TripAdvisor, Inc. (TRIP) Q3 2021 Earnings Call Transcript

TripAdvisor, Inc. (NASDAQ: TRIP) Q3 2021 earnings call dated Nov. 09, 2021

Corporate Participants:

Angela White — Vice President of Investor Relations

Stephen Kaufer — President & Chief Executive Officer

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Analysts:

Naved Khan — Truist Securities, Inc. — Analyst

James Lee — Mizuho Securities — Analyst

Jed Kelly — Oppenheimer & Co., Inc. — Analyst

Deepak Mathivanan — Wolfe Research — Analyst

Brian Fitzgerald — Wells Fargo Securities — Analyst

Mario Lu — Barclays — Analyst

Kevin — D.A. Davidson — Analyst

Vince Cipiel — Cleveland Research — Analyst

Kevin Kopelman — Cowen and Company — Analyst

Davey — J.P. Morgan — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the TripAdvisor Third Quarter 2021 Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker for today, Angela White, VP of IR. Angela, please go ahead.

Angela White — Vice President of Investor Relations

Thank you, Jay. Good morning everyone and welcome to TripAdvisor’s third quarter 2021 financial results call. Joining me today are Steve Kaufer, CEO; and Ernst Teunissen, CFO and Chief Executive, Viator, TheFork and Cruise Critic.

Last night after market close, we distributed and filed our third quarter 2021 earnings release and made available our shareholder letter on our Investor Relations website. In the release, you will find reconciliations of non-GAAP financial measures to the most comparable GAAP measures discussed on this call. Also on our Investor Relations website, you’ll find supplemental financial information, which also includes 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, November 9, 2021. TripAdvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements.

With that, I’ll turn the call over to Steve.

Stephen Kaufer — President & Chief Executive Officer

Thank you, Angela and good morning everyone.

So before I turn the call over to questions and further commentary from myself and Ernst, I wanted to speak to my transition news. Last night, as you undoubtedly heard, I informed the investors and our employees my intentions to step down from the company as CEO at some point in 2022 or as soon as a successor is named by our Board of Directors. I co-founded TripAdvisor in 2000 with three other amazing people: Nick Shanny; Langley Steinert; and Tom Palka. Our goal, to help people plan and take extraordinary vacations all over the world, powered by the knowledge of people like you who have been there before.

Now, while there’s never a perfect time, I feel very comfortable that now is the right time for me to announce my transition. The hospitality industry is successfully emerging from the pandemic, we’re profitable again, we have a clean set of leaders in the company and we were successful in using the time accorded to us during this pandemic to reinvent ourselves, delivering an enhanced focus on our Experiences and Dining sectors and creating and launching our first subscription product. We have a clear set of priorities and while we have a lot of work ahead to get there, we have a terrific set of team members who I know are up to the challenge.

This company has already changed the way billions travel and it’s extraordinarily well-positioned to create and deliver a new set of innovations in the years and decades ahead. As a trusted global brand, as the most popular travel website and as a major influencer in a $5 trillion dollar industry, we are still a story of upside potential in a massive and really fun category. But as I said yesterday to my TripAdvisor family, the work continues. I have complete confidence that our experienced Board of Directors will select a great successor and that TripAdvisor’s next chapter will be just as exciting as the amazing journey of the past 20-plus years. And in the meantime, I will remain at the helm as fully engaged as I am at driving innovation, building teams and helping our customers.

With that, I’ll turn it over to Ernst before we take your questions.

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Thanks, Steve. Thanks everyone for joining. We were very pleased to see our revenue and adjusted EBITDA level step up significantly this quarter from last quarter, reflecting signs of a continued strong return to travel. We’re very pleased to see the recovery in consumer travel continue and this is reflected in the gradual return to 2019 levels we’ve seen over the last few quarters. In some pockets, as we noted in our shareholder letter, we’re actually starting to meet or surpass 2019 levels.

Revenue in the third quarter was $303 million, reflecting year-over-year growth of 101% and reaching 71% of 2019 levels. We call out that our Experiences and Dining revenue, in particular, is showing a very strong recovery that is not fully reflected yet in Q3 revenue. For instance, on a booking level, our combined Experiences businesses has been up versus 2019 October and the start of November. We’re not out of the woods yet with COVID, it’s still impacting us and although we are cautious about Q4, we remain very optimistic that the recovery is taking root and are bullish about travel and our business in 2022.

With that, let’s jump into Q&A.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Naved Khan of Truist Securities. Your line is open.

