TripAdvisor Inc (NASDAQ: TRIP) Q1 2020 Earnings Call Transcript

TripAdvisor Inc (TRIP) Q1 2020 earnings call dated May. 08, 2020

Corporate Participants:

Will Lyons — Vice President, Investor Relations

Stephen Kaufer — President and Chief Executive Officer

Ernst Teunissen — Chief Financial Officer

Analysts:

Deepak Mathivanan — Barclays — Analyst

Naved Khan — SunTrust Robinson Humphrey — Analyst

Lloyd Walmsley — Deutsche Bank — Analyst

Jed Kelly — Oppenheimer — Analyst

Brad Erickson — Needham & Co. — Analyst

Eric Sheridan — UBS — Analyst

Tom White — D.A. Davidson — Analyst

Lee Horowitz — Evercore — Analyst

Shweta Khajuria — RBC Capital Markets — Analyst

Kevin Kopelman — Cowen — Analyst

James Lee — Mizuho — Analyst

Brian Fitzgerald — Wells Fargo Securities — Analyst

Heath Terry — Goldman Sachs — Analyst

Presentation:

Operator

Good morning and welcome to TripAdvisor’s First Quarter 2020 Earnings Conference Call. [Operator Instructions]

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.

Will Lyons — Vice President, Investor Relations

Thanks, Eddie. Good morning, everyone, and welcome to our call. Joining me today are our CEO, Steve Kaufer, and our CFO, Ernst Teunissen.

Last night, after market close, we distributed and filed our first quarter 2020 earnings release and made available our Shareholder Letter on our Investor Relations website located at ir.tripadvisor.com. 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 contains reconciliations of certain non-GAAP financial measures discussed on this call as well as other metrics.

Before we begin, I’d like to remind you that this call may contain estimates and other forward-looking statements that represent management’s views as of today, May 8th, 2020. TripAdvisor disclaims any obligation to update these facts 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 those forward-looking statements.

With that, I’ll pass the call to Steve.

Stephen Kaufer — President and Chief Executive Officer

Thank you, Will, and good morning, everyone. Thank you for joining our call. We’re living in unprecedented times impacting all of our personal lives in hitting the travel industry hard.

First, to those on the front lines in the medical profession and to the everyday heroes working at our local grocery stores or delivery services, thank you. To our partners and suppliers in the travel industry, who are struggling with the sudden drop in business, we understand your pain, and we are helping in all the ways we can. And to our employees, know that your hard work during this challenging time is meaningful, as TripAdvisor will play a critical role in helping the travel industry rebound.

As we reported, estimated bookings and revenue-related activity generally has been down by more than 90% since late March. April stabilized at these low year-over-year performance levels. We acknowledge industry estimates around travels long road to recovery. However, we are encouraged by some early small signs in recent weeks that show consumer demand is picking back up. We, TripAdvisor and the Industry, will get through this, travel will return. It is accepted as a fundamental human right in so many parts of the world. We believe our core strategy to help guide travelers on trips that really matter to them is not only compelling and differentiated, but even more essential in times like this, where travelers have high anxiety and uncertainty.

As Ernst will discuss in a minute, we have streamlined our cost profile and solidified our financial position to weather this pandemic, and we believe our trusted brand and customer focus platform enables us to help get the world traveling again. Ernst?

Ernst Teunissen — Chief Financial Officer

Thank you, Steve. Good morning, everyone. We’ve obviously been very focused on liquidity and costs since the COVID crisis has hit, and I want to highlight where we are on this.

First, our cost structure. We took a number of cost reduction steps in response to COVID. We’ve reduced headcounts in the form of lay-off, impacting about 900 people, nearly a quarter of our workforce. We’ve also furloughed about 850 people, mostly at the fork. I know that — I know that although similar in size as the lay-off, the furloughing contributes much less to the cost saving as it tends to include lower wage personnel, and we pay top-ups to what employees get from government subsidized programs.

Further cost reductions include a temporary reduction of work for lower pay for most remaining employees and some reductions to benefits. This is all in addition to removing pretty much all of our discretionary costs we had in our plan. So these measures lower our cost significantly in Q2 and the rest of the year. For clarity, when I quote cost reductions in these remarks, I refer to expenses between revenue and EBITDA, so not full GAAP expense.

Fixed cost, the cost excluding COGS and performance marketing expenses, fixed costs are coming down 25% in Q2 and almost 40% in Q3 versus the Q1 starting level that we had this year. In absolute terms, that is a reduction by $45 million of these fixed cost expenses for Q2 and $65 million for Q3, so a total of $110 million for six months relative to the levels that we had started at. And I note that the Q1 level, I’m comparing these against, was already lower than the average quarter in 2019, because we’ve had already taken other cost measures. So, year-over-year, our cost savings are even more significant.

