lines that we have to increase customer engagement as well as monetize our influence. Before the pandemic, our B2B product and our media product showed a lot of growth and potential. We continue to build those products as we move forward into a recovery. We are very excited about our experiences in dining categories and hope to be talking about that with you in more detail that were great opportunities pre-pandemic and are recovering very strongly now. And of course, our plus, our TripAdvisor plus rollout that we continue to be very excited about. Our aspirations are unchanged since we first started talking about it. We see a huge potential for this as a category for us as well. So across all these potential areas, we're continuing to build, test and integrate and have a -- and will deliver compelling value-added, and we believe will position us very well as the market comes back.

Thanks a lot for that -- those opening remarks. In terms of what I want to ask you about, I ask a bit about the recovery, your views on where that comes to. Definitely, you're going to spend a bit of time on plus given the changes about this week, but definitely want to focus on some of those other initiatives that you have spoken to that we also like some of the transition there. So let's maybe just kick off a little bit with the recovery. You said that things have gone a bit lumpy month-to-month. I think at Q2, you said July was going to be better than June. Did that pan out? Maybe just give us a sense of how things maybe progress through August and how you're seeing September at this stage?

Yes. As I said, it's the -- clearly, in Q2, we saw a linear progression as a percentage of 2019. Q3 has been a little bit more uneven. But clearly, Q3 significant step ahead of Q2 in terms of revenue as a percentage of 2019. So although Delta has introduced some variability into our results, and we are delivering the improvement, the step-up that we talked about in Q3 versus Q2.

Okay. Very clear.

And when we're ahead towards the rest of the year and we look into 2022, and we believe there are very, very positive signs that the travel market is coming back, and we're very pleased to see that. We saw that in states in the United States, in Q2, very happy at the time to see that experiences, in particular, was coming back very strongly for us in the U.S. in Q2. That will surprise us a little. We had expected that experiences would take longer to recover, and we saw very, very strong performance there. And more recently, we've seen Europe improve as well. Despite Delta in Q3, Europe has been improving its performance and so that was very pleasing to see as well. And so overall, we look across the portfolio, and we're pretty happy where things are.

So I know that Stephen is at the Skift conference today. I'm not sure exactly what time he might be now, but it's -- there seems to be a bit of a debate going on at our conference as to whether we are in for a meaningful revolution in travel. Brian Chesky saying that he thought that COVID was the biggest shape of travel since the invention of the Aeroblade. What's your kind of view on that? We kind of have a bit more of a kind of mean reversion back to what travel looked like before or is travel going to be a very, very different industry than it ever was before pre-COVID?

Look, there are things that are going to reverse back to the mean, we believe. And so what we have seen, for instance, very strongly in our business is a shift to domestic travel, domestic consumption rather than international travel. We've seen within our experiences business, for instance, a move from city-oriented activities to more outdoorsy activities. And we believe there is going to be some degree of reversion back to the mean. People will start travel internationally again. Leisure will be ahead of business, we believe. And people will make city trips again. So there will be a degree of reversion back to the mean. At the same time, there are certain innovations that have happened during pandemic or shifts that have happened during the pandemic. And we are at the forefront with that with our forays into the subscription business with plus. And we do think there is opportunity to reshape the landscape of travel and our focus within that is to rollout what we think is going to be pretty unique subscription offering that has seen traction in other -- in the industry, but never in travel yet, and we're excited about that. So we hope to change travel in a lasting way through initiatives like that.

Great. Well, that segway is nicely into me asking a few questions about TripPLUS. And I guess, particularly some of the changes we've seen in the last week. What was the sort of catalyst to pivoting this business from the upfront discounts towards the cash back? Is this what you think supply wants or what you think demand wants? What are behind that pivot?