Naved Khan — Truist Securities, Inc. — Analyst

Yeah, hi. Thanks a lot. Steve, we’re going to miss you after the transition. It came as a surprise, but hopefully we’ll see you for the next call as well. I just had a couple — had a question on the — on your comment on the call — sorry, on the comments in the letter. You said you’re considering options to crystallize the value of TheFork and Viator. Maybe elaborate a bit on the range of possibilities here. Does that include a potential spin-off or potentially a sale of the business or is it more around optimizing it just for growth in margins?

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Hey, Naved. This is Ernst, I’ll take this one. We have two very strong assets in Viator and TheFork. They were strong growth companies before the pandemic. They’re category leaders in their markets. Viator is a global leader in Experiences and market with a very big TAM. TheFork is the European leader in restaurant reservations, increasingly moving into more fintech areas with TheFork Pay and gift cards. And now both are recovering very nicely and beyond our expectations and we believe coming out of the pandemic with even a stronger competitive position and strong leadership teams that operate with great autonomy within TripAdvisor.

Now clearly, the financial profile of these businesses is very different from our core TripAdvisor business. They have higher growth, but also lower profitability due to the investment opportunity that we’ve been capitalizing on. They also have clear identifiable and proven lifetime value that we can ascribe versus the CPC media model that we have in TripAdvisor, of course, which makes us more comfortable to spend for a long-term benefit and particularly provides where we’ve been in here in 2021. Now we know that pure play category winners like Viator and TheFork in the private and in the public markets get substantial, often, revenue or gross profit-related valuations rather than an EBITDA multiple, which is the dominant way we believe our TripAdvisor stock gets valued. And a more pronounced sum of the part valuation will make it easier for us to invest appropriately in these businesses and make acquisitions in these businesses.

So as such, we believe there are options to better crystallize the right valuation for these businesses, which we don’t believe is currently reflected. We are not outright sellers, to respond to one of your questions, of either asset, at least not in the near term. And especially in the case of Viator, there is a strategic importance to TripAdvisor having a significant influence in the company due to the importance of Experiences to the TripAdvisor value prop for our consumers. And also, we think there is a value growth opportunity for both Viator and TheFork over the years to come that we definitely want to be part of.

But there are some options. So one area of options would be just events [Phonetic] and a disclosure in our segment reporting, but there’s also a family of options that we are considering that go a little further in separating out and in separately financing these businesses. Now we haven’t got more details to share at this point and we haven’t yet committed to any particular course of action but we wanted to give you a heads up that we are considering options over the months and quarters to come.

Naved Khan — Truist Securities, Inc. — Analyst

Super helpful. Maybe just a related question, if I look at the sales in marketing line as a percentage of revenue, it was higher than what we had thought. And I guess you’re obviously using some of the funds to kind of grow these businesses, both Experiences and Dining. So how should we think about investment levels in 2022 as it relates to Viator and Dining?

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Yes. As I said before, for Viator, we have, this year, pushed further into our lifetime value model. We feel pretty confident of reaching large consistency as in the past in how users come back and how they repeat. And so we feel confident to spend beyond just the immediate return and that of course has a near-term impact and increases advertising, but is actually good for a long-term revenue and is ROI positive over that — over a longer term timeframe. So we have gladly done this year and we’ve been actually very pleasantly surprised how much we could put to work this year at good ROI levels and grow the Viator business. We’ve been very successful at expanding the marketing program in that way.

And so we feel good about that. It is a near-term increase as a — for marketing as a percentage of revenue as you highlight, but we think it’s a good ROI. We think it’s good business and it cements the very strong position that we have. So you saw sales and marketing as a percent of revenue tick down in Q3 from Q2, but we are leaning in on the Experiences side. We’ve leaned in a little on the hotel side as well in Q3 and have tapered that into October and in Q4. But for Viator, we’ll continue — as long as we see the good ROI, we’ll continue to spend.

Naved Khan — Truist Securities, Inc. — Analyst

Great. Thank you, Ernst.

Operator

Thank you. Next question comes from the line of James Lee of Mizuho Securities. Your line is open.

James Lee — Mizuho Securities — Analyst

Great, thanks for taking my questions. Steve, thanks for your leadership over the years. And maybe, can you talk about your decision to make that transition next year? And also secondly, in terms of finding a successor, what kind of background and experience you and the Board are looking for? Is it more travel-related, or is it more technology-related? Thank you.

Stephen Kaufer — President & Chief Executive Officer

Sure. Thank you, James. Let’s see, So I — as I kind of said in my opening remarks, I think while there is no right time, I think this is a darn good time to be able to start the transition. As I said, some time in 2022, I’m looking forward to be — a smooth transition as possible. I certainly wasn’t going to make any move over the past 18 months, it was pretty dramatic all over the travel industry. But when we look at our future now, you see us clearly coming out of the pandemic, love the new initiatives at play at TripAdvisor, overall parts of the business — overall, the business is recovering in all of its parts. So it’s a pretty good time. I think we have a strong management team, new faces, you have tenured faces. So again, while no time is perfect, I think now makes a lot of sense.