And of course, all variable cost, COGS performance marketing is coming straight down with revenue. As Steve said, we’ve been — we’ve seen revenue related activity down more than 90% recently. And so, in Q2, we expect COGS and performance marketing to come down by about $50 million from the Q1 level to a number under $10 million. This is additional to these fixed cost reductions that I was talking about.

Of course, we will invest more in variable expenses in Q2, where revenue recovers faster than anticipated. Importantly, not only do these cost measures preserve cash, but also they will position our P&L very well in a recovery into 2021. We will be leaner, more focused on the highest priorities in the business, and we expect much of the fixed cost savings to remain when revenue recovers.

Now, to our liquidity position. We’re very pleased to announce this week that we agreed to an amendment to our credit facility with our bank syndicate. We had a large facility in place before COVID hit with already enough capacity to comfortably fund us through downside scenarios. The amendment we agreed this week additionally and importantly gives us a holiday on the main leverage covenant until Q3 of 2021, which helps us navigate a period with EBITDA under significant pressure. Even under very adverse scenarios, with even under scenarios with little or no recovery in travel in 2020, we are confident we have now both the liquidity and the ability to stay compliant with covenants over the next two years.

As Steve mentioned, revenue visibility remains limited. We are expecting a significant EBITDA loss in Q2, and we believe this is likely to persist at least through Q3, assuming the travel industry has a slow recovery, although we expect Q3 EBITDA to improve versus Q2. But as highlighted above, we believe we are well positioned to weather the storm, and we believe we are very well positioned to come out of this storm in a solid financial shape.

With that, we will now open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from the line of Deepak Mathivanan with Barclays. Your line is open.

Deepak Mathivanan — Barclays — Analyst

Great. Thanks for taking the question, guys. Steve, how are you thinking about positioning TRIP for the recovery path both in terms of product and business model? You obviously have a great brand in travels, and traffic is always very strong. But the various assets that you’ve historically had, have they been like very disconnected from a user experience standpoint and to some extent under-monetized compared to other media peers. So how are you thinking about, perhaps first, realigning the product using this time into a more integrated experience, and then also potentially explore new monetization models around those? Thank you.

Stephen Kaufer — President and Chief Executive Officer

Thanks, Deepak. That’s a great question and does dovetail very much with what we’re doing internally. We have a fully centralized B2C organization at TripAdvisor now that kind of follows as an extension on the One TripAdvisor vision that we had talked about for the last couple of quarters. The key element to that is truly helping the traveler plan all of the things that they need for this considered trip. So, instead of, or in comparison to, someone first shopping for hotel and then may be shopping for an experience later, we really are aiming to have our travelers plan the entire trip with us, no matter which category they happen to start it. That considered trip, a huge TAM, great positioning with respect to or in comparison to a search engine like Google or someone that just sells in the airline flight or a hotel. And leverage is very much the brand trust that people have in this — in TripAdvisor to guide them through that whole journey.

So we have — to the second part of your question, we have an excellent monetization vehicle for when someone is in hotel shopping mode or experienced shopping mode, and we’ve grown our restaurant media business quite well when they’re looking for a place to eat. Our biggest challenge has been enabling people to plan the entire trip around it so that we get not just a bite at when they’re looking for a hotel or a restaurant or attraction, but since every considered trip involves at the minimum of three components, how do we help the traveler and therefore monetize all those different components. Add to that some initial efforts on leveraging the large consumer base with direct-to-consumer products. And I think we have both the considered trip, monetize more for every considered chopper that we have, and some new offering that’s going after newer revenue streams namely direct-to-consumer as potentially kind of opportunities ahead that we’ve never tapped into before.

Deepak Mathivanan — Barclays — Analyst

Okay. Thanks, Steve.

Stephen Kaufer — President and Chief Executive Officer

Sure.

Operator

Thank you. And our next question comes from Naved Khan with SunTrust. Your line is open.

Naved Khan — SunTrust Robinson Humphrey — Analyst

Yeah. Thank you. Can you provide some color on the uptick that you’re seeing in bookings that are over 90 days out? How much of an improvement is it, and is it primarily in regions where lock-downs have been eased or is it more broad base? [Phonetic] Can you talk about that? And then, just with respect to the headcount reduction, how does it affect your plans to build out more features and functionality for the branded display side? Just those two. Thanks.

Stephen Kaufer — President and Chief Executive Officer

Sure. So, I want to caution folks. The uptick we’re seeing is modest, it’s not anything that I would characterize as a big rebound, which obviously makes sense given that the lock-downs in many parts of the world are easing, but are not off. And so, therefore, it starts to — it starts to come back in, where probably an early indicator as people are thinking about the trip but not yet booking it on our site. So, traffic has started to come back pretty much around the globe.

