Tripadvisor Inc (TRIP) 2020 Q3 法說會逐字稿

Good morning, and welcome to TripAdvisor's Third Quarter 2020 Earnings Conference Call. As a reminder, today's conference call is being recorded.

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.

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

Last night, after market close, we distributed and filed our third quarter 2020 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 financial measures discussed on this call. Also on our IR site, you will find supplemental financial information, which includes reconciliations of certain non-GAAP financial measures discussed on this call as well as other metrics.

Before we begin, I would like to remind you that this call may contain estimates and other forward-looking statements that represent management's view as of today, November 6, 2020. 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.

And now with that, I'll pass the call over to Steve.

Thank you, Will. Good morning, everyone. Thank you for joining our call. I'm going to make some summary remarks about the quarter, and then we'll pass the call to Ernst for some remarks on our financials before we open up the call to your questions.

As described in our release and shareholder letter that we posted last night, our third quarter results improved versus second quarter in the midst of what has been an unprecedented period for our industry and for the world. Both consumer demand and revenue performance as percentages of last year's levels improved each month throughout the quarter.

While Q3 showed a nice recovery trend, in recent months, the travel industry's recovery progress has slowed, particularly in Europe, supporting our view that the near-term path will be uneven. Fortunately, we have planned appropriately for a variety of recovery scenarios, and we are committed to supporting consumers and partners throughout.

We also remain confident that with each passing month, the world is closer to important medical developments that will meaningfully restore consumer confidence in travel and allow for a broad-based travel rebound. In the meantime, we remain focused on factors inside our control, maintaining focus on executing on our One Tripadvisor initiatives that deepen customer relationships, deliver more value to consumers and partners and positioning the business well for many years to come. We are making great progress despite the challenging backdrop.

In Q3, we expanded our Travel Safe initiative to include more than 120,000 hospitality businesses, enabling them to efficiently communicate pertinent health and safety information to prospective travelers, drive engagement and recover faster. We also recently launched 2 new B2B products for hospitality clients, further signaling our ongoing commitment to support partners and deliver them more value as travel and dining starts to come back.

And finally, within the next few months, we plan on -- we plan to begin rolling out our first direct-to-consumer subscription offering and are very excited by this new opportunity to deliver meaningful value in delight to premium members.

So while it undoubtedly remains a very difficult operating environment, we are pleased with what we have been able to accomplish.

Before I pass the call to Ernst, I want to once again extend a thank you to all frontline workers for their tireless hard work during this difficult time. Of course, I also want to thank each and every TripAdvisor, Inc. employee for their talent and dedication. Better days will come, and we are doing what's necessary to emerge stronger than before.

And now I'll turn the call over to Ernst.

Thank you, Steve, and good morning, everyone. On our last 2 calls, I have described how we quickly adapted our business to its new reality. In the third quarter, we minimized operating expenses and generated positive adjusted EBITDA despite the fact that revenue was only 35% of last year's comparable period. We remain squarely on track for over $200 million of fixed and discretionary cost savings this year versus 2019. And that will be clearly more if variable costs like performance marketing are included. And our quarterly fixed and discretionary run rate decreased by $67 million in Q3 versus the first quarter of this year. It's a testament to our business model, our flexible cost structure and proactive cost reduction efforts that we were able to produce positive adjusted EBITDA even at such sharply reduced revenue levels this year.

We also strengthened our liquidity position with a bond issuance in Q3. And at the end of Q3, we had cash of nearly $450 million as well as $1 billion of undrawn capacity on our credit facility, which keeps us adequately prepared for a variety of COVID recovery scenarios. We believe that our concerted cost savings and our funding efforts, combined with the many new revenue initiatives that Steve just mentioned, and we'll talk more about on this call, put us in an excellent position to benefit financially when the travel market inevitably comes roaring back.

With that, we will now open it up for your questions.

(Operator Instructions) Our first question comes from Deepak Mathivanan with Barclays.