To the second part of the question as to what the Board is looking for, travel experience would be great, subscription experience would be great, e-commerce, I mean, it’s a core part of our business today and going forward. So I don’t — I wouldn’t — there is no reason anyone should read into anything about my transition, other than kind of what it’s — what it says on the face. Company is in a good position, I’ve been at the helm for — by the time I depart, it will be 22 years. It’s a good opportunity, tons of potential in front of the company. And so this isn’t a question of needing change. This isn’t a question of looking to do something dramatically different. And that’s — but I wanted to give the Board plenty of time to select truly the best leader because it’s a gem of a company with a ton of upside in front of us.

James Lee — Mizuho Securities — Analyst

Great. Thanks, Steve.

Operator

Thank you. Next question comes from the line of Jed Kelly of Oppenheimer. Your line is open.

Jed Kelly — Oppenheimer & Co., Inc. — Analyst

Hey, great, thanks for taking my questions. Just two, if I may. One just on the sales and marketing this quarter. I think it was 90% of 2019 levels. Can you speak to is that being more invested in the core hotel platform, subscriptions or Experiences and Dining? And can you just speak to the change in the subscription policy going forward and sort of how you think about TripAdvisor Plus into ’22? Thank you.

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Hey, Jed. I’ll take the first part and then I’ll hand it over to Steve for the second part. In terms of advertising, yeah, we have — I told you before about the leaning into Viator for marketing at good ROIs. Now, we’ve seen in our hotel business an ability to spend more compared — as a percentage, compared to before because CPCs have been very strong. And our hotel business in the third quarter, particularly in the U.S., was very strong. Our U.S. auction was above 2019 in the quarter. So we’ve seen favorable pricing levels, which always disproportionately favors pay channels. So we’ve been able to lean in there as well. As I said before, we have — and on the hotel side, we started to taper that in October and into — and further into Q4. We wanted to spend into the holiday season, in the summer vacation season in the summer, but that is driving the relative performance versus 2019. Over the longer term, we expect that to start to normalize again for the hotel business. It’s just a phenomenon of good CPCs.

Stephen Kaufer — President & Chief Executive Officer

Thanks, Jed, and I’ll take part two there regarding Plus. I couldn’t be more excited about what Vacation Funds, this kind of change in the model can deliver for our travelers, and of course, how well it works for our suppliers. Remember, the original instant savings model had us offer a discount right upfront, but that did cause more supplier facing problems than we had anticipated. So we are nothing if not a nimble company able to adapt and when we heard that feedback and when supply started to be a bit constrained, we shifted. And so we’re in beta testing now with Vacation Funds, which again offers the hotel rates at retail which then offers the same economic benefit that just comes a little bit later and so at the actual stay time. We’re working on kind of the flows to make sure that that’s well understood. It’s literally the same cash that the end user is going to get. So they are benefiting by being able to achieve an impressive savings, be able to stay an extra night, dine at a restaurant, save it up for the next trip or put it straight to your bank account as cash and spend it any which way the traveler wants.

So for TripAdvisor, for the benefit of the product, this unlocks supply. So we’re able to get a lot more supply, a lot more hotels available for sale as part of a Plus offering than we were before. That’s really exciting. It’s easier for us to onboard independent properties under the program, because we’re not asking them to load, what’s called, a rate quota — a special rate just for TripAdvisor. This is the regular retail rates. It’s not competitive with their own website and just organizationally and tactically it’s easier on the part of the hotelier. So you bring all that inventory on, we’re highlighting great discounts at the top of our sort order, delivering really nice additional value to customers.

And then kind of how we think about it in 2022. We remain focused on U.S. market. We want to make sure that we get to that product market fit before we expend the energy to roll it out to the rest of our audience. As everyone understands, the U.S. is a very big market so it’s plenty big for us to test against and we’ll continue iterating until we have that fit and then as I said, we go international.

Jed Kelly — Oppenheimer & Co., Inc. — Analyst

Thank you. So just so I’m understanding, the hotel would pay that initial discount back to the travelers that’s coming out of the hotel even though they’re seeing the retail rate?

Stephen Kaufer — President & Chief Executive Officer

Well, you can think of it as the — from the travelers’ perspective, they’re looking at a regular retail rate that they use our metasearch engine or they compare it any way they want, and they see that they’re paying the same rate that they would pay anywhere else. And then as they go through the shopping funnel, they learn and they’ll also get $150 back, $300 back whatever the Vacation Funds number is based upon where they’re staying and how long they’ll stay. As soon as that traveler makes that stay or has to stay, they get pinged with a, congrats, your $150 is now in your bank account as Vacation Funds for you. And the traveler can then do whatever they want with those funds. That’s pretty amazing savings.