To the question on how will the headcount reductions change what we invested in — what we’re investing in. Yes, we’re having to focus on some of these core things that matter to us, but growing our media business to better monetize all of our unique audience is certainly something we view as a high priority.

And so, I would recall the key points that I made in the past call in this one in terms of helping a traveler, guiding a traveler through their considered trip, we will continue be investing there. We will continue to be investing in our B2B businesses both with experiences and obviously our hotel auction. And then, the display or general media business continues to be, we expect, a very nice growth driver for us.

Naved Khan — SunTrust Robinson Humphrey — Analyst

Thank you, Steve.

Stephen Kaufer — President and Chief Executive Officer

Of course.

Operator

Thank you. And our next question comes from the line of Lloyd Walmsley with Deutsche Bank. Your line is open.

Lloyd Walmsley — Deutsche Bank — Analyst

Hi. Thanks. Yeah, looking at kind of longer-dated queries, it looks like there is not a lot of auction density right now. Just anecdotally, obviously not much demand out there right now. But wondering, are your customers falling below minimum CTC levels or just kind of exiting altogether like what’s causing some of that beyond the obvious? And then, how are your conversations with customers in terms of when they’re likely to come back to auctions, what they need to see, do you think it will be pretty quickly as conversion start to come up, any sense for that?

And then — and then, secondly, I guess, just on the subscription listing business, can you give us a sense for how big that is and how that’s holding up in light of everything going on? Thanks.

Stephen Kaufer — President and Chief Executive Officer

Sure. I’ll take the auction question, and then maybe Ernst on subscription. You may see a little, what I’ll call, dislocation in the auction at the moment or over the past week or two as many of our clients had to do a very quick re-allocation, a very quick pull back. But if we look at prior recessions, prior big challenges to the travel industry, those companies that had an interesting demand footprint were in a good position because so many of the companies that have big fixed assets, be it new planes or in our case hotels, are very hungry for demand. And the travelers on TripAdvisor and other front-end media sites become very valuable. So, I would — I’d say, I’m cautiously optimistic that many of our current clients, certainly the big folks, will be very eager to get access to the auction that we have on our site. And so, as demand picks up, those eyeballs are that much more valuable.

I’ll turn it to Ernst.

Ernst Teunissen — Chief Financial Officer

Yes. In terms of the subscription — the subscriptions, yes, they are holding up better than the auction. Subscriptions obviously are longer-dated terms, often a year terms. There are renewals coming up which might be under pressure. But overall, that revenue stream has held up better than the auction revenue stream. We’ve been helpful to some partners by pushing out some payments. But in terms of the actual revenue, we’re expecting a more limited impact to that compared to the auction.

Lloyd Walmsley — Deutsche Bank — Analyst

Okay. Thank you.

Operator

Thank you. And our next question comes from Jed Kelly with Oppenheimer. Your line is open.

Jed Kelly — Oppenheimer — Analyst

Great. Thanks for taking my question. Two, if I may. First question, just how do you see your Meta auction evolving into the recovery? I mean, is there any way you potentially can diversify your revenue among your partners. And then, on your activities. I guess, traveler health and safety is going to be a pretty big priority. So how do you view your supply? You still want to have a lot of supply or will you scale it down to work with a couple of partners that are trusted? Thank you.

Stephen Kaufer — President and Chief Executive Officer

Sure. So, on Meta evolving, I really do believe we will have all the major OTAs, certainly the major chains be eager for our demand. So, I think — what we might call the liquidity of the auction will be strong and people will be fighting over travelers on our site and others.

With respect to the traveler health and safety, absolutely important, arguably the biggest challenge, not just in an informational context, but what are the airlines and hotels and other travel companies actually doing to provide a safe experience for travel. We expect — we would hope to be a major information hub to help travelers in exactly that concern. People turn to TripAdvisor because we are a very trusted brand and we expect to share as much information as we can gather about the safety-related issues in anywhere you’re going as well as where you’re staying, and what you may choose to do while you are there.

We think that that will be a major benefit to travelers, helping them get comfortable to get back on the road, as many others have pointed out, probably trips will move towards more domestic travel than international, which works very well for us because we have — we’re not — our business is not centered around a dozen top cities, our business is centered around everywhere a traveler is interested in going. So we have great content, great choice.

I don’t think, to your question specifically, we’ll need to scale down supply. We’re simply going to be informing our travelers about the safety considerations that they may have questions about in all of our categories. And with that, and our community to answer questions, I would hope we would be –I would expect we would be a major source of valuable information for our hundreds of millions or billions of travelers.

Jed Kelly — Oppenheimer — Analyst

Thank you.

Operator

Thank you. And our following question comes from Brad Erickson with Needham & Co. Your line is open.

