TripAdvisor, Inc. (NASDAQ:TRIP) Q4 2021 Earnings Conference Call February 17, 2022 8:30 AM ET

Company Participants

Angela White – Vice President of Investor Relations

Steve Kaufer – Chief Executive Officer

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

Conference Call Participants

Naved Khan – Truist Securities

Richard Clarke – Bernstein

Jed Kelly – Oppenheimer

Lloyd Walmsley – UBS

James Lee – Mizuho

Zach Morrissey – Wolfe Research

Mario Lu – Barclays

Tom White – D.A. Davidson

John Colantuoni – Jefferies

Dan Wasiolek – Morningstar

Brian Fitzgerald – Wells Fargo

Kevin Kopelman – Cowen

Operator

Thank you for standing by, and welcome to the TripAdvisor Fourth Quarter and Full Year 2021 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s program is being recorded.

I would now like to introduce your host for today’s program, Angela White, Vice President of Investor Relations. Please go ahead.

Angela White

Thanks, Jonathan. Good morning, everyone, and welcome to TripAdvisor’s fourth quarter and full year 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 closed, we distributed and filed our earnings release and made available our shareholder letter on our Investor Relations website.

In the release, you’ll find reconciliations of non-GAAP financial measures to the most comparable GAAP measures discussed on this call. Also on our IR site, 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, February 17, 2022. 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.

Steve Kaufer

Thank you, Angela, and good morning, everyone. We just finished our fiscal year, and I’m pleased with our rate of recovery. Thinking back to this time last year, things were still very uncertain. Vaccines were not available. In many parts of the world, we’re still in lockdown. We’ve come a long way. As 2021 progressed, we saw our tourism industry begin its transition out of the pandemic, and our results followed.

Across our segments, we exited the year in a much stronger position. Throughout the year, we remain focused on our partners, customers and travelers. We continue to launch new products and improve the user experience for our travelers. And just a few weeks ago, we hit a tremendous milestone of 1 billion reviews and opinions.

Now all of this is a testament to our terrific teams across the globe and the brand that we’ve built, the foundation of which is the trust and engagement from our travelers. As we laid out in the shareholder letter, we believe that across our businesses we are well-positioned to execute our plans for 2022. We provided updates on our key segments and areas of focus as we start the New Year. I hope you’ve had a chance to read through that.

One update that I did not provide in the shareholder letter was on the CEO transition. I can share that the Board continues to search for my successor, and we will keep you updated as the journey continues. In the meantime, I remain fully engaged and focused on driving business results, innovation, our employees and our customers.

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

Ernst Teunissen

Thank you, Steve, and thanks, everyone, for joining. We were pleased with our 2021 financial results and are positive about the setup for 2022. We started last year with revenue that was one-third of pre-pandemic levels. Yet as the industry recovered in the second half of the year, we exited at 72% of pre-pandemic levels. And our Q4 results were slightly ahead of the expectations we had communicated in December.

As we saw the top line return in 2021, we also managed our costs appropriately, maintaining fixed cost savings, a reflection of the flexibility in our model as we balance future revenue opportunities with investment. In this New Year, we see some exciting areas, which we called out in the shareholder letter. For example, our Experiences offering continues to deliver high growth. And we are expecting revenue for this line to be well above 2019 in 2022.

As discussed in the previous quarter, we are looking at multiple opportunities to crystallize value of our Experiences & Dining business. An update this quarter is that we recently submitted a confidential S1, which, along with other opportunities we are evaluating in parallel, puts us in a position for a potential sub-IPO of Viator, subject, of course, to market conditions.

Our HM&P segment continues its recovery path. And while still a transition year, we expect to show great progress in all our revenue lines in this segment as well. In addition to meaningful year-over-year profitability increases, we look forward, in particular, to catching up in our more up-funnel B2B products for hotels and media sales.

So in summary, we are very optimistic that consumer travel continues to transition back to full recovery in 2022 and that we are positioned to benefit from the return to travel in general and international travel, a TripAdvisor strength, in particular.

With that, let’s jump into Q&A.

Question-and-Answer Session

Operator

Certainly. [Operator Instructions] Our first question comes from the line of Naved Khan from Truist Securities. Your question, please.