Underneath the covers, what’s happening is, we are funding that. TripAdvisor is funding that as a benefit of a Plus membership. Hotels are paying us the regular commission that they would pay essentially to any online distribution platform. So from a hotels perspective, it’s clearly a pay-for-performance when we send the booking and the booking happen, the hotel pays us. That’s what they’re used to doing all day long with every OTA. And essentially, we’re not treated much differently. We look to get an additional perk or two from the properties to otherwise improve the value proposition for our traveler to make that stay extra special.

But to the economics, we’re funding an amazing discount far more valuable than regular sort of loyalty points, if you will, from other folks and the traveler gets that benefit and we get the commission from the hotel. Our financial gain is — TripAdvisor’s win is part of that subscription fee, so, the $99 that we’re charging, that lands for us and generates the renewal rates, the ongoing revenue stream, as essentially we have the opportunity to fund the loyalty program with the commissions from the hotel program.

Jed Kelly — Oppenheimer & Co., Inc. — Analyst

Thank you and good luck in next year, Steve.

Stephen Kaufer — President & Chief Executive Officer

Well, thank you.

Operator

Thank you. Next question comes from the line of Deepak Mathivanan of Wolfe Research. Your line is open.

Deepak Mathivanan — Wolfe Research — Analyst

Great. Thanks for taking the question. Steve, I do want to mention that we will miss you. So just a couple of questions, a follow up to the question before. Thanks for all the color on Trip Plus, it was very helpful. But curious how your conversations with hotel chains and OTA partners, post the model change announcement, has been. Are they now more comfortable to come on board? Should we expect kind of big chains to participate? What are your expectations there? And then sort of second question, also related to the prior one about the economics. I mean, with you funding the perks for the travelers, offset by the commissions that you get from hotels and then also the cost from traveler, does — how does it compare to kind of like cost-per-click fees that you generate? I mean, do you think this model is going to be accretive under this arrangement? Thanks so much.

Stephen Kaufer — President & Chief Executive Officer

Thanks, Deepak. Thanks for your kind words. Two excellent questions in there. So how have our conversations gone with hotel chains? Let me back it up and sort of point out or explain our supply perspective. When we were doing Instant discounts, we needed to have the chain participation [Indecipherable] because it was actually lower than what was on their own site. And we thought that would work because we would have a paywall. This was a [Indecipherable] very, very closed user group. But turns out that, that wasn’t enough. Now that we’ve moved to a retail model, we would love, absolutely appreciate the chains participating, but to be clear, in our beta site right now, you see a lot of chain properties already on the system showing the exact same rate as is on the brand.com website.

Because it’s a regular retail rate, we’re not — it’s not bothering the chains in terms of violating any rate parity. That allows us, through other aggregators, not the chains, to be able to represent that we have some of the best properties in the world from the Hilton’s and the Marriott’s and IHG’s because we’re getting them through other sources, sometimes directly through channel managers, sometimes through other aggregators and I’d say it’s safe. It’s not violating the rate parity piece. So while I invite all of the chains to participate, we’re in conversations, some will join now, some will join later, I predict. But the point for more economic model, so I don’t actually need them to participate because we have aggregators including our very public partnership with Trip.com who has access to a lot of global inventory and that inventory can show up on our site in a rate parity safe manner.

To the second question, economics versus our CPC model, do we think that this will be accretive? We think it’s going to be wonderfully accretive. So part of the challenge/opportunity of having so many travelers looking at hotels on our site is that we offer lot of kind of free browsing and we don’t make much money because somebody doesn’t click. And then when the traveler does click on our meta offering over to an OTA, the vast, vast, vast majority of those clickers don’t actually book since they’re not ready to or whatever reason and therefore technically we got paid on a CPC, but in reality, since it didn’t book, it didn’t generate any profits for our clients, it’s in effect lowering the value of the next click that we’re going to get.

So what I mean to say is the number of travelers that we send to the OTAs that still are not booking is the opportunity that we see to make this a much more accretive model for TripAdvisor because we’re sending people into our own transaction flow, we’re giving them a very clear incentive on why they should book with us, which is all of this cash back, all these Vacation Funds. And if they’re going to save more than $99 on the very first booking, it becomes, as we expect, a very simple equation; charge $99 million for the subscription, they have $150 cashback, maybe they don’t even have to pay anything upfront and we just give them $50 cashback at the end. Lots of ways to get folks to sign up, and then that’s $99 we weren’t seeing in the CPC model. Then take it to the next step and now you are a paying member to a travel subscription, to a travel club.