Brad Erickson — Needham & Co. — Analyst

Hi. Thanks. Just a couple. First, you talked about variable cost basically coming down as quickly and kind of in line with what you’re seeing revenue wise. Conversely, I guess, when we look towards the recovery, do you see any revenue that you might start to generate to correlate really as a function of like basically bookings rebound we might see from the hotels or the OTAs, kind of is that the right formula for how to think about any sort of a shape of recovery? And then, just what you’re hearing from your customers specifically that leads you to comment just generally that Q3 will be better than Q2. And then just a quick follow-up.

Ernst Teunissen — Chief Financial Officer

So I’ll take that to begin with.

Stephen Kaufer — President and Chief Executive Officer

I’m sorry. I was on mute. Some of the technical glitches in the COVID era. Brad, thank you. In terms of variable costs, so variable cost mostly COGS and performance marketing. It’s very linear with revenue and bookings, and so — for our Hotel business, but also for our Experiences & Dining business and across the board really. So, expect — when revenue comes back, expect these variable cost to grow broadly in line with these.

And you asked about partners. Yes, if our partners on the hotel side see bookings growth, they are likely to spend on our channel and we are likely to want to invest variable marketing expense as well against that. And across other parts of business where we have our own supply, for instance, experiences, we will also, when we see the demand pick up, spend more on the variable cost side.

So, I said in my opening remarks that we expect those levels to be very, very down in Q2, I said maybe under $10 million between COGS and external marketing and performance marketing. Of course, we’re happy — if revenue comes back more quickly, we’re happy to pick up the pace and spend more of that, because that means more revenue will come. The reason why we believe Q3 will look better than Q2 is, Q2 — our assumption for Q2 is that it stays pretty much at where we are today. And so, we commented on bookings and other revenue-related indicators for our business to be down over 90% right now in end of March and in April. We expect that to more or less extend into the rest of the quarter. Maybe there is upside to that, maybe there is a recovery faster in June, but we’re not banking on that near-term. We are expecting that there will be more of a recovery of revenue into Q3, still very much down year-over-year, but more of a recovery than we’ve seen in Q2, and we believe we’re now really at the bottom level.

Also, I highlighted some of the cost savings that we are — that we’re instituting and picking benefit off, and I said that we expect Q3 benefits to be higher than Q2 benefits. That’s because we get a full quarter of some of these cost reductions that we make. In Q2, we only get part of the quarter for that. So that together is in the statement that we expect Q3 EBITDA performance to improve from Q2.

Brad Erickson — Needham & Co. — Analyst

Got it. And then, just a quick housekeeping. You guys report average monthly uniques for the quarter anywhere, I saw there is a number for Q3 of ’19, just curious where that numbers shook out for Q1 of ’20. Thanks.

Stephen Kaufer — President and Chief Executive Officer

Average monthly uniques of what, sorry?

Brad Erickson — Needham & Co. — Analyst

Just average monthly uniques on the…

Stephen Kaufer — President and Chief Executive Officer

Uniques? No, we’ve not reported that this quarter or for some quarters.

Brad Erickson — Needham & Co. — Analyst

Got it. Thanks.

Operator

Thank you. And our next question comes from the line of Eric Sheridan with UBS. Your line is open.

Eric Sheridan — UBS — Analyst

Thanks so much for taking the question. Maybe one big picture and one sort of housekeeping matter. Steve, bigger picture, you talked a little bit about sort of the dynamics where you will invest in the portfolio of assets you have, can you share your world view on how you think maybe the industry may consolidate or there might be pockets of the industry that scale becomes more important on the other side of COVID-19 obviously pretty unprecedented in what we’re living through right now. And I’m just kind of curious for your views on how the industry might evolve on the other side of this.

And then, coming back to the deal that was announced in November with Trip.com in China. My understanding of that deal was, they had to purchase in the open market within a year to maintain the board seat [Phonetic], have they made any such purchases and how is that relationship evolving or how could that be implemented in the next couple of years? Thanks so much.

Stephen Kaufer — President and Chief Executive Officer

Thanks, Eric. I’ll take the first part of that. In terms of — at the biggest macro level from a traveler perspective, how do I think things are going to change in travel in a two, three-year time frame, I got to say, not much people love to travel. It’s more and more of the younger generations growing up looking for experiences in travel always rate super highly on what people want to do. So, the demand, I believe, will be there. And so then what happens in the supply side, especially in the midst of this pandemic, certainly we feel for all of these hotels out there that are going through an incredibly rough patch. And unfortunately one can guess that a number going to be recapitalized in one form or another.

But if you leave my prediction that the demand will be returning within a couple of years at least, then you have the same need for accommodations and so the hotels may come under a different flag or may be reborn under different ownership in general, but they’re there. And perhaps more will join chains, perhaps the reverse, that’s a bit tough for me to read right now.

