TripAdvisor, Inc. Q3 FY2020 Earnings Call

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, everyone, and good morning. 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 views 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 with that, I’ll pass the call 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 in the shareholder letter that we posted last night, our third quarter results improved versus the 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. Our 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 position the business well for many years to come. We're 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 two new B2B products for hospitality clients, further signaling our ongoing commitment to our partners, and delivering them more value as travel and dining starts to come back. And finally, within the next few months, we plan to begin rolling out our first direct-to-consumer subscription offering and are very excited about this new opportunity to deliver meaningful value and 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 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 two 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. That will be clearly more 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 conservative 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.

Thank you. Our first question comes from Deepak Mathivanan with Barclays. Your line is open.

Hey, guys. Thanks for taking the question. Just two 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 what are your medium-to-long term goals with this product? You know, 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 Q3? You know, were OTAs and suppliers coming back to the platform, how does the participation from hotels change in other suppliers during that time?

Excellent. Thanks Deepak. This is Steve. Hi, great question. So, the new consumer subscription offering launching in a couple of months, 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 the 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 also gives them a special experience. Everyone loves to feel like they are treated special and that they are delighted when they go traveling, not only by where they're going but by how they are treated as a guest at a hotel or during the experience. We feel that our demand on the TripAdvisor side, or our relationship with suppliers put us in a wonderful position to be able to come up with the subscription offering. If you look at the overall picture, we have, pre-COVID, more than 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 of thousands or hundreds of thousands of properties and attractions throughout the globe. So we kind of have both pieces of the marketplace and our opportunities 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 for 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 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. So 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, 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're seeing right now is that, obviously, volumes have gone up since then. CPCs have improved because conversion rates have improved in the meantime, but volume and conversion rates are still down from pre-COVID levels. In the early days, our take rates, if you want to call it, how much we got paid per booking delivered for our OTAs was down, and 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.

That's very helpful. Thanks, Ernst. Thanks, Steve.

Thank you. Our next question comes from Lloyd Walmsley with Deutsche Bank. Your line is now open.

Hi, thanks. So this is Chris on for Lloyd. Maybe one longer-term question on the hotel auction. You guys have been de-emphasizing 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 marketing effectively to zero 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 can just talk to us a little bit about how getting 3Q under your belt helps refine your 21 strategy? Thanks.

Thanks, Chris. Maybe I'll take the first one on the auction. In terms of de-emphasizing the auction, no, no. The auction in the 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 at performance marketing in terms of us buying traffic to that shopping experience side, we would expect it to 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 in 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 this third quarter. The fourth quarter, our reservation business and the restaurants did very well in the third quarter. And now 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 facing. And so, we’re careful and conservative in our outlook for Q4. We're seeing right now in our business that, for instance, the restaurants in the business for the fourth quarter is trending down from Q3 with all the lockdowns. So it's going to be an 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 how TripAdvisor skews 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 hopeful that on the medical side, we'll see progress on the vaccine rollout. And we're looking forward to a recovery of the travel market. But in the meantime, it's patchy. We see that right now in Q4, that doesn't take away our enthusiasm for being ready to come back when the market comes back. We've done everything we think is prudent at this point. We've cut our costs quite significantly. We have funding in place. We are able to weather these ups and downs that we are in right now. 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. We believe that we will come out with an improved cost structure when the market returns. So we're waiting for that, and in the meantime, we'll be patchy. Looking forward to 2021, we are focused on what we should be focused on— being prudent on cost while the situation hasn't been resolved and, in the meantime, developing some exciting new tenants to our strategy. 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 might see it in Q1 or Q2, but we expect to see those when the market comes back. And so, we're excited about positioning ourselves correctly for 2021.

Got it. Appreciate the color.

Thank you. Our next question comes from Shweta Khajuria with RBC Capital Markets. Your line is now open.

Great, thank you. Let me try two please. Are you expecting, the 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 trends among your members? So, not only membership growth or improvement, but how are they interacting? Did you see improvement through the quarter? Thank you.