We believe a number of people are going to say, well, I belong to the TripAdvisor Plus, therefore I’m starting my next trip on TripAdvisor, looking at the Plus hotels and Experiences and all the other offerings. And so we’ll get repeat business in a much higher degree because you’re a prolonged member. And then whether you’re making additional transaction or however many additional transactions a traveler is doing over the course of the year, that’s all, generally speaking, incremental revenue to us. We monitor the — what TripAdvisor Plus does with the CPC clicks, and obviously we have to keep a careful eye on that and make sure our own conversion flow more than makes up for the clicks that don’t go over to meta clients.

Deepak Mathivanan — Wolfe Research — Analyst

Thanks. Very helpful. Thanks, Steve.

Operator

Thank you. Next question comes from the line of Brian Fitzgerald of Wells Fargo. Your line is open.

Brian Fitzgerald — Wells Fargo Securities — Analyst

Thanks, guys. Steve, congratulations and we will miss you. Couple of things I wanted to ask about was the pullback that you saw in September. Was that consistent across regions? Did Europe stay strong in September? And then on Plus, wondering if you’ve seen any early indications or dynamic in terms of maybe the customer cohorts there, and are you seeing a differentiated use of Experiences or Viator or TheFork? Anything with these Plus members that are saying, hey, they’re converting into other product usage better?

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

I’ll take the first part [Speech Overlap]

Stephen Kaufer — President & Chief Executive Officer

Yeah, go ahead, Ernst, on the first.

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Yeah, I’ll take the first part, Brian, and I’ll hand it over to you, Steve. In terms of September, we saw more of an impact in the U.S. on the Delta. Europe had been recovering — well, the U.S. was the first to recover as you know in Q1 and Q2, much stronger than Europe. But Europe sort of caught up from a traffic perspective in Q3 and we saw revenue improve throughout Q3, including September. Now, was that impacted by Delta? Maybe it would have grown even more with Delta. Now we saw more of a sort of a step back as a result of Delta in September in the U.S. Now, in October, that has been moving up again in the U.S., but that was the more pronounced impact geographically of Delta for us.

Stephen Kaufer — President & Chief Executive Officer

Thanks. And with regard to Plus, candidly, we’ve been kind of really focused on our shift to Vacation Funds and how we clearly present this value proposition to the traveler. So excellent questions on, hey, have we seen cohorts of existing Plus subscribers now move over to Experiences? But truly we haven’t been kind of focused on building that up yet, with our efforts clearly targeting the — that golden part of 160 million times that people click over on expensive trips. That should be great Plus candidates.

Brian Fitzgerald — Wells Fargo Securities — Analyst

Got it, thanks.

Operator

Thank you. Next question comes from the line of Mario Lu of Barclays. Your line is open.

Mario Lu — Barclays — Analyst

Great, thanks for taking the questions. I have two more follow-up on Plus. So you already mentioned some hotel chains and aggregators were added to the platform. Anyway to help quantify how meaningful the number of hotels were added to Plus after the change to the Vacation Funds was made? And then, similarly, on the customer side, any color you could provide on if this change impacted conversion or user engagement? Thank you.

Stephen Kaufer — President & Chief Executive Officer

Thanks, Mario. Excellent questions. Those are kind of the exact ones that we are studying and looking at and trying to grow. With respect to the number of new hotels, I’d simply point out, we’re able to tap into a lot more of the Trip.com inventory, as an example, because they had a bunch of properties that had a special rate that we had put live on instant discount. But obviously, they have way more properties at a regular retail rate. And with the Vacation Funds model, also all of those properties can come online. Similarly, with some of the other aggregators we work with, there was just more flexibility in being able to bring on more inventory so long as we kept the rate at parity with other sites.

We also had our independent supply efforts and this would go back several years, but we had signed up quite a few independent properties that connected directly with our back-end that would off their rates. And by not having to go reach out to those properties and negotiate a specific discount, we were able to bring all of those properties live, essentially immediately because they were kind of already signed up, and that’s in the thousands, but it’s a — it’s close to a handpicked thousands.

The most interesting part of the question is really that conversion rate and how is it going. And I can’t offer much at this point, because we’ve just rolled out to a fraction of just our U.S. audience, but that’s key. We need to make sure that the language on the site explaining the value proposition, the flow, the ability to easily book a Vacation Funds property or Plus property because the photos are good, the rooms are well understood, the payment happens smoothly, the errors don’t exist, getting the bugs out of the system, and that’s basically the stage we’re at now as we tested on a small slice of the traffic. So as we make improvements and as it becomes better and better, we’ll roll out more and more, and obviously we hope for a 100% rollout as soon as we can.