On the attraction side of things, it’s going to be other big suppliers that we care about. Yes, again, super tough time and there may be a thinning out that would be unfortunate from our perspective. But where there is a need and where that demand will grow, those tour providers will quickly come back into business and many of those are not highly capital intensive, so they can spring back.

Restaurants, again, some closures, some reopenings as demand emerges. It’s a big — super big macro level, you already have such a consolidation amongst the big OTAs that there is kind of not much further that that can go, in my opinion at least. So it’s not clear that there is going to be tectonic shifts in the travel space that we will look back in three or five years and say, wow, look what this pandemic caused in terms of the big supply — the big suppliers of the big intermediaries being consolidated. But again, just my two sense.

Ernst Teunissen — Chief Financial Officer

To your second question, our Trip.com, yes, excited about that relationship, excited about the opportunity that we have together. The joint venture in China that we’re working on together now has moved through its transition phase and is now implementing the strategy for the business, and we’re excited to work on that with Trip.com. As you point out, there is an ongoing step with the Board seat, there are some regulatory approvals that are still required before we get there, but we continue to have a strong relationship with Ctrip and are excited about the partnership that we forged.

Operator

Thank you. And our next question comes from the line of Tom White with D.A. Davidson. Your line is open.

Tom White — D.A. Davidson — Analyst

Great. Thanks. Steve, I think you made some comments about expecting kind of a rebound in the hotel auction in a recovery. And on one hand, I guess that makes sense that the large OTAs kind of might be in sort of a land grab mode, given that everyone has been dark for a while. But just curious if there is any more color you can give on kind of what gives you confidence about that, given that those big advertisers have been kind of leaning away a bit from the metasearch channel in recent quarters.

And then, just a follow-up, just curious if there is any update on how you guys are thinking about alternative accommodations or vacation rentals, that category, have your views changed there given the pandemic? Thanks.

Stephen Kaufer — President and Chief Executive Officer

Thanks, Tom. Good question. I’d say, when looking at how I expect hotel chains and OTAs to play in our metasearch environment or any metasearch environment, I’m simply going off of prior downturns. And the basic economics that, say, the individual hotels are going to be very hungry for demand because they’ll be operating and there is a huge difference to them, whether they’re operating at a 40% occupancy or a 60% occupancy. And so, they will naturally turn to us as well as the OTAs to help fill the rooms. And as they are willing to pay more in a marketing way, that ends up coming back directly to us or through the OTA channel if they’re making more money than they’re willing to spend more on various channels. More succinctly, I’m drawing on past experience in this case. Demand hasn’t really brought back — hasn’t really come back yet in a way that allows me to have evidence to prove it one way or the other. But we certainly think it’s a very reasonable thesis based upon history.

To the second question on rentals, we know rentals — alternative accommodations are clearly an important choice for consumers to have. We believe in maintaining that choice on our platform. It’s all about helping guide the travelers on their considered trip and in many, many cases having an entire home is better than a couple of rooms in a hotel. So, I don’t think our views have changed at this point, certainly not with respect to pandemic. There is an argument that says, alternative accommodations come back a little quicker than hotels, but probably on the margin, and I’m not even sure that I personally buy into that. I find anecdotally different opinions depending on different demographics I speak with.

Tom White — D.A. Davidson — Analyst

Thank you.

Stephen Kaufer — President and Chief Executive Officer

Certainly.

Operator

Thank you. And our next question comes from the line of Lee Horowitz with Evercore. Your line is open.

Lee Horowitz — Evercore — Analyst

Great. Thanks for the question. Just wonder if I could, I guess, with travel likely remaining much more localized in the near-term, people getting on their car and driving to their new vacation destination, how are you thinking about adjusting your business model in order to capitalize on that trend, if at all, and how may that effect the model, I guess, in the near-term in terms of revenue per user? Or any kind of color there on localized travel would be helpful. Thanks.

Stephen Kaufer — President and Chief Executive Officer

Yeah. That’s a great comment, great observation. We certainly agree with it. And our research would say, and all the research I’ve seen says a domestic trip is going to be much more common than before. That’s great with us. We have all the content we need in every country to help folks have a great local trip. So, on the TripAdvisor homepage, if you’re coming from a U.S. IP, you’re going to see — fewer times will you be seeing Paris and Bangkok, and much more often it might be an Austin or a San Francisco. So, we just think it’s easy for us to market destinations that we already cover very, very well to more of a — with more of a local audience. And initially it will be drive trips, but I think the big delineation is just going to be domestic versus international.

And if you were thinking about going — you’re sitting in Boston, and you were thinking of going to Paris for the summer, it’s a considered trip, and you’re going to be just as interested in my opinion about taking that considered trip somewhere else in the U.S. And so, whether it’s a drive or a flight, it’s going to be, you need the best place to stay, you need advice from your community, you need memorable things to do and wonderful restaurants to eat at. And we’ll have all of that, we already have all of that information, and we hope to be it one-off, if not the most accurate source, for wonderful things to do in each of the countries in which we serve.