Naved Khan

Yes. Thank you, and good morning. Just a couple of questions. Maybe on Viator, maybe – can you guys maybe talk about some of the areas where you see some low-hanging opportunities for investment where you get the biggest ROI? And in Dining, beyond the recovery that is expected to happen over the next 12 months to 18 months, just from the recovery and travel, what are the levers that you have to drive long-term growth in this segment?

Ernst Teunissen

Yes. Thank you for the question. Let’s talk about Experiences first. Experiences was a tremendously strong year in 2021 and a very strong return to pre-pandemic levels in that business. We saw – it’s traditionally in this business, we had very strong city consumption and – of Experiences, strong international consumption of Experiences. And last year, we saw the opening up of a very strong U.S. domestic business in parallel or in replacement in large part, which was a business we hadn’t tapped into so much.

So we grew strongly domestic use cases of Experiences. The jet ski in Florida, the canoe on the Colorado River, a helicopter tour in Hawaii and that drove very strong growth for us. We also, as you alluded to, flexed our marketing spend in this area, to a very great effect. We were able to get a lot more revenue by stretching our payback period just a little, and this was a huge success. So we feel we’ve taken significant share in a market that pre-pandemic was growing at very high levels. And we are positioned really well with our Experiences business going forward.

These various initiatives that you asked about that we have in place and levers that we have in this business, we talked in our shareholder letter about one exciting new product, which we accelerated for our operators, which is called accelerate. And this is an opportunity for our operators to profile themselves more on the platform and this has created great results for us, not only in bookings, but also in our take rate.

Other initiatives, we have really improved the quality of the products that we have, the Experiences products that we have and how we show them to our users. A real focus on quality and showing only the best Experiences to our users, which has resulted in great conversion gains. The last thing I would highlight is a strong focus on our app for Viator. We are indexing on our – we are under-indexing on our app usage, but have made great strides in developing that product over the last year and see tremendous opportunity going forward.

One important feature of the Experiences and shift in the Experiences businesses is that increasingly, consumers are one, investing in Experiences rather than the place they stay or the travel to the place they stay, especially with millennials, that’s a huge trend. A second important trend that we are seeing and tapping into is an increasing flexibility to book Experiences, really, while in-destination. And the app is a critical tool for us there. And so we’re investing significantly in our app capabilities.

On Dining, the leverage that we have there is still increasing the penetration. We are with TheFork, indexing heavily towards Europe. We’re a European business with TheFork. And Europe is underpenetrated in terms of restaurant reservations compared to, for instance, the United States. And there’s a lot of opportunity still to go penetrate countries more deeply, go to secondary, tertiary cities and sign up restaurants there and to increase the user base that we have and the loyalty of the user base and those are all areas where we invest.

Another exciting area around Dining is we’re investing more towards more fintech type of applications. We have launched a payment option for pay on the app – to pay on the app for your dinner when you’re in a restaurant, integrated with the restaurant, which is a very exciting way of creating stickiness and loyalty.

And the other area where we have invested is in gift cards, which allow us to further penetrate the market and leverage all of the word-of-mouth of the great service that we provide. So levers are differentiating towards more fintech products, deeper penetration into markets, UK, Germany, markets where we’re under-indexed, we’re investing in. And so we have for both of those businesses, a huge TAM ahead of us. 80% off-line in Experiences still, a huge TAM ahead of us and, we think the competitive position to really take advantage of this market. And so we’re bullish on both businesses. And as we highlighted in our shareholder letter, continuing to invest in these businesses for long-term value creation for TripAdvisor and shareholders.

Naved Khan

Got it. Maybe a quick clarification on something you said earlier. So the potential IPO you’re exploring for Viator, along with some other options, are they mutually exclusive or not necessarily? How should we think about that?

Ernst Teunissen

Yes. We have a range of options we’re considering. We announced today or yesterday evening that we have filed, confidentially, an S1 for Viator. That puts us in a position to do a sub-IPO as early as somewhere this year. And that’s a great option to have. We’re also looking at other things in parallel. Yes, some different, some more consistent with it, but this is one that we highlighted and it’s definitely an attractive option.

Naved Khan

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Richard Clarke from Bernstein. Your question, please.

Richard Clarke

Thanks for taking my questions. Just first one on what you’ve been seeing for the last few weeks in terms of trends, both for your Experiences & Dining and your hotels business. Some of the other companies have commentated that Omicron’s kind of eased off and things are getting better. And just maybe how you’ve reflected the last couple of weeks into your guidance for Q1?

