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September 23, 2021, Online, New York, NY, USA
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A Return to Experience: Building New Models for Travel’s Future
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  • Description
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About the talk


About speaker

Steve Kaufer
CEO at TripAdvisor

Mr. Kaufer co-founded Tripadvisor in February 2000 and has been the President and Chief Executive Officer of Tripadvisor since that date. Mr. Kaufer has been a director of Tripadvisor since the completion of the spin-off of Tripadvisor from Expedia, Inc. (“Expedia”) in December 2011 (the “Spin-Off”). Mr. Kaufer serves on the Board of Directors of CarGurus, Inc., a company traded on The Nasdaq Stock Market, LLC. Mr. Kaufer also serves as President and Chairman of the Board of Directors of Tripadvisor Charitable Foundation, a private charitable foundation. Mr. Kaufer also serves on the Board of Directors of the charity Neuroendocrine Tumor Research Foundation (formerly known as Caring for Carcinoid Foundation). Prior to co-founding Tripadvisor, Mr. Kaufer served as President of CDS, Inc., an independent software vendor specializing in programming and testing tools, and co-founded CenterLine Software and served as its Vice President of Engineering. Mr. Kaufer holds an A.B. in Computer Science from Harvard University.

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Please, welcome CEO, and co-founder for TripAdvisor. Stephen copper in discussion with skiff, senior research analyst Seth Gorka. Hello everybody. Thank you for it for sticking with this afternoon. Steve. Thank you so much for Johanna. My pleasure. If we have time, I want to start fucking bit about the elephant in the room, which is supervisor plus. So that is your travel membership description, Club $90 a year and you just made some changes to it this week. Right? Yes. So used to be $9 a year and you get Hotel savings. And now you're going to instead of

the savings, you're going to sell hotels at the best available rate and consumers are going to get funds more about that. Or I would say consumers are actually getting likely to be getting the same savings. Just had a slightly different time. So we did a bunch of research on how we could make our product better. This is what we do all the time with all Prada. I ran over the past few months. We figured out a few things. One choice is really important. We want to be able to offer as many hotels with his much savings as we can to, we want it

extend, the engagement with our traveler so that the appreciate not going to just a bit of money savings here, but also kind of expand the imagination. What can I do with this money that they save? How can they are? Mission is? How can we help them, make them a better traveler? And we still think we're absolutely convinced. This program is a fantastic way to do that. So the changes in a nutshell is instead of the instant discount upfront or put in that same discount, back at the end of the state. So after you get checked in this vision for the product, after you get not launch

that after you get the app to check in vacation funds, get deposited to your online wallet TripAdvisor, and then you To spend them in any way you want rate. If you want to spend it on, extending your hotel, stay, if you want to spend it on taking a private tour. If you want to use the hotel spa, if you want to eat at a great red spot, all wonderful things. Some of those things you can find a by and do on TripAdvisor, but it's also an open program, so that you could take that money that are marketing dollars that we've given to you and pull them out as cash at any

point after check-in. So the savings instead of being upfront or the same savings, but at the end is real money that you're going to use on this trip or you an extra set of the prior savings have been provided by. You are not charging a commission and effective that you're taking the wholesale rates and pass them through through your membership club. Now, you are actually going to be charging, a 15% commission to TripAdvisor and effectively rebating. That commission, back comes out of a more on budget, from our perspective, from the hotel's perspective. They're paying a

commission to Somebody or they discounting their room rates to that same traveler. It's like literally the same economics from the hoteliers perspective, a number of Hotel, your shared with us that has a repair Dias. You offering a discount room in front of our audience was problematic for them. I can appreciate that belief was that because the rate was shown Behind The $99 pay wall that that wasn't going to be as big of an issue. But that turned out to be like it wasn't a problem for some on the Marriott in Hiltons in

all these properties live on the site today in the current plus implementation. But in order to increase, the choice increase supply, for The Travelers, increase the benefit of being able to find any hotel, you want to go on and you want to stay at to be able to achieve that savings. We needed to flip the model a little bit and say, hey, so the retail rates are what we're selling at. And the rebate comes at the end Wall. Street reaction was not super positive. I think the stock was down low, but I think part of that was at Wall Street was a little bit surprised at the shift

in the shot. I think I was I was surprised of it because I think the rate parity concerns have been raised from the very beginning. And so if there was always rate, parity concerns kind of what caused the change to happen now, like was it, some supplier really kind of getting really louder or upset or was there any to meet area was going to shut you off? Like, why? So why the change? Sure, we knew Ray parody cuz we've been in the business. Long time is an issue. We also know that suppliers have agreements that allow them to do whatever

they want when they are different rated show on behind the closed user groups. We had opposed the use of group aspect very close, not just a a free membership but a $99 pay wall. That would work and it didn't work. Remember, we announced a number of time, Partnerships have wholesaler would like, lots of things were quite well, but to be clear, we're moving as fast as I can. I'm never going to apologize for making a shift to a better product quickly. We were out in bed early this year. We launch formally to all of our traffic in June