Ernst Teunissen — Chief Financial Officer

In terms of revenue per user, we would expect that to be just a shift in spending towards domestic spending, so not necessarily a change of the revenue we can generate per user.

Operator

Thank you. And our next question comes from the line of Shweta Khajuria with RBC Capital Markets. Your line is open.

Shweta Khajuria — RBC Capital Markets — Analyst

Great. Thank you. How do you see the current environment from COVID different from maybe past recessions? In your letter, you did call out prior recessions and potential for quicker recovery because demand for travel will be there, travelers still want to travel. How do you compare this COVID-related downturn versus what we’ve — what you’ve seen in the past in ’08 and ’09, how is it different and how will the recovery be different? Thank you.

Stephen Kaufer — President and Chief Executive Officer

Thanks. I’ll start, then let Ernst toss in some comments. I think it certainly will be different. Past downturns have been very economically forecast, so — or economically impactful, meaning there was always a class of individuals who could afford to travel and would happily go anywhere, was just economically impaired. Whereas here, even though this pandemic — even those [Phonetic] with the ability to take the trip are not going on the trip anywhere at the moment, and when the restrictions ease up will likely much more stay domestic. It’s going to be a little hard to fathom how travel completely returns to normal until there is a vaccine or months of no new cases taking hold.

And so, we all think, or many of us think, that that’s quite a ways out. So, what the airlines and hotels and travel suppliers are doing to make people comfortable traveling, and the information that we can provide of course helps bring it back. But our forecast, we think, would be quite different where it [Phonetic] and I see this painfully where it’s merely a recession versus something that causes people meaningful health concerns when traveling.

Ernst, I don’t know if you want to add?

Ernst Teunissen — Chief Financial Officer

Yeah, not much to add. It’s obviously much sharper for the travel industry, a much sharper reaction and a much sharper reduction of revenue than ’07, ’08, ’09 where — but that may mean — that doesn’t mean that the recovery path is much longer than it was at that time. It is — that is difficult to forecast. What I do observe is that the economic support structure, the financial markets are functioning really well, and it feels that there is enough liquidity available for companies which at least bodes well for the potential shape of the overall economic recovery.

Shweta Khajuria — RBC Capital Markets — Analyst

Thank you, Steve. Thanks, Ernst.

Stephen Kaufer — President and Chief Executive Officer

Thank you.

Operator

Thank you. And our next question comes from the line of Kevin Kopelman with Cowen. Your line is open.

Kevin Kopelman — Cowen — Analyst

Hi. Thanks a lot. I’ve had a question about Google, they made some changes to their different vertical and shopping, they made some changes to allow free price ads or organic price ads essentially, and do you have any thoughts on — do you expect something like that to happen in travel? And if so, if TripAdvisor would be able to participate? Thanks.

Stephen Kaufer — President and Chief Executive Officer

Hi. This is Steve. My thoughts — yes, we noted what they were doing with shopping. I think the competitive dynamics are pretty different in the shopping category versus travel. So, look, when Google makes a change or Google offers a new product, we certainly happily look at it and see if it fits our business needs, but I’m not spending a lot of time sort of guessing about whether or something like that is coming into the travel category.

Kevin Kopelman — Cowen — Analyst

Okay. Understood. Thanks, Steve.

Stephen Kaufer — President and Chief Executive Officer

Sure.

Operator

Thank you. And our next question comes from James Lee with Mizuho. Your line is open.

James Lee — Mizuho — Analyst

Thanks for taking my questions. Hope everybody is healthy and safe. Steve, just curious, as you go through the portfolio review process, how should we think about your ability in terms of streamlining your business even more? I’m thinking about maybe your TripAdvisor China JV, would you necessarily want to be in that business or potentially exiting some of the geographies or even vacation rental business? So, in other words, looking at categories where you do not — where you do not have a leading position specifically. Thanks.

Stephen Kaufer — President and Chief Executive Officer

Thanks, James. So, I think we did a year back look at our China offering and said, yeah, we’re not going to be able to do this alone. So, we put it into the JV, which does effectively take it off of our books. And to the extent as the junior JV partner, Ctrip or Trip.com can use all of our content information to help Chinese travelers. That’s clearly a win for us, and it’s clearly a win for Trip.com. So, kind of — on my check list, that’s a great, done. I’ve already achieved the streamlining that, I think, you’re alluding to.