Yes. So we're making an integration that we believe will benefit both the supply and the demand. We had been rolling out in one market in the United States, as you know. And what we found is that we were able to show the offering to our subscribers, to our users to do a few clicks before you got behind the paywall, and you could actually see the offering. But, we're offering great discounts and proposals, but some of the hotels we spoke to were concerned about price parity, and were concerned about differences in pricing on our site. And so we have evolved our offering from an instant saving to a travel fund to ability to get cash back at the moment you check into a hotel, where you actually go on the tour or the attraction and get that as in the form of cash at that point or use the cash actually when you own the trip for other purposes, spend it while you're on the trip. And we believe that's a compelling -- continues to be a compelling consumer offering. You're getting a discount, and you're getting it not instantly, but you get it in the form of -- into a wallet. But we think that have some appeal as well. It makes it more memorable that you got the discount than just getting it transactionally at the moment of booking. And it's continuously compelling opportunity --compelling discount. And on the supply side, we are able now to broaden the set of hotels that we can offer, which is ultimately good for our consumer as well. And so it's an iteration. Look, we have been iterating on this product as we -- from the beginning. Of course, you do that. This is a new market, a new industry. The iteration with the version had made it better, we believe, over time, we've listened to our partners. We've listened to customers. We still listen to users. And we believe this situation will position us well. We're rolling this out throughout Q4 and are very pleased to do that and excited to do that. And I want to remind, of course, everyone that the vision for this is a subscription service that is much more than just hotel discounts. It's about experience and discounts. We're going to broaden into other verticals. But you've seen our partnerships that we've done with auto mall and rent the runway and the vision is clearly to package in a much broader set of benefits for our users. Ultimately, that could be about content. We have a chat messaging service that we have built up as well. So the vision for this is broad and sometimes tempting to just think about this as pertaining to hotel discounts because that is a no-brainer sweet spot area where we start, but it is going to be a much more comprehensive consumer experience, not just a transactional thing.

That's very clear. Maybe just to what extent does this change on the hotel side, I mean you're kind of relaunching this? To what extent are you kind of, is this back to square one? Do you need to -- anyone that signed up so far? Do they need to kind of resign up? What about the hotel deals you've done with Melia, Barsana, the Trip.com deal, the wholesale deals, is everything kind of from scratch or do lot of those naturally roll over into this cashback commission model?

No, of course not starting from scratch. We've been having ongoing dialogue with -- dialogues with our partners about the offering. And so we believe this is an iteration rather than going back to Square one. This is an iteration. We've been naturally progressing this. It's an important change, but it's a progression on the path that we were on, and we believe we continue to be on a very significant long-term opportunity for us.

Okay. Makes sense. And in terms of sort of this has obviously come up with conversation with branded hotels, I guess, is one part of that. Are you expecting to make some announcements on branded sign up in the recent -- in the near future Or does that come later than that?

Yes. We've made some announcements. We'll make announcements as they come along, and we continue to be in deep dialogues with all potential partners.

Okay. Okay. And then just a little bit of a question around the mechanics. Because you talked about the sort of no-brainer deals that were there before. Obviously, those discounts could be quite a lot bigger than standard commissioning levels, the 10% to 15% commission level. Will your cash back -- is that what -- is the commission and the cash back those are going to be equal to each other. And so therefore, the discounts maybe not be quite as good on one hotel, but you'll have more hotels on the platform, and it will be a bit of the broader product rather than focusing on those no-brainer type deals?

We will continue to have access to multiple sources of the supply of course. Hotels directly through OTAs, we've announced that we connected through trip.com and then there are aggregators in the marketplace that have differentiated deals as well. So we will continue to have multiple sources that we can tap into for discounts, some very attractive discounts, so we will continue to have that.

So -- okay. So you can still use that wholesale supply using this business model, but the price you'll present will be kind of just the retail rate and the difference between the wholesale price and the retail price will be the cash back? Is that the way to think about that?

The big change that we made, indeed, Richard, the big change is how we present the offer. It is a -- we present it as a retail price, but then a travel fund that you get back, and we can adapt the size of the travel fund, of course, depending on the commission we get.

So it's not necessarily cap to the standard OTA commissioning as it should be, bigger than that necessarily?

There is flexibility.