Great. Just 2 quick ones from us. First, we're not looking to jump the gun, but can you provide more color on the subscription offering? What will it look like? And kind of what are your medium to long-term goals with this product? Both on the supply side and on the consumer side. Who would be the ideal suppliers for this program?

And then second question on the Hotel business. Can you talk a little bit about the competitive dynamics on the auction side that you saw as travel demand was rebounding during the summer months in 3Q? Where OTAs and suppliers coming back to the platform, how does the participation from hotel chains and other suppliers during that time?

Excellent. Thanks, Deepak. This is Steve. Great question. So the new consumer subscription offering, launching in a couple of months. I -- we're looking to provide meaningful additional value for premium members. So if you're buying into the subscription package, you'd be able to get discounts on tens of thousands, eventually more and more hotels all around the globe. You'll get a discount off all the attractions we sell. Last count was close to 400,000 Experiences. And there's plenty more, if you think about it, of things that we can add to the bundle.

When you think about our relationship with hoteliers, we have direct supply and we have supply through aggregators. And we're looking to present an offering to our travelers that not only saves them money but gives them a -- that traveler a special experience. Everyone loves to feel like they are treated special, that they are delighted when they go traveling, not only by where they're going, but how they are treated as a guest at a hotel or on an experience. We feel that our demand on TripAdvisor side, our relationship with suppliers, put us in a wonderful position to be able to come up with a subscription offering in that vein.

If you look at the overall picture, we have, on pre-COVID times, north of 400 million unique users on our site that were looking to plan a trip. We feel that a good number of them would clearly be interested in that extra special perk, the discount, the better experience, the extra something.

And then when you look at our supply side, we have relationships with all of the aggregators and tens or hundreds of thousands of properties and attractions throughout the globe. So we kind of have both pieces of the marketplace and our opportunity is to connect them in a premium package.

Moving on to the second question on the auction. We've seen the OTAs be quite rational in their behavior. They're looking for demand through all channels. Hotels are looking through demand through all channels, including the OTAs as well as TripAdvisor. So I think the easiest way to look at our auction is that it's recovering in line with how the overall travel footprint or the overall travel ecosystem is recovering. Hoteliers need demand, of course, and they're coming to us and they're coming to the OTAs. And via the OTAs to us, and so we're -- the auction is essentially behaving as we would expect. And as much as that's a regional answer, it's behaving regionally in those same areas.

Ernst, do you want to add anything to that?

No. I -- on the auction, I would add, clearly, as the COVID unfolded in April and May, there was significant pressure on the auction in terms of volume, in terms of CPCs down, conversion rates being down and also our partners bidding quite carefully.

I think what we are seeing right now is, obviously, volumes have gone up in the period since then. CPCs have improved because conversion rates have improved in the meantime. But volume and conversion rates are still down from pre-COVID times.

In the early days, our take rate, if you want to call it, the -- how much we got paid per booking delivered for our OTAs, was down as well as the bidding was careful. That has sort of normalized now. And so we're finding that our partners are willing to pay again for the bookings like they were before.

Our next question comes from Lloyd Walmsley with Deutsche Bank.

This is Chris on for Lloyd. Maybe one longer-term question on the hotel auction. You guys have been deemphasizing this business in your overall mix prior to the pandemic. So just thinking longer term, would it be wrong to assume that over time, you're moving towards taking performance market effectively to 0 for this business? Or is this really not the right way to be thinking about it?

And then just maybe coming back a little bit and focusing on 2021. You talked about coming out of the quarter, results were better than internal projections back in August. So maybe if you could just talk to us a little bit about how getting 3Q under your belt help refine your '21 strategy?

Thanks, Chris. Maybe I'll take the first, Ernst the second. In terms of -- I know, I thought about deemphasizing the auction. No, no, no. The auction in that hotel search capability, finding the best hotel for your trip remains and will always remain a core asset, a core value that we're bringing to travelers. As such, as we get better added performance marketing in terms of us buying traffic to that shopping experience site, we would expect it would always remain.