Steve Kaufer

Sure. This is Steve. I’ll take this, Richard. We have seen and can echo some of the comments that Omicron does seem to have eased off January. I mean, December and January were pretty tough in the travel industry. I think everyone has seen that, and that’s caused a material issue for what we would have hoped for in Q1. We’re reluctant to make many forward-looking statements based upon days or a week or two of data, but we’re certainly encouraged, but we – by what we see if we look in the very recent past.

Ernst Teunissen

And if you put it in the context of what we said about the first quarter, January, clearly impacted by Omicron, and we saw December and January having impact. But as Steve is highlighting, trends are up. February is looking much stronger, and that makes us incrementally positive about the year. But Q1 will be impacted by that January impact. But it seems to have been a particular January issue. In terms of, specifically, your questions about Experiences & Dining, very strong performance there at the moment. Dining was significantly impacted also in January in Europe, and that is clearly easing now into February. And Experiences has been strong in February, too. So things are looking up in February.

Richard Clarke

Thanks. And if I could just ask one follow-up. In your shareholder letter, you mentioned you’re not just going to put resources into Experiences & Dining, but also into your core Hotels and Media offering. Is that a reference to the – leaning into paid search? Or is there some more product investment going into those areas as well?

Ernst Teunissen

Yes. The total investment we’re making in HM&P is incrementally quite limited. We called that out in our shareholder letter. There is some inflationary pressure on wages. And we’re making some hires, but by and large, the increase in fixed cost is quite moderate. But we are shifting resources around within our portfolio there.

We – as we were waiting for the pandemic to come back, we were focusing less with resources on re-launching, for instance, our B2B business. And we are addressing that this year by shifting more resources towards that. So there is more resources going to the core parts of the business that will drive revenue in the year.

Richard Clarke

Okay. Very helpful. Thank you.

Operator

Thank you. Our next question comes from the line of Jed Kelly from Oppenheimer. Your question, please.

Jed Kelly

Hey, great. Thanks for taking my questions. Just to circling back on Experiences, you mentioned you had pretty strong share gains in the U.S. Can you talk just regionally how your Experiences business is doing in different regions, including Europe and APAC? And then just on the Plus subscription, I know last year, when you were first rolling it out, it was a lot of discounting. So have those $99 subscriptions renew? How is that occurring? Are people churning off that? Are you alerting people? Or can you just talk about how you’re managing through the discounts that people received last year? Thank you.

Ernst Teunissen

Hey Jed, I’ll take the first one on Experiences. Our Experiences business is a global business, And we have Experiences in Europe, in North America and in Asia Pacific. Our audience – our points-of-sale have skewed to more English speaking. So we’re strong on the U.S. point-of-sale UK, Australia, historically. And Europe point-of-sale is an opportunity for us, where we still have a lot of room to grow on the POS side.

What we saw last year in terms of trends was where historically, we had seen U.S., UK travelers making city trips and city experiences or – and/or make international trips, the American going to do a coliseum tour in Rome, for instance. We saw last year, very strongly, a shift towards the U.S. market and U.S. domestic consumption. And Europe now coming back. And so we have seen it at the back end of the year and early this year, Europe coming back and increasingly, international travel coming back.

And so what makes us so enthusiastic about our Experiences business is that we captured the strong domestic U.S. business last year. There will be, to some extent, some move from domestic consumption to international consumption. But we also believe that we have really demonstrated that use case of domestic U.S. consumption to our users in a way that will be sticky.

And this year, we are expecting an increasing recovery of Europe as well as international trips that our audience is making. So all things that bode well, in combination with the various improvements we’re making to the product, I highlighted some of those were set up for a strong, strong year.

Steve Kaufer

Hi. And Jed, I’ll take the Plus question. So it’s still pretty early days for us to get a good handle on kind of churn in redemption. And you have to remember, we weren’t fully rolled out this time last year, nor would I counsel us or I do not read a lot into churn on the very first set of customers, the early adopters or the other-industry folks who might sign up to try something.

I would add that we don’t view ourselves as having been dependent in our early set of customers on the discounts. We did try discounting, the $99 price in a variety of different matters. But I wouldn’t – I mean, a perfectly fair question, but I wouldn’t particularly worry that the discount level would be a major factor in churn versus usage over the course of the year.