Excellent, thanks, Shweta. So in terms of whether 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 are planning a trip; they are in some stage of planning that trip. Our opportunity with this subscription product here is, while they are on the site, to present the value proposition in such a way that it becomes a no-brainer and really simple. So, imagine you're planning a trip to Cancun, you're examining a couple of hotels. 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. Then you get an opportunity to see a subscription product that saves you meaningful dollars on the hotel you wanted to stay at anyway, offers discounts on the tours and activities that you want to do in Cancun, maybe as you look at the savings that we can offer instantly on this trip versus the subscription price, that becomes a no-brainer. It becomes a very easy opportunity for us without incremental marketing costs to educate a consumer at the time they're ready to buy that this is a great deal. And we, 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 we are offering is, in fact, better than what they can find on other sites. When that consumer is convinced that yes, it actually is saving money for them and that hotel is offering a chance for a free upgrade or 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 the kind of experience we're aiming for. When that traveler is on trip experiencing the benefits—they know the money they saved on the hotel—they might be able to do a special meal or an upgrade with the ocean view; how exciting is that? So, remember that it's TripAdvisor that brought them this enhanced experience, like that subscription. And, of course, that flows into whether they renew a year later. As for your second question on the engagement of members, yes, certainly. Members are as engaged as the average traveler during this pandemic. I'm not sure we see particularly different behavior on the site. Everyone, a member or not, is super concerned about safety and wants to engage more in outdoor or rural places and fill their trips with more National Park-style experiences. Unfortunately, we’re not seeing a particularly meaningful split along member vs non-member lines. And, of course, because the members we have give us the ability to suggest they come back for some of those types of trips that are more likely taken 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 compared to non-members at the moment.

Okay. Thanks, Steve.

Thank you. Our next question comes from Naved Khan with Truist Securities. Your line is now open.

Thanks a lot. A couple of questions for me. Can you help us with your fourth quarter outlook a little bit? So you expect revenues to be – performance to be modestly below the third quarter? Can you maybe talk about the state of revenue for the hotel business between U.S. versus non-U.S. I kind of remember it being two-thirds U.S., one-third international. And then, the restaurant segment is quite European. How should we be thinking about that amidst the lockdowns?

Yes. Naved, hi. Our euro business is, a, we don't break it out, but is a minority of our business that has 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've seen is in Europe with the lockdowns that have been introduced there. We've seen that on the hotel side and we've seen it 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 has a bit in Australia, a bit in South America, but almost exclusively in Europe. And so, that's been very significantly impacted by the lockdowns and it's the majority of our dining revenue. But there is also a component of our dining revenue that is in the U.S., which is our business-to-business component of the subscription services and other marketing services we sell through 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 analyze that that equates to around $270 million, but then obviously, you did say that you expect to return most of it, but not all of it when things do turn around. So if I had to think about 2021, can you give us some guidance about how much of this can be sustained in terms of cost savings?

Yes. When the market comes back, there are going to be some costs that we will naturally have to add back. Just as an example, we are not operating any offices right now. 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's always some other inflationary pressure on costs. When the market comes back, we may invest behind some strategic initiatives like our subscription product. But we have found, after taking out this much cost, that we have become more efficient. We are targeting much more on the things that really matter for our strategy. We are looking around and saying, hey, this actually works for us as well. We don't have to add back all this cost. So, I didn’t have a specific number for you yet for 2021, but we will add back some costs. I believe that we will not add back all the costs even if the market comes back.

Great. Thank you.

Thank you. Our next question comes from James Lee with Mizuho Securities. Your line is now open.

Thanks for taking my questions. 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, vacation rentals, and will you be more focused on going forward like making more investments in that segment? And also, secondly, you know, with the TCOM CEO on your board right now, anything you learn from the company specifically? They certainly have a reputation for merchandising and bundling. I was wondering if there’s anything you can pick up from their perspective. Thanks.

Thanks, James. To begin with the alternative accommodation question, absolutely, alternative accommodations are a key part of our future. We have a reasonable footprint that we're looking to augment. The trick, if you—or the challenge is, if you talk to TripAdvisor or almost any other OTAs, is figuring out the way to mix in that alternative accommodation into the default. So the opportunity to help teach travelers that there are these great options out there, because it is a growing category, and we fully expect it to be a growing part of our mix as well. I don't think the TripAdvisor brand will stand solely for alternative accommodations. We are looking to help travelers plan those important trips that matter, and that involves any type of accommodation, fantastic experiences, helping you get there, and delighting you with inspiring content that showcases out-of-the-way things to do, that make that trip as memorable as possible. Alternative accommodations do play a role in that lodging type, but it’s not the center for the company. To your question about having Trip.com on our board, Jane Sun is a perfect addition for us. I can't disclose any particular learnings; however, I can say 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 many other parts of the world. As we operate very complementary businesses, I enjoy our interactions quite a bit.

Okay, great. I just would seek some clarification on your strategy on vacation rentals. It sounds like your strategy going forward is to help travelers plan more 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 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 is travelers looking for a very considered trip. Since alternative accommodations do play an important role in that, we just want to have that supply on our system, without necessarily investing in and building or growing our supply organization to get it.

Great, thanks.

Thank you. Our next question comes from Lee Horowitz of Evercore ISI. Your line is now open.