When you add in the subscription offerings and the other sort of direct-to-consumer things that we plan, because as you know, we've already launched a couple and this new subscription offering will be a third. It's yet another opportunity to monetize the traffic that we bring to the site organically or through paid channels or our repeat efforts, all the different ways that we get up to the hundreds of millions of users. And so for us with the subscription, with the auction and the way it's running, we expect that to continue and performance marketing will probably always play a role in that.

In terms of your second question, our visibility, of course, in the near to medium-term remains limited. We said last quarter that we think the recovery may have an uneven path. And I think we're seeing that right now. Q3 was stronger than we expected. Our European business performed very strongly in the third quarter. TheFork, our reservation business on the restaurants, did very well in the third quarter.

And now what we're seeing at the start of the fourth quarter, some of these trends are different. And so we see Europe now taking a step back with all the lockdowns that we're in. And so we are careful and conservative in our outlook for Q4. And we are seeing right now in our business that, for instance, the restaurants in the business for the fourth is trending down from Q3 with all the lockdowns.

And so it's going to be uneven recovery. We remain bullish and optimistic about the recovery of the travel market in the next periods to come. We think travel will recover fully. I want to highlight sometimes lost a TripAdvisor SKUs almost exclusively to leisure travel. And we think leisure travel will be the part of the travel market that will come back the fastest.

So we're looking forward to 2021. We're looking forward to, hopefully, on the medical side, seeing progress, a vaccine being rolled out and we're looking forward to a recovery of the travel market. But in the meantime, it's patchy and we're seeing that right now in Q4. That doesn't take away from our enthusiasm of being ready to come back, roaring back when the market comes back.

We've done everything, we think, that is prudent at this point. We've cut our cost quite significantly. We have the funding in place. We are able to weather these ups and downs that we are in right now. And we think we've actually adjusted our cost position very attractively now because we might add back some costs when the market recovers, but not all. And so we think, actually, we will come out with an improved cost structure when the market returns. So we're waiting for that.

In the meantime, it will be patchy. Looking forward towards 2021. We are focused on what we should be focused on, being prudent on cost while the situation hasn't been resolved. At the meantime, developing some exciting new tenants to our strategy. I think the revenue initiatives that we're rolling out right now could have some real legs. You're not going to see that in Q4. You're not going to see that in Q1 maybe. But we are going to see that when the market comes back. And so we're excited about positioning ourselves correctly for 2021.

Our next question comes from Shweta Khajuria with RBC Capital Markets.

Great. Let me try 2, please. Are you expecting -- first one is, do you expect to put some marketing dollars behind the subscription product? Maybe build that awareness so that when consumers are ready, they can subscribe as they see value in that product?

And then second is on engagement. Any update on how you saw engagement trend among your members? So not only membership growth or improvement, but how are they interacting? Did you see improvement through the quarter?

Excellent. Thanks, Shweta. So in terms of do we need to apply or do we plan to apply marketing dollars on the subscription. The way we look at it is we have 400 million unique users on our site. They're planning a trip. They're in some stage of planning that trip. They are already in a plan/buy mode. So our opportunity with this subscription product here is while they are on the site, present the value proposition in such a way that it becomes a no-brainer, really simple.

So imagining you're planning a trip to Cancun. You're examining a couple of hotels. It's a considered trip. It's a trip that matters to you. It's likely to be on the higher end, and you're going to be doing some activities there. And then you get an opportunity to see a subscription product that -- or to see a product offering that saves you meaningful dollars on the hotel that you wanted to stay at anyways, offers discounts on the tours and activities that you want to do in Cancun. And maybe as you look at the savings that we can offer instantly on this trip versus the subscription price, that becomes kind of a no-brainer.

It becomes a very easy opportunity without, to your question, any incremental marketing costs for us to educate a consumer at the time they're ready to buy, that this is a great deal. And we have, of course, expect the consumer will continue to shop around to make sure that this is the hotel they want to stay at, that this deal that we're offering is, in fact, better than what they can find on other sites. And when that consumer is convinced that, well, yes, it actually is saving money for them and that hotel is offering a chance for a free upgrade or a spa or dining credit or something else that can make that stay extra special, you combine that kind of win for the consumer with the ability to use the subscription product for the next entire year. That's kind of the experience we're aiming for.