Mario Lu — Barclays — Analyst

That’s great. Thanks, Steve. That’s very helpful.

Operator

Thank you. Next question comes from the line of Tom White of D.A. Davidson. Your line is open.

Kevin — D.A. Davidson — Analyst

Thanks so much. This is Kevin [Phonetic] on for Tom. First question, I was wondering about your monthly unique user trends in Q3. It seem to improve and sort of in line with the trajectory of revenue recovery. Can you talk a bit about specifically what you’re seeing in terms of user engagements, maybe a better specific region, the type of trips, the willingness to book and spend, and whether this engagement differs in any meaningful ways than from earlier phase of the pandemic? Thank you.

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Hi. Yes, we saw a step-up again in users as a percentage of 2019 in the third quarter. We were at sort of 70% in the second quarter, and we went up to 76% in the third quarter. I think the most important trends to point out are geographic. So where we saw that the U.S. was clearly ahead in terms of traffic recovery in the first and second quarter to the rest of the world. Europe really caught up to it. And so in the third quarter, Europe and the U.S. were sort of very similar in traffic as a percentage of 2019. So that’s the one important trend; Europe starting slow this year but catching up in the third quarter. The rest of the world, also a significant part of our usual traffic outside of the U.S. and outside of Europe, has been much slower to recover and is, therefore, dragging down the overall of 76% versus 2019 that we reached in the third quarter.

Kevin — D.A. Davidson — Analyst

Thank you. And then for my second question, I was wondering in regards to the HM&P segment, you mentioned that the monthly revenue is down [Phonetic] just a little bit in September versus July, August and September. As a percentage of ’19, could you elaborate a bit on that and talk a bit more? I know you discussed briefly about October, but a bit more on how October looked in that segment. Thank you.

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Yes. So September was — I said — so when I answered a question before about the impact of Delta, we saw an impact of Delta, we believe, in this — in September in the U.S., so that impacted HM&P. The CPCs have continued to be strong in September and the behavior of our partners in the auction has been very consistent and similar, but volume was impacted as a result in September. We’ve seen improvements of that environment in October. We — I also said earlier in the call that we tapered some of our marketing in October and into the fourth quarter, so that’s going to impact — we spent more, we leaned in more in the third quarter. But the general environment in October for the U.S. has improved from September, clearly.

Kevin — D.A. Davidson — Analyst

Great. Thanks so much. And congrats on the new chapter, Steve.

Stephen Kaufer — President & Chief Executive Officer

Thank you.

Operator

[Operator Instructions] Next question comes from the line of Vince Cipiel of Cleveland Research. Your line is open.

Vince Cipiel — Cleveland Research — Analyst

Great. Thanks for taking my question. Curious, when you look at the existing base of Trip Plus members, I know it’s still a newer program, but seeing anything interesting in terms of engagement or repeat booking activity of Trip Plus members versus the average user on TripAdvisor?

Stephen Kaufer — President & Chief Executive Officer

Good questions, Vince. We do see repeat bookings from Plus members. That’s nice. Unfortunately, we don’t really have a great way to compare that to whether those are just people who travel a lot and would be repeat booking through our meta auction because we don’t always see — we don’t see their actual booking behavior. So yes, it’s nice to see we have more Plus bookings than we have Plus subscribers, if you will, because people are coming back and booking more. But — and clearly that’s benefiting us, but I can’t compare it to another site terribly well at this point. It’s one of the things that we watch in terms of — and we think the Vacation Funds model will give us kind of yet another data point on that. There is a reasonable thesis that says an instant discount kind of sounds great, you get the money right there. But a Vacation Funds model where you’re sort of building up a bank, knowing that you can take that bank and take it as cash anytime you want, it’s as good as cash, it’s an extreme — one way to think about it, it’s an extremely rich loyalty program.

But the other way to think about it or a complementary way to think about it is, it’s building up a bank of things that you can continue to do on TripAdvisor. And so people have expressed to us, they like the notion of saving for that next trip, they like the notion of, hey, doing a few more purchases on TripAdvisor so that they’ll have some more funds saved up again for the same trip or the next trip. But it’s a — it goes back to the travel jar that some folks used to have where you just save some extra money along the way to go spend on that wonderful trip. And I think we’re tapping into a bit of that for a segment of our audience. And we see that, I think, in some of our repeat bookings.

Vince Cipiel — Cleveland Research — Analyst

Thanks. And my second question, I think earlier on the call, you mentioned that the commission the hotel would be paying won’t be that dissimilar to what they would pay other OTAs. But then I’m trying to think about the economics from a hotel perspective. If they’re paying a similar commission as well as providing an amenity and a potential upgrade, how does this channel compare in total costs relative to other distribution channels with Plus?