Great, thanks for the question. 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 businesses, that much of it is coming out of the hotel, but any help on hotel versus non-hotel would be helpful? Thanks so much.

Sure. Thanks, Lee. At some point, we will be looking to build a brand around the subscription offerings. I really 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 for years. So, we think the success of the subscription product will revolve around the value we're providing to these travelers, helping them understand how that value aligns with the subscription fees. Unlike another business that would start up a travel subscription and not have our demand assets, your question would be spot on—how much do you have to spend to acquire customers, and what's the lifetime value, and can you make that math work? For us, it's quite different because we're confident we already have the traffic or the demand on the site every day. Obviously, we will be spending some marketing dollars; if we have some folks going through a path to buy the subscription product and they abandon, we will 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 like others have done, do a consistent job improving the value we bring over time with our content, additional discounts, special treatment, upgrades and credits at hotels, and experiences that are unique to a paid membership value offering. And, you know, we've— there have been others’ programs in travel. There's certainly been plenty of programs like this in other verticals. But again, to your question, it's not a matter of cost back 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, we see similar levels of savings year-over-year as a percentage between our hotel, media and platform business, and experiences and dining, which falls within our other segments.

Thank you. Our next question comes from Tom White with D.A. Davidson. Your line is now open.

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

Hi. Thanks, Tom. As you saw, we announced a couple of additional products in our hospitality solutions offering—two new B2B products that enhance a hotel's reputation, as well as deliver business insights to help run the business. We're constantly evolving in helping the tens of thousands of hoteliers with these and with the chains as many are interested to help them grow their business using TripAdvisor. To the question on the subscription product and how it relates, we obviously view that channel direct-to-hoteliers as a tremendous asset in delivering a unique value in the subscription product. 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 the experience at their resort to TripAdvisor members behind our pay-gate, you'd find that articulated clearly as you think through the overall system—many hotels aim for rate parity across the various channels. But behind a paid gate, or subscription gate, there are lots of new possibilities available for hoteliers to choose from, and we're not inventing this model. Plenty of other very successful examples of discounted rates and packaged rates have been established through distribution channels for hotels. For the first time, we're bringing that to TripAdvisor in the form of this subscription product. We shall see; we will learn what hotels are interested in offering, and in return, have access—preferred access in some cases to those travelers on TripAdvisor. Specifically around connectivity, we have connectivity to the OTAs through GDSs and 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 to enable many of those who would be interested in our audience to establish that direct booking or their direct offer capability.

Great, really interesting. Thank you.

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

Great, thank you. Steve, just to dig deeper into the direct opportunity, I mean, we're obviously seeing Google and other metasearch models that tend to enable the loyalty program efforts that hotels 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 to 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 we're in to benefit TripAdvisor’s more direct relationships with hotels and the OTA ecosystem?

Yes. Thanks, Heath. Interesting question. We were pretty quick to market with our Travel Safe initiative that grew— in previous calls, I think it was talking about 50,000 businesses advertising their information about safety. Now, it's up to 120,000. I think our travelers benefit from those businesses that are clicking on properties with travel safety information, which yields them a higher percentage of our traffic. We share that with hotels all the time. It's fairly obvious to think about travelers wanting to know what the hotel is doing to keep them safe. As a result, we’ve earned some bonus points with travelers by presenting the information comprehensively. With hoteliers, we’re making that available for hotels and restaurants for free to help meet customers’ needs. We do quite a bit for hoteliers and restaurateurs for free; we let them sign up, add photos, respond to reviews. All of this is part of our ongoing relationships with our registered owners. When we offer products, all the ones we've brought to market so far are designed to help leverage some additional insights on TripAdvisor, or gain additional bookings, which again supports them in their growth. The subscription offering brings yet another model that is very demand-oriented and is easy to measure because we are actually producing more bookings based on the offerings, and it's kind of in a no-risk situation for a hotelier who wants to test participating in our program. They'll see bookings come through whatever connectivity we've established with them if we are successful in driving more demand, and that makes it a win for them and our traveler obviously benefits from the perks or bonuses that the hotel offers.

Great, Steve. Appreciate that. Thank you.

Thanks.

Thank you. Our next question comes from Jed Kelly with Oppenheimer. Your line is now open.

Hey, great. Thanks for taking my question. Looking at your traffic patterns, your traffic is obviously ahead of where some of the OTAs are, it seems good. You know, it seems to be more of a leading indicator. As you think about travel's recovery, are there any products you could potentially introduce to kind of control your own destiny in terms of revenue and generate more revenue, either through your media platform ads, as more consumers look to book travel before actually traveling?