and now like we're we're telling people even before we launched it that we're moving the model forward because we have a better way to do it. We're going to be able to get more Supply on to the system. We're going to be able to deliver essentially the same Savings in a slightly different form and I ain't going to have a wallet on TripAdvisor that hopefully will be bringing you back to say. Hey, how can I spend this? And it's totally different than the other types of reward program, which are locked to the particular Supply or particular platform

and Frankie. Aren't worth nearly as much as what we're doing with the with vacation, has another option to maybe make the platform, even more opaque, right? To gate the race even further and continue with the current model. And I think one of the criticisms that I've heard is, you know, you're right that they change the time of the cash was, does Americans are not known to be like the most patient people in the world, right? Like people like instant gratification were you, you

know, you had a choice to turn off instant gratification and Gomorrah pay, I guess I want to dig into that. Great question. We had some of the same issues or concerns or question marks ourselves. So what do you do is an internet company. We go do our research, you go talk to a bunch of different Travelers, different walks of life, different styles and say, hey, what do you think about this instant? What do you think about saving for a rainy day or saving for a sunny day in the next vacation? I am, and it was a near-universal reaction again, very early research. But near-universal

at said, I can often find discounts in lots of places. This is aspirational. This is like I get to save to do more for my trip. I trust TripAdvisor that the money is going to be real, and it's not. So the points that I might accumulate, did not know what to do with these vacation funds. They're real dollars that you can pull out and put into your bank account at any point if you want grape, but it turns out and what we believe is that people often think of that as hey, I'm keeping that money aside. So then I can either have it. I have a fantastic

meal and know that my smartness and using it to buy surplus is paying for this delicious dinner. Bad credit card or travel credit card, it kind of start to feel some of that and I have a ton of chase points with frankly. I've been sitting on to the entire pandemic. The little frustrating. Are you? I guess, I guess you see a credit card company is your competitor. Now in this new space or is it in dreams or or who is, how does this change our competitive landscape for plus? I don't really think of myself as having a competitor. A big

competitor in the space at the moment. As the other programs are good programs. I am a member of a probably all of these programs and I'm accumulating little points on their sitting there with the balance and sometimes I use it cash back on a credit card is great. I'm sure everyone gets a percent maybe to cash back. I think a 15% Vacation Fun that you can 15% off, what the cost of this hotel is going to be as a vacation fun that you can turn into cash, is meaningfully different than a 2%

cash back on your credit card. By the way, you can double-dip the New Journey strategy for all the flyertalk forums out there. All right, okay, or is it just part of the program program? Again? If it's just a piece, we know some other side benefits and meaningful benefits to a plus membership, but we have the vision to create a extremely affordable way for folks everyone in the room everyone watching and with everyone around the world who can afford a

$99 to save way more than that, and it's That folks, we're actually who do travel more than the once a year. But first, you'll all comers are welcome. If you have a $2,000 trip plan and you look the same going to save $250, in P99. It does still be but it is still a no-brainer moment to to buy Plus for that year. We think the renewal rates will be super high because it is so inexpensive for the savings and all the benefits will provide or Milton. Or you

see if you think of it like if you have looked at the side you will see. I did myself in New York customers don't care where the supply comes from. I was looking in New York yesterday. I stay in November. There's a Hilton there's a Marriott. There's everyone and the customer is getting a meaningful discount. On those property, get, I guess if a customer doesn't care and you had various already via the GDs, and you put your making this change, be more friendly. Suppliers, isn't the point to get direct

connections. Yes, we have through our older instant book technology. It comes back to life and it really helps us now because we already have connectivity with about a hundred different connectivity suppliers. I don't want to go too much in the air. Like we have a program that enables us to bring thousands of more independent hotels online, instantly not through the GDs. And all of the small Brands, the bigger Brands Independence. I still use the GTS. If they want to pray, you have a connection, but they often prefer other

connectivity providers of which, we now have working again, probably close to a hundred inside and tourism experiences and I heard of your earnings, call your back to 2019 levels. What's driving? The recovery in tourism activities for you. I mean the Viator as a standalone. Side TripAdvisor Xperia This is the third party business we have with my towards. It's an amazing. Can a gym inside of the TripAdvisor portfolio? Not only does it power and Incredibly important part of the