And then, of course, when that traveler is on trip, experiencing the benefits, the money they saved on the hotel, they might be able to do an extra special meal, the upgrade with the ocean view, how exciting is that. They'll remember that it's TripAdvisor that brought them this enhanced experience, like that subscription, and of course, that flows into the logic on whether they renew a year later.

To your second question on engagement of members. Yes, certainly, members are as engaged as the average traveler during this pandemic. I'm not sure we see a particularly different type of behavior on the site. Everyone, a member or not, is super concerned about safety. They want to go to the more outdoors, more -- less urban, more suburban, more out of the way, more national park-type trip. I don't think we've seen a split along member, nonmember lines. And of course, with all the members, we have the ability to suggest they come back for some of those types of trip that are they're likely to take via our CRM channels.

So as you suspected, membership continues to grow, but I can't point to anything particularly meaningful that's different in members versus nonmembers at the moment.

Our next question comes from Naved Khan with Truist Securities.

A couple of questions from me. Can you help us with your fourth quarter outlook a little bit, maybe? So you expect revenues to be -- or performance to be modestly below the third quarter. Can you maybe talk about the split of revenue for the Hotel business between U.S. versus non-U.S.? I kind of remember it being 2/3, U.S.; 1/3, international.

And then the restaurant segment is all European. How should we be thinking about that amidst the lockdowns?

Yes. Naved, the -- our Europe business is, a, we don't break it out, but is a minority of our business that is impacted and U.S. is more significant. The trends that we're seeing right now, for instance, in the hotel business, is that the U.S. is, compared to where we were in September, holding up more or less at the same sort of recovery levels. So not too much change moving from September to October into November.

The big change we have seen is in Europe with the lockdowns that have been introduced there. We've seen that on the Hotel side, and we've seen that on the restaurant side as well.

You're almost correct about your statement about dining and the skew to Europe. TheFork is almost exclusively in Europe, our reservation business. A bit in Australia, a bit in South America, but almost exclusively in Europe. And so that's very significantly impacted by the lockdowns. And that's the majority of our dining revenue.

But there is also a component or dining revenue that is in the U.S., which is our -- it is our business-to-business component of it, the subscription services and other marketing services we sell to at restaurants. But the largest part is Europe of that business. You're correct about that.

That's very helpful. A quick follow-up, if I may. So on the fixed cost savings of $67 million that you had in the third quarter, if I just annualize that, that equates to around $270 million. But then, obviously, you did say that you expect to retain most of it, but not obviously all of it when things do turn around. So if I had to think about 2021, can you give us some guidepost about how much of this can be sustained in terms of cost savings?

Yes, there are -- when the market comes back, there are going to be some costs that we will naturally have to add back. Just an example, we are not operating any offices right now. Our -- most of our offices are closed, at least the larger ones are closed. And when we reopen, some of that infrastructure cost will come back.

There is always some other inflationary pressure to cost. And when the market comes back, we may invest behind some strategic initiatives, like our subscription product.

But the -- we have found after taking out this much cost, as you often do, is that we have become more efficient. We're targeting much more on the things that really matter for our strategy. And we're looking around and we're saying, "Hey, this actually works for us as well. We don't have to add back all this cost."

So I don't have a specific number for you yet for 2021, but we'll add back some cost, I believe, but we'll not add back all the cost even if the market comes back.

Our next question comes from James Lee with Mizuho Securities.

Steve, I was wondering, given the fact that we see a pretty meaningful mix shift towards alternative accommodations here. I was wondering maybe what do you think about your strategy on vacation rentals? Would you be more focused on, going forward, like making more investments in that segment?