For rentals, it’s still an evolution. We want the alternative accommodations to be part of the experience that TripAdvisor offers. We have our own rental supply augmented by some other partners. And so, how can we further both improve the supply in our site and knowing that we’re not going to be the king in the supply area, is there a better way that we can deal with that part of our business. We also did announce that our smarter travel business is being — some of the brands folded into to TripAdvisor, and we are looking to see whether there is some other better homes for some of those brands that we had acquired many, many years ago. So, the streamlining in the portfolio review did happen, it’s obviously ongoing. So that we’re enabled — so that we are able to really focus on what we expect and what we would hope would be the big wins in the next three to five-year timeframe.

James Lee — Mizuho — Analyst

Great. If I can ask the follow-up questions — are you expecting any, maybe structural changes to your customer behavior, whether it’s on the supplier side or user side, for example, I’m thinking about maybe experiences suppliers moving to online faster. So, maybe you’re anticipating to capitalize on that. And also maybe help us think about maybe potentially new business model emerging where you can provide content to raise consumer confidence or potential results, some of the potential frictions when it comes to travel? Thanks.

Stephen Kaufer — President and Chief Executive Officer

Hi. So you raised two things certainly, online — more experienced providers coming online. I think the number are doing that. We have a business unit called Bokun, which is dedicated to exactly that. And they continue to sell in, in the marketplace. It’s combined with the channel on both Viator and TripAdvisor for when people are ready to do those experiences again that we can help steer them to it. So I think that’s a natural. We already have a lot of supply on our Viator platform. So, well, I think that’s a long-term secular benefit to us. I don’t think it’s a — it’s a particular needle mover over the next year.

And then, on the confidence to travel, I don’t view it as an additional business model, but more — the folks who are coming to TripAdvisor because they’re exploring, they’re thinking about the trip the more we can provide information to make that traveler feel comfortable, where appropriate, that they can travel safely and stay safely and eat safely, that’s going to help conversion rate. And they’re already on our site. So, they convert by booking that experience or booking that hotel on our site or booking that hotel by clicking off to a Booking or an Expedia or Marriott or a Hilton, we’re indifferent. But because of that raised confidence, we’ve helped the conversion, and that benefits us.

Ernst Teunissen — Chief Financial Officer

And I would add to both these points about the portfolio as well as the change — structural changes in behavior. We have obviously been ruthlessly, now ruthlessly focused on what it is that we invest behind. As we said in our opening remarks, we have done a lay-off of close to a quarter of our people, and so we have very, very consciously now thought about how do we want to allocate the 75% that are still in the company.

Certain businesses have been de-prioritized and focused, certain activities have been de-prioritized and focused, and certain activities we’re just laser-focused on continuing to build our competitive advantage, and experiences that you talked about is one of them. Experiences & Dining are growth areas. We feel we have a very strong competitive position. We are investing to remain leaders in these industries and we want to emerge from this crisis really in a very, very strong position. So, looking at opportunities that may offer in terms of more rapid online movement as you were saying or other opportunities is something we’re super-focused on despite the fact that we’ve reduced our cost.

James Lee — Mizuho — Analyst

Thanks, Ernst.

Ernst Teunissen — Chief Financial Officer

Thank you.

Operator

Thank you. And our question comes from Brian Fitzgerald with Wells Fargo. Your line is open.

Brian Fitzgerald — Wells Fargo Securities — Analyst

Thanks, guys. Had a couple of questions, maybe one to follow-up to Tom’s question. And Steve, I’m wondering from the traveler point of view, are you seeing any nuances with respect to traveler preference for alternative inventory versus proper hotels as we emerge from this, hey, I’d rather stay at some place where they have seals on the doors and UV light cleaning versus some guy’s vacation rental. So, nuances around that.

And then, the second question was around your dining assets, Bookatable and LaFourchette. As we emerge from this crisis, I think, the scheduling aspect of showing up at places, right, they’re not going to be able to open up another table in the corner to seat you, it’s going to be a third-full to a half-full and they’re going to have to measure that and meter that very carefully. How do you feel about the opportunities of those — your dining assets being kind of exacerbated or highlighted as we emerge from this?

Stephen Kaufer — President and Chief Executive Officer

Thanks, Brian. Two good questions. The first one, unfortunately I don’t have much insight in terms of alternative accommodation versus hotels and user preferences. We’ve thought about it. We see it both ways, but our traffic isn’t such that it’s insightful at this point in time. To restaurants, yeah, there is — as restaurants open up and they need to reconfigure their tables, especially in Europe where the restaurants are in fact smaller, TheFork can play quite a useful role from a traveler perspective to make sure there is room there. You don’t want to venture out and then sure enough there is no room at the restaurant. But also from the restaurant management perspective, to help educate the restaurant towards that, maybe it’s time, especially in Europe, to shift to two seatings, 6 PM and 8 PM in Europe, and 8 PM and 10 PM dining opportunity.