TripAdvisor experience as a standalone part of the business. Is it kind of roared back to life. It beat our our own expectations, that the shift, there's certainly a big shift. We used to do a lot more business, Americans going to European destinations, but as the covid-19 strains, he's this past summer. I May June, July file, people wanted to get out and do stuff and they said, all right. I can't go to Paris. I'm going to Miami. I'm going to Yellowstone. I'm going wherever and 54 already has that inventory. And so we picked up a lot of

that kind of pain in top travel. To me on, this is a business. That was a growing very nicely for his pre-pandemic took a huge head as people had to stay home. And now it's kind of roared back to life. I'm excited and I was speaking with Google Google yesterday. They are really constantly just like you were generated. They're constantly catering tours and activities and I think, actually, you're one of their pilot Partners in their advertising program Google important or the scary. I guess it's a little of both and depends what they choose to do. I

add to the degree that they're sending traffic on our way. Cuz lot of people start a Google for a lot of things. That's awesome. They're great partner to the degree that they want to own the entire experience of shopping for a fracture. I don't think they'll be successful at it. It's not really easy problem. There's a ton of different dimensions to the degree that you are selling a commodity ticket. That that's not our sweet spot is a business. That's not why people are coming to viatortripadvisor. They're planning the memorable things and that that's probably not a single Museum ticket. So I

want Your kind of multi-prong multi product strategy. We've been talking for hotel. How do you, how do you run a business with so many different product to maintain? How do you prioritize them all properly? I guess it's a challenge right back. I will, I will share that with you certainly. When we always start with no, what do we want? Consumers to be the most successful in doing on our side, they're coming to plan. The trip hotels is a really important part of that decision. It is absolutely core to the benefit. That so many

Travelers get from TripAdvisor reviews. It's the photos. It's then that auction is the ability to discover whether this is the right hotel for you and whether I can afford it and whether it has kind of the right room, nation and to know whether I have to go spend the next half-hour shopping around the web or whether thank you, TripAdvisor. You brought all the prices together for me. So like we're extending that models. And now, another option for just this hotel is through TripAdvisor. Plus this is another way you can pick up your travel but Hotel talk or when you think of the other

things that everybody does, they it was that things to do. They do stuff on their trip and subtractions have to be super important dining. We have one of the best restaurant databases around the planet where the leading restaurant review sites. So many countries of those have been or three major and a pillars and they served us pretty well or actually, you can't do that 60 million plus monthly users. What do you say incense in twice? In the reopening of American borders? Is it a big boost? What are you

excited, So we have going to like data from what people actually doing on her site? When we have a survey data, cuz we're always asking you all very, very segments of our audience. And the great news is that as the restrictions have eased over the summer, boom. There was so much pent-up demand. We saw our kind of Hotel revenue and then click levels above 2019. Yay. Attractions climbed above 2019 again, looking at are US Traveler's as Europe was born in the tougher. Lockdown State earlier part of the summer much less there as

those restrictions of used as vaccine rate of climb. You've seen Europe, shoot back to life has been really good. Those are and when you sleep, you geographically kind of us. Biggest part of our North America Biggest Part Europe. Secondary offer for Easter Asia. Tertiary, and so like that. Hasn't recovered as much. Those big International trips aren't happening from from those Source markets at them. Open will be over at some point and expect, that, that will certainly recover. I a sentiment. How is vacation this kind of changing what we're hearing against has

as much from surveys from of the two other points that during the pandemic. There was a lot of activity, going out for outdoor activities. It was camping. It was smaller cities. It was Beach and places like the old New York and Chicago weren't on the top 10 list where people are going. Snell flipped next, New York, Chicago or super popular. Again, back up into the top five or top 10 in terms of destinations. And then you have would have people doing on vacations. And here's were some of the sentiment research comes in where people are caring more about the type of thing.

They are actually doing in a destination, is not about visiting Paris. It's about visiting Paris, and the tour and the activity and kind of We all know that but we can start to see that by way of actually booking capabilities. And when we ask people, if they talk more about booking tours in book, he acted that it seemed like the carpet World. Travel that we have heard. A lot of snow. Are we supposed to know August of 2020? I was shelter-in-place. And your quote, to me. You were very optimistic at a time. You said, nobody's going on his own vacation. That's what you told me,

and I'll get the points on it. And I think in retrospect was pretty prescient. That you eat, what you were right? Big leaving Charles recovery. We're starting to see the recovery again. What do you think? How's traffic going to change? Post-pandemic life? Like what as it fades? What's going to be different? I think clearly people are coming back. The notion that anyone would switch over to a virtual travel experience, or were cooking classes by Zoom instead of travel. I think is udder udder. Bologna. The like Telecom

seeing the helicopter tour of the Grand Canyon on my 3D, it's really interesting. I now want to go do the real thing. So we do if anything it will and I believe it will spur demand to Gap. Get out there and actually do it. So I hugely bullish on recovery. Especially Leisure Travel. I do think the experiential part of it. I I is going to be gangbusters and terms of the new options people be really caring about what they are exploring seeking break guidance for what to do it and provided by us and others of or spider

going to have a great. I'm glad, I'm glad to hear. Thank you so much. We're at we're at a time, but I really appreciate you coming to join us. Thank you for having me here.

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