And also secondly, with TCOMS's CEO on your Board right now, anything you've learned from the company specifically? They certainly have a reputation of merchandising and bundling. I was wondering anything you can pick up from their perspective?

Thanks, James. So to begin with, on the alternative accommodation question. Absolutely, accommodations are -- alternative accommodations are a key part of our future. We have a reasonable footprint that we're looking to augment and the trick, if you -- or the challenge, the opportunity, if you talk to TripAdvisor or most of the other OTAs, is figuring out the way to mix in that alternative accommodation mix into the default sort. The opportunity to help teach travelers that there are these great options out there because it is a growing category, and we fully expect to have that a growing part of our mix as well.

I don't think the TripAdvisor brand will stand for alternative accommodations at any particular point. We are looking to help travelers plan those big trips that matter. And that involves any type of accommodation, fantastic experiences, helping you get there, delighting you with inspiring content, out-of-the-way things to do, helping make that trip as memorable as possible.

And so alternative accommodations as a lodging type plays a role in that, but it's not kind of a sensor for the company.

To the question on having Trip.com on our Board, Jane Sun, a terrific addition for us. I can't -- it wouldn't be right for me to kind of disclose any particular learnings. It is -- I can say, however, it's fabulous to have the perspective of one of the major global OTAs that has tremendous operating experience, not only in China, but in so many other parts of the world, as we operate very complementary businesses, but obviously, very much in the same category, in the same space. So I enjoy our interactions quite a bit.

Great. I just looked at some clarification on your strategy on vacation rental. It sounds like your strategy going forward helped with you more help travelers do more planning towards accommodation, pushing traffic to your suppliers as opposed to sourcing the inventory directly. Am I reading that correctly, Steve?

Well, it's a fair statement that we don't plan to sort of compete with the number of sales reps sourcing supply directly versus everyone else, because we feel we can do a better job for our travelers by taking inventory we have, augmenting it with inventory sourced by other players to present a more comprehensive experience.

What we bring to the equation is demand. What we bring to the equation is the travelers looking for a very considered trip. And since alternative accommodations do play an important role in that, we just want to have that supply on our system, certainly, regardless, without necessarily investing in building a -- or growing our supply organization in order to get it.

Our next question comes from Lee Horowitz with Evercore ISI.

Two if I could. Maybe on the subscription product. In a more normalized demand environment, how do you think about the advertising investments needed to support the subscription product? Ultimately, how do you balance paid advertising versus leveraging your owned and operated space in order to drive subscription growth?

And then maybe on the revamped cost structure, can you help us size the magnitude of these fixed cost savings across your business lines? I'd imagine that, given the relative size of the businesses, that much of it is coming out of the Hotel, but any help on Hotel versus non-Hotel would be helpful.

Sure. Thanks, Lee. So certainly, at some point, we will be looking to build a brand around the subscription offerings. I really do want to drive home the point, though, that we have north of 100 million members. We have tens of millions of travelers planning a trip visiting our site every single day. These are all folks who we have the opportunity to introduce our subscription product to. At the right moment, they are already in travel planning mode or if they're a member, they already know TripAdvisor and have been using us perhaps 4 years.

So we think the success of the subscription product will revolve around the value that we're providing to these travelers, helping them understand or just making sure that, that math works, that the perks, the extra experience, the delight and the savings that we're offering the traveler is worth that subscription piece.

Unlike another business. If you were to start up a travel subscription business and not have our demand asset, your question would be spot on, how much do you have to spend in order to acquire and what's the lifetime value going to be for the subscription? And can you make that math work? For us, it's really quite different because we're confident we already have the traffic. So -- for the demand on the site each and every day.

Obviously, we will be -- not obviously, perhaps. But of course, we will be spending some marketing dollars if we have some folks going through a path to buy a subscription product and they abandon, we would naturally seek them out to remind them to come back and finish the transaction. But the big win, the big opportunity, is to leverage the traffic that we already have. And as others have done, do a consistent job, improving the value over time with our content, additional discounts, special treatment, upgrades, the credits at hotels, experiences that are in -- destinations that are unique to paid membership value offering.