Yes. Okay. That makes sense. Thinking about international rollouts, obviously, this has been sort of price parity has been part of the issue, of course, it's price parity is not so much of a rule in Europe. So where are we on the international rollout, which model do you think you'll use when you begin to roll this out more internationally?

Yes. We're still focused on the U.S. and iterating on our U.S. offering, and that's what you'll see us do in Q4. The ambition is to go international -- to go global with this. We're now focused on making sure that we own this iteration in the U.S. market.

Okay. Okay.

Other markets will follow.

It is your ambition?

And you're -- absolutely. And you are correct to point out, Richard, that different markets will have different characteristics. You pointed to one, price clarity, there are other characteristic differences and we will adapt the product accordingly, but U.S. first and then other markets.

Okay. Makes sense. And how are you thinking about the marketing of this product so far, maybe linked to that is, how have you seen demand uptake so far? Is it in line with your expectations? And how are you thinking about the sort of marketing spend to support that?

We are in a fortunate situation that we have a very, very large captive audience on TripAdvisor across all platforms, but also on the hotel platform, where the no-brainer moment often will happen. We've said before in 2019, we had 160 million different instances of searches for bookings of $750 and over, which is sort of the sweet spot because you get your money back most right away if you buy a subscription. And so we have the fortunate situation that we have a lot of those moments where we can have shots on goal with our current audience. That may be different for a platform that starts this from scratch because they may have to go out and get these customers into the door, but we have that. And so we believe that the first marketing push is basically on-site conversion of traffic that we already exist and make sure that we merchandise the new subscription offer as well as possible. In parallel, we may do some retargeting maybe on online platforms of people that have shown interest in it. But we're in first phase, not putting a major amount of marketing dollars behind this initiative. May, at some point, we increase our marketing spend to put more fuel onto the fire if the number of subscribers really start to take off, maybe, but we think we have a long runway of on-site marketing before we have to spend seers marketing dollars.

And so can I conclude from that that -- although I probably don't expect you to give me any kind of number on subscribers, but you felt that you were kind of on that demand side, if you're on track changes we hear were more about the supply side.

We were offering an attractive set of price discounts for our users. So we felt that, that was a solid part of the product that we have put together. We believe this integration is going to make the level of discounted level of benefit that our users get much more transparent because we're now able to immediately show to all our users coming on to our site, what the level of benefit is, where before you had to click-through a few times before you really saw it. So that way we think will -- on the consumer side will be helpful as well. And then on the supplier side, now this will actually just accelerate how quickly we can offer a broad set of supply. So we think it's a win-win for us, for the -- for our users and for the supply base.

Okay. Very clear. I mean, I guess one of the questions we've received is there are other cash back deals out there. I mean some other companies do offer cashback. Just including some of the OTAs have some cash back type offers. Is your product going to be more generous than that? Does this increase your head-to-head competition with the OTAs a bit more? How do you feel about sort of differentiating yourself from other cash back offers?

There are various programs in the market. There are loyalty programs in the market. And -- but there has not yet been -- the white space is a comprehensive subscription -- travel subscription that gives you benefits in terms of discounts, you give you content benefits, gives you tools, get you connection to services around travel. And that market space is, we believe, on claimed at this point, and that's what we're after. The -- there is not like Amazon has created or in other industry has been created, there is not yet a comprehensive ubiquitous membership subscription -- travel subscription in the minds of consumers. And that's what we're after, and we think the opportunity is.

So yes, okay. So that sort of leads into the partnership agreements that you've signed with Hertz, Rent the Runway Audible, I think, most reasonably. They're scoped to do more of these type partnership deals? Does this mean you have to share some of the $99 with these partners? Or are you still able to keep them and have those partnerships with them?

Yes. We are keen to strike these partnerships with mutual benefit -- mutual commercial benefit. And so we have one with Hertz, just announced one with Audible where we together develop content on Audible Travel content on Audible. We believe that there is a win-win commercial benefit for partners where we help them increase the value for their subscribers or consumers while being able to provide benefits to our PLUS subscribers. So we think it's a win-win commercial arrangement that we enter into with these partners and hope to do more.