Stephen Kaufer — President & Chief Executive Officer

No, excellent question. So we are quite flexible on the hotel side. So when we approach an independent hotelier, for instance, we have perhaps a minimum commission, but then we point out the better deal that we can present to our traveler, means you’re going to get more visibility on TripAdvisor. And so, let’s say, a hotel might pay a, let’s call it a 15% commission, that’s probably less than what they’re paying to other OTAs. So it’s a bit cheaper of a channel and that might be a hook for us to help persuade the hotelier that it’s worth signing up, mind you, it’s very easy to sign up. So there is no, like, organizational or additional logistical or a technical barrier there. So we get the hotel to sign up and then the message is — and if you add a perk and it could be as simple as a bottle of wine or a fruit plate, a free upgrade, if available, there is a little bit of a very small amount of cost maybe. And then because that offer looks more compelling on TripAdvisor, it rises higher in our sort order and hopefully that hotel receives more bookings.

They don’t have to have it but many properties are — it’s relatively easy for them to offer a $20 off or a $50 dining charge. And so it helps get them in the restaurant, helps get them spending the money on premises. And the whole notion of Vacation Funds allows someone to build up this credit and we encourage the hotel and we can help the hotel market the ancillary services, whereby those credits can, in fact, be spent on property. Hotels love that, travelers appreciate the ability to get the extra amenity or the extra thing at the hotel and it’s all up to the property if they want to participate, kind of, in exchange for more demand. So that’s how we view our own ecosystem working.

Vince Cipiel — Cleveland Research — Analyst

Thanks for the color, Steve, and best of luck in the next chapter.

Stephen Kaufer — President & Chief Executive Officer

Thank you.

Operator

Thank you. Next question comes from the line of Kevin Kopelman of Cowen. Your line is open.

Kevin Kopelman — Cowen and Company — Analyst

Thanks so much. I had a couple of questions. First, could you talk about how you think about TV advertising, whether — now that we’re in the recovery, whether you would consider returning to TV?

Stephen Kaufer — President & Chief Executive Officer

I can start. With regard to TripAdvisor Plus, as I’ve said before, we feel we have an extremely highly qualified audience already on our site, who we have the ability to educate as they are shopping for a hotel. So while TV is phenomenally effective for overall brand advertising, for raising overall awareness, we feel we have plenty of traffic on our site today at the right point in time that we can educate, drive home the benefits of TripAdvisor Plus without spending an incremental dime. Once we have the product market fit and are on the growth ramp that we’re really excited about, amen to all different vehicles that enable us to put fuel on the fire. But I’m pretty clear, I want to be able to show — we need to be able to show ourselves and then we would be sharing with you that this thing is a rocket ship and here’s why putting more fuel on the fire would make a lot of sense. I don’t think I’m of the mindset that I should do that level of branding on a speculative nature.

I think there is another angle as to whether we approach television for our Viator and TheFork businesses because they are in a different investment mode, they have a different opportunity to capitalize on share gain, and they’re also doing extremely well right now without any of those other media pieces. So I don’t view it as something that is necessary, but certainly that could be additive over the course of next year and those on the brands if we choose to do so.

Kevin Kopelman — Cowen and Company — Analyst

Thanks. And if I could ask an unrelated question, can you give — could you give any more color or detail on how we should anticipate the Experiences and Dining or let me rephrase that, how well it did in the month of October for revenue, because I think you alluded to bookings being higher than the revenue trend for Q3? So, any color on how that trended into October would be helpful. Thanks.

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Yeah. We saw a bit of an impact from Delta in September also on the Experiences business, but Experiences roared back in October, doing really, really strongly. And as we called out, on a bookings level, and of course, bookings are a leading indicator of revenue because the revenue recognition is at consumption rather than at the time of booking. But on a booking level, sort of combined Experiences, points of sales, Viator, TripAdvisor, third party, were above 2019 levels, which is very, very encouraging and has been sort of the last step in a very strong recovery this year getting bookings above 2019. What is strong about that is that Viator was clearly leading the way earlier in the year. Viator is well above that level of above 2019 on a bookings level, but TripAdvisor has been catching up. And so to be above 2019 on a bookings level for the combined points of sale and Experiences, it’s just a very strong signal for us that this market is coming back strongly and that our position is very good and it’s — and we’re very pleased with that.

Kevin Kopelman — Cowen and Company — Analyst

Great. And Steve, I will definitely miss you on the calls and best of luck.

Stephen Kaufer — President & Chief Executive Officer

Thank you. Thank you very much.

Operator

Thank you. Next question comes from the line of Doug Anmuth of J.P. Morgan. Your line is open.