And we're -- there have been other programs in travel. There's certainly been plenty of programs like this in other verticals. But again, to your question, it's not a question of cost of that consumer acquisition for us because they're already on our site.

Ernst, do you want to take the second one?

Yes. Lee, in terms of your question about the magnitude of the fixed and discretionary savings across segments. Similar on our similar level of savings year-over-year as a percentage between our Hotel, Media & Platform business and Experiences & Dining, more on the Other segment.

Our next question comes from Tom White with D.A. Davidson.

Steve, earlier, when you were talking about the subscription offering, you mentioned how kind of your direct connectivity with hoteliers and properties played a role there. Could you maybe comment on sort of what percent of your overall properties on the site you guys have maybe some level of kind of direct connectivity with i.e., not through an OTA or through a hotel, GDS or something like that? And I'm just curious whether kind of driving more of that direct relationship with properties is a big strategic focus for you guys? And how you might monetize that, if so?

All right. Thanks, Tom. So as you saw, we announced a couple of additional products in our hospitality solutions offering to new B2B products to enhance your reputation as well as to deliver business insights to help on your business. So we're constantly evolving in helping the sort of tens of thousands of hoteliers in these. And then, as many of the chains as are interested, help them grow their business and grow their business using TripAdvisor.

I -- to the question on the subscription product and how it relates, we obviously view that channel direct to hoteliers as a tremendous asset in being able to deliver unique value in the subscription products. So if you can imagine a hotelier that might have a shoulder season and might be perfectly happy to provide a discounted room or an extra piece of an extra credit, an extra part of the experience at their resort to TripAdvisor members behind our pay gate. So if you think of the overall ecosystem, there tends to be or many hotels aim for rate parity across the various channels. But behind a paid gate or a subscription gate, there's lots of new things that hoteliers can choose to do. And we're not, by any means, inventing this model, the price line, the hot wire, the -- there have been plenty of other very successful examples of how discounted rates and other packaged rates are in established distribution channel for hotels.

For the first time, we're bringing that to TripAdvisor in the form of this subscription offering. So we shall see, and we will learn what hotels are interested in offering to get access, preferred access, in some cases, to those -- to the travelers on TripAdvisor.

Specifically around connectivity. We have connectivity through the OTAs, through GDSs, through hundreds of different Internet booking engines that hotels have been using on our site. It's not an easy part of the equation, but through previous efforts, we have quite a bit of experience establishing the connectivity that will enable many, and dare I say, most hoteliers that would be interested in our audience to be able to establish that direct booking or that direct offer capability.

Our next question comes from Heath Terry with Goldman Sachs.

Great. Steve, just to dig a bit deeper into the direct opportunity. I mean, we're obviously seeing Google and sort of other metasearch models attempt to enable the loyalty program efforts that hotels or -- certainly pre pandemic, but even this pandemic, are attempting to build out.

During the pandemic though, we're seeing the shift in consumer behavior towards more direct booking via phone as consumers try and get more information about health protocols and check-in and that type of thing. What kind of opportunity do you see for TripAdvisor to play a role there short term? And then certainly, to the extent that we're all focused on the longer term to use that and the environment that we're in to sort of benefit TripAdvisor's more direct relationships with these hotels and sort of around the OTA ecosystem?

Yes. Thanks, Steve. Interesting question. So we were pretty quick to market with our Travel Safe initiative. It grew -- in previous calls. I think I was talking about 50,000 businesses, advertising their information about safety. Now it's up to 120,000.

So I think our traveler has clearly received benefit, those that are clicking on or those properties with Travel Safe information are getting a higher percentage of our traffic. We share that with hotels all the time. It's fairly obvious to think about travelers want to know what the hotel is doing to keep them safe. And so I think we've earned some bonus points with travelers by presenting the information in such a comprehensive way. And with hoteliers for making it available to hoteliers and restauranteurs for free to help them address the concerns that their customers have.