Great. Does this shift towards the wallet make a credit card product a bit more likely? Because I guess it sort of can be seen as being more similar to a credit type product?

There are multiple ways in which the subscription could iterate going forward. The wallet is really meant to be a great place where our subscribers can keep the balance of the savings that they have created. And as we said -- as I said before, someone may want to just take that cash out to the moment they arrive and check in into their hotel. Someone will actually like the notion that they have of a place where they have created a little bit of a travel fund and keep it there. And so that offers us other opportunities and going forward to enhance that. That all, I think what we do with that.

Great. Okay. Let's shift away from PLUS. I think for -- talk about some of the other initiatives that are certainly going on there. So your metasearch business, I guess, has been in a bit of decline pre-COVID. I think from my numbers, has actually held its own pretty well through COVID. How do you see the sort of future of the metasearch product, the relevance of it? Does it become more relevant by having that review base in a sort of post-COVDID world. What are your sort of considerations there?

Yes. We do think what you just said at the end, we do think that one of the things that COVID has underlined is actually the importance of good information about either a hotel where you're going or a destination where you're going. I think that has been underlying. And of course, we are a platform -- travel guidance platform where providing independent information is very valued by our users. And so we think that could help us. We're continuing to hone our value prop across all lines, including our auction. Look, the outlook for the auction this year and next year in 2022, it remains a little bit difficult to forecast with precision. What was very encouraging is the fact that in the U.S., the auction was actually above 2019 levels in June. That was a very positive data point. How that translates to what it's going to look like in '22, how it translates like into how strong Europe auction will recover is a little bit more difficult to forecast right now. But, we're doing everything that we can do, continuing to hone the value prop that we have for a hotel search on TripAdvisor and believe that we have the ability to continue to make progress there. And we'll take the very positive signs that we've seen in Q2 so far.

And those sort of positive signs you're seeing, do you think that's metasearch as a whole is maybe becoming a bit more relevant again or are you beginning to squeeze share back from Google even or is it maybe some of the smaller players are suffering a little bit more?

I think that's a little bit difficult to discern in the middle of the pandemic. There's so many different cross trends going on. It's a little difficult to discern. I would like to think that a platform like ours continues to be relevant to people looking for hotels, and we see that. And the evidence in the U.S. in Q2 clearly was that. So that -- we'll take that as a positive sign.

And is there -- the trend on the sort of cost per click, the dollars you're making per click, is that being positive, negative? Is it more traffic led? Or is that number kind of be of help in that regard?

We saw very strong in the U.S., very strong CPCs compared to 2019, and that was a very good sign. CPCs in the U.S. were ahead of what we have seen in 2019, which is evidenced the fact that travel is coming back and recovering. And our advertisers, our partners on the site, clearly value the clicks that they're getting from TripAdvisor. And so that was a positive development we thought one of the reasons why we saw such strong performance in the auction.

You're also benefiting from bookings, kind of focus on the U.S. market, they want to gain share of the OTA level in the U.S. market? Are you seeing a sort of shift towards booking? Or is it sort of broad charge improvement?

No, it's a broad church. I think all the participants in the travel industry are seeing that this is a good moment for the market to recover. And everyone, including ourselves, are willing to expand the variable marketing that they're doing because the market is going back. And so that's the reason why we saw that on our side.

Okay. Excellent. So let's maybe move on to experiences and what your -- maybe you can -- when you've approached the experiences business, I guess you've commented more as the merchants are record. Why go in as that business model maybe rather than more the kind of auction business model? What was the attraction of going in that direction?