Jed Kelly

Thank you. And just a follow-up, Ernst, when you talk about expanding Viator into non-English-speaking countries, do you expect it to grow organically? Or would you look at acquisitions?

Ernst Teunissen

Mostly, organically. We have a strong footprint, and it’s not so much supply growth. I – we have a very strong supply in Europe. But the audience, the points-of-sales in European countries, particularly, Continental Europe, has – have under-indexed for us, and we think that’s still a growth opportunity that we’ll tap into. We’ll do that with product and marketing, not with acquisitions necessarily.

Jed Kelly

Thank you.

Operator

Thank you. Our next question comes from the line of Lloyd Walmsley from UBS. Your question, please.

Lloyd Walmsley

Thanks, guys. Two, if I can. First, the shareholder letter mentions Experiences EBITDA being kind of like a mid to high 20s range. Historically, you’ve talked about the targets being hotel like. So wondering if there’s anything that changed to kind of lower that target margin? And then the letter also talks about revenue from free traffic recovering faster in 2022. Is there any changes to Google SEO we should be keeping in mind? Or what is your plan in terms of brand advertising spend in 2022 versus the past that we should think about for kind of traffic driving?

Ernst Teunissen

Yes. I’ll take both questions. Hey, Lloyd. On the first one, no, our long-term outlook for E&D hasn’t really changed. We said mid to high 20s, which we’ve said in the past as well. And they could go beyond that, but that sort of intermediate long-term goal. The economics of both businesses are very healthy. If you take Experiences, we have take rates in the mid-20%, which is very healthy. We have a cost structure that is comparable to one of a hotel OTA business. And the microeconomics on the consumer level are attractive as well. We see nice repeat rates in our user base, et cetera.

And so we think the economics are very healthy. And so as we compare ourselves to hotel OTAs and their development historically, we think that those are the kind of margins that we can target for this business long-term. And we are going to benefit, we believe, long-term of being a market leader in that area.

On the restaurant side, the economic model is slightly different, more focused around getting a bounty per seated diner from restaurants. And that’s a business that can scale very nicely on that model. We are currently investing in expansions in the markets. I talked to you about that. We’re acquiring customers.

The repeat rates of customers that we acquire for our Dining business are attractive and so generate a nice NPV. And so we’re building that base as we go forward, and expect to see real leverage in that model going forward as well. So we feel good about the long-term. But as we highlight in the near-term, we’re more focused on getting the growth and taking advantage of the TAM and of our market position and are more focused on top line growth than on bottom line growth.

Your second question, in free traffic. Yes, we saw in the pandemic last year, and we’ve highlighted that in our core auction that our paid traffic was growing faster than our free traffic or recovering faster than free traffic. It’s largely a function of very healthy CPCs that we have seen and we’ve called out, particularly in the U.S., which has allowed us to, in our turn, spend more on paid marketing channels on Google and other paid marketing channels. And that has, with still a lower number of shoppers from free channels coming in because of the pandemic, has shown a mix shift in our total portfolio towards more paid.

As the pandemic unwinds and as we’re getting closer to a more normal, we expect to – that balance to shift back to more historic levels. And as such, in this year, in 2022, we expect free revenue to grow ahead of paid traffic and get a, not full, but partial rebalancing towards the historical levels. In terms of brand spend, we have some brand spend that we have been doing in last year around TheFork. And our bigger brand spend historically, of course, was in – for TripAdvisor. We currently don’t have any plans to return to significant brand spend budgets for TripAdvisor.

Lloyd Walmsley

Okay. And anything on SEO, Google changes to be mindful of Ernst?

Steve Kaufer

This is Steve. I’d say, as you’re probably aware, there continued to be a set of changes. Google continues to push pretty much everyone else further down in the organic list, but I can’t cite any big moves over the past quarter.

Lloyd Walmsley

Okay. Thanks, guys.

Operator

Thank you. Our next question comes from the line of James Lee from Mizuho. Your question, please.