Yes, I don’t think so. It’s Steve again. I think you've seen some of the leading indicators; destination marketing organizations or the geographies that want to start attracting tourists are leaning heavily into the display space—one of our product offerings—more than the chains. That’s a combination of dollars available but also they recognize that people are even in the midst of the pandemic planning and making some decisions for when all this craziness is over. The DMOs want to be there, and that’s arguably a bit too risky for the hotel chains to play in that decision making process. We have no doubt that as demand picks up because people feel safe to travel, again— not next month, not even next quarter potentially—but as the recovery happens, all of the ecosystem will rebound to where we were. The chains will return to being active markets; destination marketing organizations are also critical components for destinations, and all of our traditional clients will be back in force looking for that demand. One other thing I wanted to mention about the subscription product is that we believe that the loyalty programs the chains and the OTAs offer will continue; they tend to be reasonably strong programs. Our subscription offerings are not meant to drag demand away from those; it’s very complimentary to those systems. So nothing that we’re doing product-wise would make it any less interesting for hotel chains to be terrific advertising partners for us.

And I would underline the point you make, Jed, about leading indicator of traffic. We were at 74% of the previous year in unique users in September, which is obviously way ahead of the 35% revenue we were on compared to last year. Even in the depths of April and May, we had about a third of our traffic still on our site. We’re seeing continued engagement with the TripAdvisor platform even when conversion rates are low. That's very positive for us. Another indicator I would point out is, if we get into a situation next year where there is more certainty on the ending of COVID and a vaccine rollout, we may see our hotel auction—which is mostly pay-per-click—serve as a leading indicator, because people will start to engage and start to book further out. It's another area we might need to recover.

Thank you.

Thank you. Our next question comes from Doug Anmuth with JP Morgan. Your line is now open.

Good morning. Thank you for taking my questions. I have two: Could you provide more information about the hospitality B2B product that you recently launched? Can you share some additional details on your initiatives in this area? Also, looking at the broader B2B landscape, are there any unique or interesting opportunities emerging that we should be aware of? Lastly, regarding the Trip.com partnership, it's been almost a year since its announcement. Do you have any updates on how the partnership has evolved?

Certainly. I can start. We have two B2B products recently released, and then there's a subscription component we can talk about. In no particular order, there's a Reputation Pro, which enables hoteliers to step up their level of reputation on TripAdvisor. This is critical for many hotels around the globe, offering free visibility regardless of whether the client uses our platform. It’s free visibility for them—critically dependent on the guest experience. Many hotels try very hard to improve their reputation on TripAdvisor because you can’t pay your way into the rankings. One of the best ways we recommend hotels to improve is to deliver better customer service and encourage guests to write about their experience. We’ve seen a consistent correlation between the number of guests that write about a hotel and the overall review score. Reputation Pro helps automate that process so hoteliers can set and forget that review request to all their guests. They also receive extra insights into what guests are saying. The review volume tends to go up and thus improves their ranking on TripAdvisor. For those that want it automated, we provide this solution that integrates with TripAdvisor, Facebook, and Google ads. Second product is Spotlight, which is a business insights product. This is a partnership using TripAdvisor data to enhance insights into running a hotel business effectively, including pricing strategies. It’s a well-established category, but penetration hasn’t occurred yet because it’s expensive to maintain a sales force globally. We think two valuable products can help hoteliers, and they're sticky in nature, contributing to their long-term business growth. We look to establish relationships that are truly helpful in supporting their business.

I would add that our strategy to grow revenue outside of our hotel auction is not limited to just experiences and dining. Last year, our non-auction hotel products grew double digits year-over-year. So, we have plans to continue expanding the hotel B2B market alongside our media business, experiences, dining, and these new revenue streams.

As for the TCOM partnership—it’s been nearly a year since we entered the joint venture. We’re excited about this partnership's progress and our efforts in China, particularly with our team working on the product development for the joint venture. Although COVID impacted the revenue for that business, we note the domestic market in China has seen a solid recovery. The joint venture primarily focuses on China outbound traffic, international travel, which hasn't fully recovered. So while revenue isn't tracking where we had hoped due to COVID, we’re happy with the progress made towards product development for the future.

Great. Thanks for the color.

Thank you. That concludes our questions for today. 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. We are truly living one of our company values of being better together. To our investors, we are constantly seeing signals of pent-up consumer demand and we believe our continued disciplined balance of cost savings and targeted investment in our future will enable us to emerge leaner and stronger than before. We will get through this—time and time again, travel has rebounded, and travelers have come back to TripAdvisor. We will continue executing our strategy, ensuring TripAdvisor plays an 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.