We acquired -- 7 years ago, we acquired Viator, which was a pure-play OTA. And we have been building our experiences business around Viator since. We've aggregated tremendous amount of supply, which is an achievement because this is a quite dispersed and long-tail industry, and we've built that. We benefited -- and TripAdvisor benefited from that supply by making that supply bookable and available on TripAdvisor as well. We already had a very large audience on TripAdvisor looking for things to do. But, now are increasingly making that bookable. And so like other verticals that have developed, there are a few OTAs that go in and really make the investment to aggregate the supply. We've done that. I have supply second to none, a very strong position. And as you say, as the merchant of record, we -- it's a business with attractive take rates commissions from -- that we get from suppliers to very solid, good business in that respect. And we are operating that business across 3 different -- basically 3 years points of sale. One is the largest, Viator, positioned as a pure play. You go there because you want to do a tour in a particular destination, and it's very targeted to making that available to you. Then we have TripAdvisor, which is more part of a general -- a funnel search or part of an overall trip that you're making, another great way to offer it to users. And then we have a third-party channel with the likes of booking and other partners, which is the smaller channel but has a lot of potential too. It's a huge market. It's a $180 billion plus or minus market in 2019, very underpenetrated online. Vast majority is offline. And there's a general macro trend of consumers wanting to spend more on experiences, less on physical products that is going to benefit us. We always say, when you go on a vacation, you come back, you don't necessarily talk about what your flight was like or what your hotel room was like, you really talked about the things that you did when you were there. And we're in the sweet spot of that. And the move from offline to online offers just a lot of growth potential. So we are excited about the potential for that market. We're excited about our competitive position within it. And we will continue to capture that opportunity for TripAdvisor. We think it's one of the really strong and valuable parts of the business, and we'll continue to focus on it.

So maybe just talk a little bit about the market positioning. I guess what we -- when I launched the same, a lot of the point was that booking Expedia, we're going to do this themselves. I mean, just in the last week, we've seen Expedia do a deal with GetYourGuide. I assume that's -- although that's one of your competitors, it shows this as a specialist subject to do. But what is the kind of competitive landscape out there? How do you compare with GetYourGuide, Klook, Musements, even Airbnb, how do you position yourself? Is there room for all of those different players in this market?

Yes. It's a young market. There's a lot of growth in the market. And therefore, it's attractive market. Therefore, you see other parties going to it as well. We have a position second to none compared to all those players. We have really a very significant offering. And then we have the additional advantage through [ TripAdvisor channel ] that we just have a much larger captive audience and base to monetize that supply base against. So we feel that we are very well positioned compared to those pure players out there. And then the larger traffic participants, to your point, have been -- have been partners for us, and we are making our supply available to them, which is a win-win for us as well. It allows us to keep growing and leveraging the investment that goes into growing the supply base. And so that's been good for us as well. And all these larger OTAs will want to have the offering. But we are focused on coming out as the largest OTA and the largest direct-to-consumer platform to this.

So one of the other developments we've seen recently is Google getting into the experiences market. It probably changed its strategy a little bit. It almost looked like it was going to be more of a head-on competitor. And now it looks like more of a price comparison website. Is that a positive? Is this something that could accelerate online adoption? How much is via to leaning into Google going forward?

I think in general, it is a positive for the industry that there are options to find great experiences out there. It's great for us if people go directly to TripAdvisor and Viator to find that out, but it's also great that there are other ways they can get -- ultimately get to Viator or TripAdvisor as well. So that's a positive. It's indeed Google seems to have modified and as you point out, it seemed to have moved away from a product that was more directly competitive with us. And so we'll take that as a positive. We -- I also want to just point out is like there are sort of 2 different parts to this marketplace. There is a part of it, which is a relatively simple to serve or compare prices among which is the tickets. And so if you just book a straight ticket to the Louvre or to the [ Chrysler ] building rooftop. That is a little bit more easy to aggregate and easy to price compare across. The value-added part of this market and one where we, as Viator and TripAdvisor are very focused, is more around tours. So it is a dedicated tour with in the Louvre or canoodling tour or Jetski rental or -- and so these are more value-added. And because they are more value added, by nature, they're a little bit more difficult to price compare press compare across. But that's the more profitable end of the marketplace, and that's where we are definitely focused.

Okay. It makes make sense. You mentioned in your prepared remarks, you're quite surprised -- You're almost taken by surprise how well experiences are done in the recovery. And I remember you saying, I think maybe the Q1 results, maybe in the full year result. The experience is really needed. International travel. It was Americans going to Paris and booking a trip to the catacombs, there's a core by the business. So what is coming? What are people doing that has led to that recovery that's kind of taken you by surprise?