And reservation management system helps one do that, combined with the online capabilities. I don’t want to imply that this could be a big driver for LaFourchette because the whole restaurant industry is hurting. But I think, as dining goes back, more new habits are going to be formed, including making sure I can get a table when I venture out, and TheFork does that beautifully. So, I think, with big changes comes opportunities, and I think TheFork certainly throughout Europe is going to be able to leverage this to help restaurants and travelers even more than before.

Ernst Teunissen — Chief Financial Officer

And I think more broadly, as Steve said it before, more broadly TripAdvisor as a brand is so well trusted for providing great information to its users and more information about, as Steve says, layout of a restaurant or how good is an experienced supply or a hotel in social distancing, cleaning, more information is going to be a premium. And we think we have the brand to benefit from that.

Brian Fitzgerald — Wells Fargo Securities — Analyst

Awesome. Thanks, guys. Appreciate it.

Stephen Kaufer — President and Chief Executive Officer

Thank you.

Operator

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

Heath Terry — Goldman Sachs — Analyst

Great. Thanks. Steve, I was just wondering if, given the — obviously the world we’re living in now, doesn’t come along very often. Is there any way that you’re looking at this as an opportunity to revisit some of things that you may have tried before where it wasn’t just — simply just wasn’t the right time in the industry or the industry your customers, the hotels maybe weren’t necessarily ready for it. Instant booking comes to mind but it’s not the only thing that I’m thinking of here that may be given where the business is here, you have some air cover to try some things that are a little bit more extreme in evolving your business model. Just curious kind of getting beyond the quarter and the current crisis, as somebody who has been through these before and seen a lot of evolution in the industry, how you might be looking at this as an opportunity for TRIP?

Stephen Kaufer — President and Chief Executive Officer

Thanks, Heath. Great question. You bet, we’ve been thinking hard about this. Frankly not so much from the perspective of instant booking though it may have a role, but really more from reinventing the experience of a traveler coming to TripAdvisor to plan that important trip. And historically, because we were so successful in so many categories and we were growing, we opted for speed and we opted for focusing on conversion around our hotel shopping or experience shopping. We are growing our inventory, all wide range of things that made a lot of sense and grew the company quite nicely over the past couple of decades.

This is an opportunity we have and are taking right now to re-imagine the consumer experience around that considered trip, around the planning aspect where consumer — traveler isn’t just looking for a hotel or isn’t just looking for something to do. They’re looking to have an amazing time visiting Philadelphia or San Francisco, wherever the trip is going and how can we internally and, this is product, this is tech, this is sharing information, this is great data access, this is treating the traveler throughout their life cycle when they’re first discovering a location, all the way through collecting the five or six things they want to do when they get there, and having an amazing itinerary so that they — so that we’re not a stop along the way for planning a trip, but we’re the travel hub where someone is starting. However they found us, but with so much wonderful functionality designed around completing that entire trip that they keep coming back and back.

And to be fair, that’s coming at the expense of some of the other things that we had been doing for a couple of decades in terms of making the hotel shopping path as smooth and frictionless as possible or making sure we had all the perfect payment types in all the different markets that we were supporting.

So, to your question, we are taking this opportunity where are the fundamentals of the revenue of our business is dependent upon traffic coming back, and we’re not able to influence that a lot to really rebuild from much more foundational perspective, how we want the traveler to experience trip planning on TripAdvisor, so that as we emerge, trips are planned are bigger, are more complete, users were turning to TripAdvisor many more times. And the end of the day, our total unique users per month might go down, but the repeat rate goes way up because we’ve found the set of audience that is entirely — that loves being dependent upon TripAdvisor for the whole experience versus using us for a point task. And that’s not a one-quarter or a two-quarter journey, but that is, I’d say, the biggest way that we think this pandemic will contribute to reinventing TripAdvisor.

Heath Terry — Goldman Sachs — Analyst

Great. I really appreciate the answer, Steve. Thank you.

Stephen Kaufer — President and Chief Executive Officer

Thank you.

Operator

Thank you. And there are no further questions at this time. I will now turn the call back over to Steve Kaufer. Your line is open.

Stephen Kaufer — President and Chief Executive Officer

Thank you, everyone, for joining the call. We are navigating tough times, and we have had to bid farewell to a number of exceptional employees. On behalf of the TripAdvisor family, I want to extend a heartfelt thank you to these colleagues for their passion and their service. And to my current teammates at TripAdvisor, you’re doing an amazing job. I’m very proud of how you’ve all stepped up to help our business partners in the industry, and with the site updates that we’ve already launched and we’ll soon launch to help the billions of travelers who trust us to safely guide them on their next journey.

The near-term remains unpredictable. But time and time again, we have seen the hospitality industry recover and thrive. Concerted actions have solidified our financial position and will help us to emerge a more focused business on the other side. We will continue executing our strategy and ensure TripAdvisor plays an influential role with consumers and partners worldwide in the recovery and beyond.

So, thanks, everyone, and please stay safe.