James Lee

Great. Thanks for taking my questions. A couple of questions, a follow-up on Trip Plus. I think on the shareholder letter, you guys talked about not making much progress as expected. Maybe you can clarify that statement a little bit, Steve. Is that in terms of supply? Or the benefits you’re offering to consumers or the uptake on the membership? And also curious, what are your key focus Plus for 2022? And also maybe help us understand a little bit of consumer behavior. I’m sure you guys have done a lot of surveys. Help us understand what the key reason people are not signing up for your service?

Steve Kaufer

Sure. Thanks for the question. So when I talk about kind of Plus not quite meeting our expectations, we did believe with the traffic and the brand trust and the number of folks that were looking to plan their vacation on TripAdvisor, that a travel subscription would resonate faster than 2021 has shown.

Yes, we had some supply challenges, but we did some changes. And as you look on the site, you can see some pretty nice discounts across the board at – in the markets that were rolled out. I’d say the biggest learning for us, and as we say, we’re still hugely invested in making a travel subscription product work. But we have to recognize that, at this point, we haven’t found the product-market fit that we’re looking for. So as you point out, we do our customer surveys, our focus groups.

One of the things that I can share is that as we get people down the purchase path for a hotel with the big savings, the decision to – actually, customers are telling us, the decision to make this big hotel purchase, while at the same time, signing up for travel subscription service is, perhaps, a bit more of a load than that customer is ready to decide. And that makes some intuitive sense. If you have a big choice, where am I going to stay for my vacation? It’s an expensive purchase. And yes, they’re saving real money, but it’s not just whether to buy a travel subscription. It’s whether this hotel is the right one for you.

And so some of the things that we’ve been trying have been presenting the opportunity to buy a travel subscription at different points. And I think it’s fair to say, we have quite a few other things in the hopper that we look to – as we respond to this customer feedback that we’ve gotten, where we look to find different ways to present the value proposition in a way that consumers will say, yes, at a higher volume.

So the 2021 learnings is that we were too optimistic in the consumer uptake. And we tried to share that in the shareholder letter with you. But that we’re still very excited about the prospects of a travel subscription based upon all of the trust and traffic and capabilities that TripAdvisor has to offer.

James Lee

All right. Thanks, Steve. If I can ask a follow-up question regarding a new CEO search. I think previously, you said you guys were looking for, potentially, an executive with travel and tech background. I was wondering any changes to your search criteria? Are you expanding that? Just curious kind of where you are in the progress.

Steve Kaufer

No, I don’t think there’s been any change in the job description. The Board, obviously, for very good and appropriate reasons, wants to be thorough in their evaluation. And I’ve given them the ability to be thorough with my time frame of – look, finding the ideal successor and then it could be a very smooth transition. So I wouldn’t read anything into the lack of a candidate yet. The search hasn’t been going on for that long. And no, the criteria still is – it’s a fantastic company with a tremendous brand and someone with e-commerce, travel, all the things you mentioned, would be perfect.

James Lee

Great. Thanks, Steve.

Operator

Thank you. Our next question comes from the line of Deepak Mathivanan from Wolfe Research. Your question, please.

Zach Morrissey

This is Zach on for Deepak. Just on Viator, as you explore kind of various different options for the business. How do you think about how important the kind of core TripAdvisor platform is to the long-term growth outlook for Viator? And then I appreciate the kind of mid to high 20s, like, long-term margin target for the E&D business. Is there any kind of meaningful difference between kind of the Experiences & Dining portions of those in terms of the long-term margins? Are they meaningfully different or roughly the same? Thanks.

Ernst Teunissen

Hey, Deepak. In terms of the Viator and the TripAdvisor point-of-sale, within our portfolio, within Viator’s portfolio of revenue, the – by far, the largest component of that revenue is the Viator point-of-sale. It’s the viator.com app, where people go to book, directly book on Viator, book Experiences. That’s the largest channel.

A significant, but smaller channel is the TripAdvisor point-of-sale. Viator is the fulfiller for TripAdvisor. TripAdvisor is the sales channel for Viator. So someone can book on tripadvisor.com experience as well. And that gets fulfilled by Viator. Customer service gets done by Viator. The Viator is the merchant of record, gets fulfilled through Viator. But it’s an important channel. And then the third, much smaller channel is other third parties that Viator integrates with and has a range of different arrangements with. And that’s an attractive long-term growth channel for us as well.