Yes. What was -- the positive surprise for us was, we knew we had the inventory for all different sorts of experience. We knew we had the outdoors inventory and domestic inventory for the U.S. tourists. And what we thought it would take longer to change behavior. Someone had been an experience as user on TripAdvisor or Viator, and was used to use us to do a tour in New York or go to Europe. We thought there might be some delay in getting them actually do these domestic experience as well. But, we've been very successful at doing that. We've seen that the trend in 2021 of Americans spending more time in-country has actually helped our business because they are renting the Jetski in Miami. They are doing the Grand Canyon tour. They are doing the helicopter to work in Hawaii. And so we've seen, for us, very satisfying shift to domestic experiences. Now again, another reversion to the mean, that doesn't mean that when the pandemic is in the rearview mirror, you will not see a shift again to international travel. But what we hope is that we have actually demonstrated to a lot of our users that Viator and TripAdvisor are great places to do outdoor experiences as well. And so we hope that this is net-net can to be a positive when we get out of the pandemics that we've established ourselves as a brand -- as brands, not just on international and city, but really established ourselves in outdoors type of activities.

Okay, that's very clear. So let's move to B2B and maybe advertising. In 2019, management talked about doubling contribution from display advertising. I think we see at other companies that display advertising has been pretty positive trends. Are you getting on to that? Is that more travel spend? Or are you beginning to sell advertising space on nontravel companies as well?

Yes. We think media is a great business to be in. And we -- even pre-pandemic, were focused on modernizing and diversifying the way we are presenting the opportunities for our customers. And one of the areas where we have -- they're also diversified is in the target customer base, where historically, we've been pretty focused on the endemic users, either hotels or airlines advertising or destination marketing organizations, advertising on TripAdvisor. We have broadened that that you see if you go to our site, more non-travel advertisers, automobile luxury products. And so we think that's a positive. And so we share what you just said, Richard, we think there is still significant runway in online marketing, online media on our site and this is an area that we continue to focus on going into the new year.

Very clear. And then on the B2B side, I know you said a couple of quarters ago that some of the initiatives like Spotlight, they maybe been a little bit slow gain going because it's a pandemic and the companies are selling to the 2 are watching their pockets watching their wallet. As we sort of move out of it, and we've seen decent demand maybe you can comment on how those products are now beginning to gain an interaction.

Yes. B2B products have been sort of the stable factor throughout the pandemic for us. It took a hit from the pandemic when it started, but not as much because it's a subscription model. And so there was more stickiness there. But it's also now on the recovery end, a little slower to recover than some of the other lines, and that's because it will take some time before hotels unlocks are investing this kind of more brand oriented or slightly up-funnel marketing on our site. It will come back, but it's just taking a little bit longer. The hotel industry is more focused on performance marketing at this point. So it's been stable. It didn't go down as much. It's not going up as fast, but we think we have a great position in B2B, and we'll continue to focus on that.

Maybe just one question. So reverting back, I sort of missed out dining, I guess, is one of the other sort of levers there. I mean, I guess, you've probably seen that dining tech company, Toast is just listing for $20 billion. Maybe -- I don't know whether this is Toast very well, but maybe you can compare what Fork does in terms of, does that -- does that have payment capabilities? Has that got some of that sort of tech side to it as well and we should get excited about?

TheFork is originally a transaction-oriented platform and facilitate making bookings on restaurants platforms. But, we're increasingly moving into payment. We have a product called TheFork PAY, which is helping payment at the restaurant. We have rolled out a gift card capability being able to gift currency we can use on TheFork platform. And so we're clearly also moving in that more sort of finance payment-oriented area there, although that's not our origin, but we think a tremendous opportunity. As you know, TheFork is -- it is strongest in Continental Europe. We have -- through an acquisition, we made capabilities in the U.K., but are really our stronghold is Italy, France, Spain, where we have significant market share and a very large restaurant base. And so there's a significant opportunity for us to start offering more and more services to these restaurants other than just helping them with reservation, and that's the path that we're on and TheFork PAY and gift cards are just 2 examples of what we can -- we offer there. So definitely a significant focus for the business.