I -- we do quite a bit for hoteliers and restauranteurs, for free We let them sign up, they can add photos, they respond to reviews. All of that is part of just our ongoing relationships with our registered owners. When we offer products that -- all the ones that we've brought to market so far, they're really to help leverage some additional information on TripAdvisor or get additional bookings, direct bookings from our site, which, again, helps them to grow.

The subscription offering brings yet another model that is a very demand oriented and extremely easy to measure because we are actually providing more bookings based upon the offer. And it's kind of a no-risk situation for a hotelier who wants to test participating in our program. And they will see the bookings come through whatever connectivity we've established with them. If we are successful in driving more and that makes it a win for them, and our traveler obviously gets the benefit, the perk or both that the hotel is offering.

Our next question comes from Jed Kelly with Oppenheimer.

Great. So just looking at your traffic patterns. Your traffic is obviously ahead of where some of the OTAs are at room night. And it seems to be more of a leading indicator. As you think about travels coming back, is there a way sort of any products you could potentially introduce to kind of control your own destiny in terms of revenue and generate revenue, more revenue, either through your media platform ads, more consumers look to book to travel before actually traveling?

Yes. So I'll take a shot at that. Steve again. So I think you've seen some of the leading indicators, the destination marketing organizations, the geographies that want to start attracting tourists, are leaning in a bit more heavily into the display space, one of our product offerings then the chains. And that's a combination of dollars available, but also, they recognize -- those organizations recognize that people are -- even in the midst of a pandemic, planning, still making some of the decisions for well when all this craziness is over, where do we get to go. And the DMOs want to be there, and that's arguably a bit too risky for the hotel chain to play in that sort of leveling decision process.

We have no doubt that as demand picks up because people feel safe to travel. Again, not next month, not even next quarter, necessarily. But as the recovery happens, all of the ecosystem will rebound to where we were. The chains will be super active. The destination marketing organizations, because so many destinations, tourism is a critical component, will be back on the site in spades. And OTAs and our traditional clients will all be back in force looking for that demand.

Kind of one other thing I wanted to kind of add on that subscription product, because we're talking about sort of chains and loyalty programs, is that, of course, we believe that the loyalty programs that the chains offer and that the OTAs offer will obviously continue. Those tend to be reasonably strong programs. Our subscription offering is not meant in any way, shape or form, to pull people away from those. It's very -- we view it as very complementary to those systems. And so nothing that we're doing, product-wise, would make it any less interesting for hotel chains, for instance, to be terrific advertising partners for us.

And I would underline the point that you're making, Jed, about the leading indicator of traffic. We had in September -- we had -- we were at 74% of the previous year in terms of unique users, which is obviously way ahead of the 35% we were on revenue compared to last year. And so we look at those trends. We were -- even in the depths of April, May we had about 1/3 of our traffic still on our sites. So we're seeing engagement -- continued engagement with the TripAdvisor platform even when conversion rates are low. That's very positive for us.

The other sort of leading indicator I would point out is, if we get into a situation next year where there is more certainty on the ending of COVID because there is a vaccine, and it's now just about the logistics of rolling it out, we may see our hotel auction, which is mostly pay per click, of course, we may see as a leading indicator there because people will start to engage and start booking for further out. It's another area where we might need the recovery.

(Operator Instructions) Our next question comes from Doug Anmuth with JPMorgan.

Okay. This is Dae Lee on for Doug. I have to -- just around the hospitality B2B product that you recently rolled out. Could you elaborate a little bit on that and give us some more details on what you're doing there?

And then looking more broadly across the B2B opportunity. Are there any other unique opportunities or interesting things that are popping up that could come down the pipeline?

And then looking at your Trip.com partnership, it's been probably a year since you announced that partnership. Do you have any updates to share around how the partnership has progressed so far?

Certainly. So I can start. Thank you, Dae. I -- 2 B2B products recently released and then the subscription component, we can talk about that if you want.