For TripAdvisor, Experiences is an important strategic vector, for TripAdvisor the brand. Increasingly, it becomes important for our travelers when they’re in market to really look at and figure out what to do and what interesting things they can do. The fact that we have Viator as a company in our portfolio and later perhaps with a more arm’s length relationship is important for TripAdvisor the brand and a strategic focus for TripAdvisor the brand. And TripAdvisor is – has ambitious goals to grow its channel there. And so Viator will benefit from that in the future as well.

In terms of your question to long-term margin differences, both businesses are attractive long-term – have long-term profiles. I would highlight that what I really like about the Experiences profile is what I said, a very attractive take rate, which is, compared to the hotel industry, very attractive with very similar economics in terms of roll out of supply and marketing to users. And so I believe that setup is very attractive going forward, in particular.

Steve Kaufer

Does that answer your questions?

Zach Morrissey

Yes, thank you.

Operator

Thank you. Our next question comes from the line of Mario Lu from Barclays. Your question, please.

Mario Lu

Great. Thanks for taking the question. So in terms of your reviews and getting to 1 billion, you also announced earlier this month a new partnership with Kayak to show your cruise reviews on its website. So just wondering if one, you could elaborate on this partnership? And how this benefits Trip? And then two, just potentially in the future, it could extend beyond cruises to better monetize these 1 billion reviews externally? Thank you.

Steve Kaufer

Sure. So obviously, clearly, we’re very proud of the billion reviews and opinions, the testament to everyone coming back, a reminder of the power of the network effects in our industry. I believe the Kayak relationships you’re talking about is our Cruise Critic subsidiary powering the Kayak cruise tabs.

And what a great way for Kayak to be able to expose Cruise to their users and for our Cruise Critic company or sub to be able to gain access to that – to those additional customers when they might just be thinking about, hey, how much does it cost to get to Miami to take my cruise? And here, Kayak can offer more cruise information and Cruise Critic powers it. So Kayak is a very strong company, a lot of traffic, perfectly good notion of why these are powerful together. I’m not sure I would read too much more into that to the rest of the TripAdvisor.

Mario Lu

Got it. Thanks.

Operator

Thank you. Our next question comes from the line of Tom White from D.A. Davidson. Your question, please.

Tom White

Great. Thanks for taking my question, guys. Two, if I might. I guess, first, Ernst, you mentioned B2B subscription revenues having a strong recovery in 2022. Can you maybe just elaborate on that a bit? Is that kind of just more of a slow build due to the subscription nature of some of that stuff? Or are there any kind of new products or new ad formats that should move the needle?

And then on Experiences, can you maybe just share your view on how we should think about the long-term competitive differentiation for you guys in Experiences? I think Airbnb said on their earnings call that they’re going to kind of renew their focus on their product in that space. But long-term, do you guys win or be one of the long-term – stay on the long-term leaders due to supply breadth? Is it the consumer experience? Is it linking Experiences up with other parts of Trip, like maybe Plus stuff like that? I’d be curious to hear your thoughts. Thanks.

Ernst Teunissen

Yes. Tom, the first question on our B2B business. So in our shareholder letter, we showed a graph of our TripAdvisor other-branded hotel revenue, which is very largely the subscription business and its percentage to 2019 throughout 2021. And you see that compared to other parts of the business in the – earlier in the pandemic, the business was doing relatively well as a percentage of 2021, which is the nature of a subscription product. And you see that as we were recovering throughout the business in 2021, you see that this line of the business recovered some, but not as fast. And that is, again, the nature of the subscription business.

We also are now currently aggressively rebuilding our sales force capability for this product. Of course, we did not invest as much in sales force during the pandemic, and we are rebuilding that right now to capture the recovery in 2022 that we expect. But you’re correct to point out, Tom, that this has a lag effect, because if we sign up subscriptions, the revenue recognition of this will be trailing that. So this is a business that will continue to be – will not snap back as fast with a recovering travel market. But we believe it does recover on a sales basis. And as we move further into the recovery, we’ll catch up on a revenue recognition basis as well.

Then in terms of experiences long-term differentiation, the way we think about this marketplace, there are going to be players like TripAdvisor that target an integrated trip, a full trip and use experiences as an add-on to the overall marketing of a trip to their consumers. We also believe that there is going to be room for a few pure-play experiences providers, like there have emerged other verticals in travel. And we believe that we are uniquely positioned with our Viator brand to capture that pure-play experiences OTA space.