Fantastic. So you mentioned in your prepared remarks at the beginning about the cost savings. Obviously, something you wanted to highlight there. Maybe you can just help us understand what have you managed to take out of the business? What have been the key cost savings? And as we look today, as we're kind of in recovery stage, what is the run rate we're looking at today? And how do you maybe expect that to trend?

Yes. So the areas of savings were -- well, we took out when pandemic happened a significant amount of cost and the way you do that, you say, what areas of the business are really most important to us, which of our employees' activities that add the most value to us. And then you have -- we were forced to be pretty ruthless in focusing and prioritizing things that matter most to us. And so that was a big driver in both the cross categories. It wasn't engineering, it wasn't in product, it wasn't in G&A, but focused on areas that really -- the measure was what mattered most of us. And that was a great discipline to go to. And although we will add back some of the fixed costs and obviously, in growth areas like experiences and restaurants and PLUS, the -- we have found an efficient -- more efficient way of operating as well. And sometimes, the silver lining of any crisis is that you are focused to make choices that you otherwise would postpone. And we work our force to make some of those choices, and we think we'll put them a more efficient company as a result.

So maybe we sort of think about -- how you think about margins going forward? Because, I guess, on the one hand, you've got these cost savings, the other side is -- a lot of your growth is going to come from, I guess, slightly less mature parts of the business with experiences, which was low profitability pre-COVID, but we'll likely scale up and PLUS, I guess, will take some time to scale up. How do you think about the sort of margin trajectory here? Did margins get back to pre-pandemic levels? Do they get above that? And do they grow or stabilize from that one?

If you look at the TripAdvisor, the brand, and if you look at within that at the -- at the activities like B2B and media and auction and now PLUS, they're all high-margin businesses. And we see potential for growth across the business portfolio. But these are profitable businesses. And with a better fixed cost structure that positions us really well. Experiences and dining are both businesses that have been more or less historically around the breakeven. Sometimes we lost money sometimes we make some money, but clearly, business is where we invest significantly. We think those are attractive long-term margin profiles as well. And so take experiences, we think they are -- the economics there are OTA-like, and we believe we can get to attractive margins long term, but that's not our focus right now. We're really focused on making sure that we capture the market opportunity. So you will see, as we grow the business, a different focus. We're focused on growing profitability as top line as well as bottom line on the core HMMP offering, more focused on growth and capturing the long-term opportunity and value creation opportunity on the other segment.

Okay. Makes sense. And then so maybe just one final question on capital allocation. Are you happy to keep debt on the balance sheet from here? Do you -- does that envisage it going forward? And if not to pay that down and are there things you would want to invest in to further grow some of your businesses? Are there any acquisitions you think could be incremental to the business? And if none of those, then what else would cash flow go towards?

Yes. We have done 2 bond offerings in the last 12 months. So it was in last year a high-yield offering and then back in March, a convertible offering. So we have a significant amount of cash on our balance sheet. And we assume that we will have excess cash on our balance sheet going forward. And so the question then turns to how do you spend that, do you spend on acquisition, possibly. Another very likely and perhaps obvious use of proceeds would be to pay down some of that debt. And so we have an opportunity in July of 2022 when our bonds, which are non-call too, are high-yield bonds, we have an opportunity to retire some of those and that's one of the things that we are looking at sort of deleverage at that point.

Great. Well, I think we are out of time. So if you've got any final finishing words, and please let us know. But thanks very much. I'll hand over to you for any words.

Yes. I wanted to reiterate that I think this is an exciting point in time for travel. The market is coming back. There's a lot of pent-up demand. It's an exciting time to be in travel, and it's an exciting time for us at TripAdvisor because we think we have some really important initiatives ahead of us that can help shape that travel industry.

Thanks very much. Well, Ernst, thanks very much. Thanks, everyone else for joining. And yes, enjoy the rest of the day.

Thank you, Richard.