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What's Next For Tripadvisor After Viator Chief Resigns?
Viator was a potential spinoff candidate in 2021. But with a potential sale of Tripadvisor, all bets are off for now.
It's been two months since Liberty Tripadvisor announced it was exploring a potential sale of itself and Tripadvisor, which it controls. Tripadvisor, in turn, formed an independent committee to vet any deals.
Both companies in the interim have been hush-hush about any deal developments, though Bloomberg reported that private equity firm Apollo Global Management expressed interest.
Now there's a new twist involving Viator, Tripadvisor's tours and activities unit and its hottest brand: Ben Drew, Viator's president, said he'd be leaving next week.
Viator just broke even last year, but revenue grew 49%, much faster than anything else in Tripadvisor's portfolio.
The impact of the departure is unclear: Drew said he was leaving for a new position outside of the travel industry.
But one travel industry C-suite executive with experience in mergers and acquisitions said it would make a potential buyer of Tripadvisor take an even closer look at Viator's prospects, and more heavily scrutinize its leadership ranks.
Tripadvisor didn't respond to a request for comment about who would replace Drew at Viator or the timing on naming a successor.
Viator's TrajectoryIn November 2021, Tripadvisor floated the idea of spinning off Viator and perhaps dining reservation platform TheFork to unlock shareholder value.
By July 2022, Tripadvisor had a new CEO, Matt Goldberg, and the financial markets had turned. Investors grew skittish about fast-growing companies that weren't profitable.
Goldberg began downplaying the idea of a Viator spinoff as a focus, though he never ruled it out.
"Matt was brought in and he took maybe six to nine months formulating his strategy, and talk of the spinoff went quiet," said one Tripadvisor investor. "Matt comes in and maybe he has different ideas about how he manages their experiences strategy."
Another factor is there has been long-standing tension about Tripadvisor's experiences strategy and whether Tripadvisor should invest in the Tripadvisor brand to sell tours and activities or whether the Viator brand should be the focus.
Tripadvisor has a long history of favoring its own brand over other brands it acquired. That was true when it bought FlipKey in 2008 for vacation rentals, and there has been a push and pull involving Viator versus Tripadvisor over the issue for many years, as well.
"I think they are trying to play both sides and manage some sort of compromise," the investor said.
Viator Chief Resigns: Big Change At Tripadvisor's Travel Experience Brand
Ben Drew took over Tripadvisor's Viator brand right as the pandemic began and helped guide the online travel seller. Drew's departure comes at a pivotal time for the brand as it faces heavier competition.
Ben Drew, president of Tripadvisor's travel experiences brand Viator for the past four years, announced on Tuesday that he would leave the company on April 12 for "a new opportunity in a new industry."
As of publication time, the company hadn't responded to a request for comment. However, Tripadvisor's CEO praised Drew via LinkedIn, citing "an impressive track record of success, a well-honed strategy for building on Viator's leadership position in travel's fastest-growing category, and a strong plan in place to continue our momentum."
Drew touted some accomplishments he and his team achieved at Viator, which many experts believe is the largest online seller of tours, activities, attractions, and events.
"In 2023 we hit $737 million in revenue, growing at 49% year-over-year, and became profitable," Drew said in a post on LinkedIn. "Moreover, we helped millions of people discover experiences they'll remember forever, and thousands of businesses make a living."
Viator generated roughly $4 billion in gross bookings last year, but Drew estimated that only captured about 1% of the experiences sold online and off. The company's major competitors include GetYourGuide, Expedia, Airbnb, and Klook.
Executive editor Dennis Schaal notes: Drew's departure occurs as Tripadvisor entertains a sale offer, and there is speculation that a buyer might opt to sell or spin-off Viator. Many consider it the most valuable part of Tripadvisor.
Viator has a deep bench of talent," said Douglas Quinby, Co-Founder and CEO of Arival, a research and events company. "The one question about the future really has to do with Tripadvisor, and to what extent that future includes – or should include – Viator."
Drew's legacyOne of Drew's signature legacies was revamping the tool and process by which suppliers set their commission and help adjust how their listings appear in Viator's search results.
Drew joined Tripadvisor as head of business development for vacation rentals in 2012, where he led significant inventory growth. He oversaw Bokun, the Iceland-based software company serving the tours, attractions, and experiences industry that Tripadvisor acquired in 2018. Drew has previously worked at Expedia and Deloitte.
Drew spoke at Skift's 2024 Megatrends presentation in New York City in January.
Maintaining Neutral: Balancing Growth And Challenges In TripAdvisor's Performance Outlook
In a report released yesterday, Ronald Josey from Citi maintained a Hold rating on TripAdvisor (TRIP – Research Report), with a price target of $28.00.
Ronald Josey has given his Hold rating due to a combination of factors reflecting both optimism and caution regarding TripAdvisor's future performance. On the optimistic side, TripAdvisor's Experiences segment has shown significant growth, with a notable increase in the number of experience shoppers year over year. Additionally, the company's integration of GenAI tools, such as Trips and Hotel Review Summaries, appears to be positively impacting user conversions and repeat rates, leading to increased platform spend. These positive trends are somewhat offset by ongoing challenges in TripAdvisor's core branded hotels segment, suggesting a mixed performance outlook.
Despite these challenges, Josey sees potential in the high-teens growth projected for Viator, TripAdvisor's sister company, due to its continued adoption, even though it's expected to post an EBITDA loss in the first quarter. There is, however, an anticipation of improved profitability throughout the year, with Viator projected to generate positive EBITDA from the second quarter onwards. The formation of a Special Committee to evaluate a potential transaction also adds a layer of uncertainty and potential opportunity, as private equity interest has been reported. These elements contribute to the decision to maintain a Neutral rating while increasing the target price to $28, reflecting the improving but still uncertain fundamentals of TripAdvisor's business.
According to TipRanks, Josey is a top 100 analyst with an average return of 23.4% and a 57.56% success rate. Josey covers the Communication Services sector, focusing on stocks such as Meta Platforms, Alphabet Class A, and Zillow Group Class A.
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TripAdvisor (TRIP) Company Description:
TripAdvisor, Inc. Is an online travel company, which owns and operates a portfolio of online travel brands. It operates through the following segments: Hotels, Media and Platform, and Experiences and Dining. The Hotels, Media and Platform segment provides contextually-relevant booking links to travel partners on websites. The Experiences and Dining segment provides information and services that allow consumers to research and book activities and attractions in popular travel destinations both through Viator, website and mobile apps. The company was founded by Nicholas Shanny and Stephen Kaufer in February 2000 and is headquartered in Needham, MA.
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