Davey — J.P. Morgan — Analyst

Good morning. This is Davey [Phonetic] on for Doug. Thanks for taking our questions. The first one, with regards to your strong performance in Experiences, are you seeing any evidence that travelers are increasingly booking ahead because of the pandemic? And if so, is this a behavior that you think could accelerate the adoption of online booking in Experiences coming out of the pandemic? And secondly, for Trip Plus, in the letter you talked about — and for travelers coming to your site removing the paywall to see saving on hotels, can you elaborate on that comment a little bit, what that means?

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

On the first part, the sound quality wasn’t great. You were asking, is this Experiences evidence of what? Sorry, can you say that again?

Davey — J.P. Morgan — Analyst

Are you seeing any evidence that travelers are increasingly booking ahead because of the pandemic and this is a behavior that could accelerate the adoption of online booking in Experiences coming out of the pandemic?

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

Yeah, I think we’re seeing a number of very important trends appearing. One was a direct result of the pandemic is that we’ve seen a lot more domestic Experiences consumption. That was very strong. We attempted to index on international travel, Americans going to Rome or to Paris or to London. But we’ve seen such a strong performance of our U.S. and European customers actually consuming Experiences locally and so domestic was very strong. Where pre-pandemic, we skewed to city experiences, we started to skew to more outdoorsy experiences, either water sports or hiking or canoeing. And that was a large big market that opened.

And what makes us feel very optimistic now is that we have clearly established an ability in the minds of our consumers to be very relevant in these more domestic and more outdoorsy experience, it’s great. We expect that to stick as we recover from COVID. And then city travel is coming back, but not yet at the levels that it was before and international travel definitely is lagging at the moment where we were before. And so what makes us optimistic is we’ve established now deeper penetration in domestic and outdoors and when international and city comes back in full force, we think that will be additive for the business. So strong signals, we think.

Stephen Kaufer — President & Chief Executive Officer

I would add that I think we’re playing to a very macro trend of people looking to do more on their vacations, combined with your ability to book on the phone, combined with the bringing of this inventory online over the past decade. And I think we’re seeing the tipping point where more and more folks are planning to book with or going to do online. And we are in the pole position there. We’ve got — Viator has a beautiful business strategy of licensing their inventory to all the major distribution channels, of course, TripAdvisor is also one of them, but having a tremendous supply footprint, great products, most interest — all interesting markets, key things that you want to do and that you want to make sure you have a seat on that tour before you get there because if you’re — it’s too scary to arrive in your destination and not know if you can do it.

COVID, I believe, accelerate it because you want to know what’s open, you want to know the cleanliness, your safety concerns, all the rest of it. But then again we’ve taught people how easy and convenient it is to book in advance. Experiences has always been referred to as the last of the major categories to come online after a hotel. And so we see COVID having taught people the ability and sometimes the necessity of doing this booking online. And I think we’re going to benefit from that trend for decades to come. To your…

Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic

There is a simultaneous trend next to the planning in advance which is because the phone has become much more important also for Experiences, there is also an increased ability to actually book things while you’re on the trip. And so one of the big opportunities that we have and have been capitalizing on is, if someone has planned in advance and did an Experience, we can help them do another Experience on the trip and so it is both increased planning upfront, but also an increased ability in market to market to them. Steve, for the second.

Stephen Kaufer — President & Chief Executive Officer

And then to your second question on TripAdvisor Plus and the paywall, sorry for the strange reference. In the current instant savings model, some of the properties that you click through, you can find the discount, you can book immediately. Other properties, you have to actually buy Plus first and then we will show you what the discount is on all those rooms, so we refer to that as a paywall experience. In both cases, you’re — or in the first case, you’re buying Plus with the transaction but in the second case, you actually have to make the purchase before you can see all the room details and that’s a natural barrier to customer adoption. It’s something we had to do because of the supply challenges and that whole aspect completely goes away in the Vacation Funds model. And so we know that that’s going to be a big win from the consumer side of things, and so it’s another reason why I’m particularly excited about the upcoming launch of Vacation Funds.

Davey — J.P. Morgan — Analyst

Great. Thanks for the color, Steve. Good luck and we will miss you as well.

Stephen Kaufer — President & Chief Executive Officer

Thank you.

Operator

Thank you. There are no further question at this time. And I would like to turn the call back to Steve for closing remarks.

Stephen Kaufer — President & Chief Executive Officer

Terrific. Well, thank you. Thank you, everyone. A very special thank you to all the TripAdvisor team members all around the world who continue to put their all into helping hospitality businesses, traveler, diners emerge from this pandemic. We’re quite optimistic, we’re extremely optimistic about the recovery of our industry and look forward to updating you next quarter on our core businesses and all of our new initiatives. Thank you again and stay safe.

Operator

[Operator Closing Remarks]