I -- in no particular order, there's a Reputation Pro, which enables hotelier -- I mean, stepping up level a hotel's reputation on TripAdvisor is for many, many properties around the globe, critical to their success. It's a ton of absolutely free visibility, whether they're client to us or not. It's visibility for them. It's reputation. I read it about it on TripAdvisor. They're very proud of their awards. And so hotels naturally do what they can. Many, many hotels try very hard to improve their reputation on TripAdvisor because as everyone knows, you can't kind of buy your way in the sort order.

So one of the best ways that we recommend hotels to improve their reputation on TripAdvisor is to actually deliver a better customer experience, no surprise, and then to get their travelers, their guests to write about their experience on TripAdvisor. And we've just seen stunningly consistent correlation between the more guests that write about the hotel, the better the overall average score of the review is.

So Reputation Pro helps automate that process. So hoteliers are able to essentially set it and forget it, so that the review request goes out to all the guests. It can also add some extra questions. The hotelier gets some extra insights into what guests are saying. But most importantly, the review volume goes up, the reviews tend to be positive, which helps their ranking on TripAdvisor. Again, they can -- and many hotels do it independently. They e-mail their guests, ask them to write reviews on TripAdvisor. We love that. But for those that want to have it a bit more automated, be able to check the reviews on TripAdvisor and Facebook and Google all in one spot, it's a very nice, relatively simple offering.

Second product is Spotlight. It's a business insights product. It looks around at -- this is in partnership with another company. And using Tripadvisor data and the other technology really helps deliver insights into how to run your hotel business. What price your rooms' at. It's a relatively established category, but penetration is not what one might expect because it's expensive to have a trusted sales force that runs globally. Well, we have that. So in partnership with some extra bells and whistles, ee've put together a product and we're bringing it to market now.

We think those are 2 very valuable products to hoteliers. They're also sticky products. They're helping them run their business and build their reputation over the long term. So we look to form relationships that -- with hoteliers that are really helping them in a permanent sense. To the degree that some hoteliers will also be very interested in our -- in offering something special in our subscription business, that's another -- more on the demand side, but hoteliers care about filling the rooms. And so that will be -- not yet, but will be another opportunity to engage with hoteliers and help them grow their business.

And I would add to that. Just as a reminder, our strategy to grow revenue outside of our hotel auction is not limited only to Experiences & Dining. Last year, our nonauction Hotel products, the B2B products, were growing double digit year-over-year. And so we have a lot of plans to keep growing that Hotel B2B part. And these 2 new products that we have introduced are important tenants of that. So big focus internally here to keep growing our hotel B2B business as well as our media business, as well as our Experiences & Dining and now these added consumer -- new consumer streams as well.

To your second question, the -- I'll start, Steve, and you can add. The TCOM partnership, yes, indeed, almost a year since we inked that joint venture, very positive about what we're doing together in China. As Steve was talking earlier about the benefits of having Jane on our Board. But in China itself, we're working on -- the team is working on the joint venture. We're excited about what we can do together in that marketplace. Obviously, COVID has impacted the plans, at least the revenue for that business as well, although the Chinese market, domestic market, has recovered quite nicely. Actually, the focus -- the main focus for the joint venture is China outbound traffic, international traffic, and that part of the market hasn't recovered very well. So in terms of revenue, not on track of where we hope to be because of COVID, but in terms of the team building the product that we need for the future, very happy with progress.

There are no other questions at this time. I will now turn the call back over to Steve Kaufer.

Thank you, everyone, for joining the call.

I just want to reiterate my thanks to all TripAdvisor employees. Your dedication is an inspiration. You are truly living one of our company values of being better together.

To our investors, we are confident in the signals of pent-up consumer demand, and we believe our continued discipline, balance of cost savings and targeted investment in our future will enable us to emerge leaner and stronger than before.

We'll get through this. Time and time again, travel has rebounded and travelers have come back to TripAdvisor. We will continue executing our strategy and make sure TripAdvisor plays in the influential role with consumers and partners worldwide in this recovery and beyond. So thanks, and stay safe, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.