And there will be competition, but we believe that we have a fantastic position to be positioned long-term as that player. And the differentiation comes in the breadth of supply that we’re aggregating and we have about 300,000 Experiences products today, breadth of supply, a differentiated way of marketing that to our users and just a brand recognition for that one place you go to, if you really want to book an exciting experience. And that’s where – that’s the space – competitive space that we’re capturing. So we’re playing it from both angles, from that angle, plus the more integrated play that we make with TripAdvisor. And that combination, we think, is going to be very differentiated.

Tom White

Thank you, guys.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of John Colantuoni from Jefferies. Your question please.

John Colantuoni

Thanks for taking my question. Just wanted to ask about cost savings. It sounds like you’re expecting to retain the majority of fixed cost savings in HM&P, but reinvest fixed and variable cost savings in E&D. Maybe you could just help outline out of the $240 million in total cost savings, maybe just walk through what portion you’re expecting to retain going forward versus spend back into growth initiatives? Thanks.

Steve Kaufer

Yes. I think the additional disclosure that we gave in our shareholder letter, which we believe will be helpful, is that we split out our fixed cost and variable cost by segment. And this allows for better modeling for you, analysts and investors, and allows us to talk about the different trends, what we see in different segments, because that’s clearly what we’re seeing.

Of the $240 million of fixed cost improvements, we’ve highlighted that within HM&P that was about $100 million of that was in HM&P. And we’re adding some back, but it’s very modest, with inflationary pressure, a bit of hiring sales force, et cetera, but it’s very modest. And so those savings, by and large, are very sticky.

We’ve also highlighted in the shareholder letter that about $90 million of costs came out in our E&D segment. And there, we wanted to reinvest. And we think the majority of that $90 million is going to be reinvested this year into product development, technology development, capability of our supply organizations and all for driving revenue in the year, but more importantly, positioning us well for the years to come. In other, the remaining fixed cost came out in sort of other. There, we’re making very minimal cost increases. And so those savings are very sticky as well. I hope that’s helpful.

John Colantuoni

Yes, it is very helpful. And one quick one on travel spend and the recovery of travel spend. I just wanted to clarify here. Do you anticipate spending for the full year, we’ll recover to pre-pandemic levels? Or is the expectation that at some point during the year, maybe in the second half, spending will return to pre-pandemic levels? Thanks.

Steve Kaufer

Yes. So we’re bullish about 2022. We obviously started in January with the impact from Omicron. But we expect to see a continuation to the path to return to relatively normal travel levels, which started in 2021 and we expect to continue in 2022. And we assume a progressive return to pre-pandemic levels of the leisure travel market. And we expect to be there at some point this year, without putting a finer point on it.

So as a result, as we look – as a result of that statement, as we look at our own business, you would expect that our revenue recovery would follow a similar pattern throughout the year. And our EBITDA, as we highlighted, will be – particularly, will be second half-weighted in the full year.

John Colantuoni

Appreciate the questions. Thank you.

Operator

Thank you. Our next question comes from the line of Dan Wasiolek from Morningstar. Your question please.

Dan Wasiolek

Good morning, guys. Thanks for taking the question. So as I understand it, one of the existing advantages for your Experiences business is the ability to tap the cash generation from the core hotel platform for investment purposes. Just was wondering, so regarding the potential sub-IPO for Viator you guys are considering is the thought that Experiences would still be able to use the cash generation from the core hotel platform for future investment needs that you decided to build that route?

Ernst Teunissen

My lawyers advised me not to be too specific about what the IPO means and how to market the IPO. But let me just take the general. Part of the – of a more independent structure, independent financing of a business would be that you would have independent financing of such a business.

Dan Wasiolek

Okay. That’s fine. Understood. And then just one more, if I could. So regarding, I guess, the percent of dining that’s booked online, I’m wondering if you can give or if you know like a penetration rate for that in the U.S. and in Europe? And then that’s it for me. Thanks.

Ernst Teunissen

Without putting a finer point on it, it is lower in Europe. In Europe, in particular, a lot of dining is done off-line, reservations is on off-line. And that is the market that we are tapping into, getting people into the habit of grabbing TheFork app to make their reservation booking, and we do that through providing a great service, but also we have marketing tools like loyalty programs, Yum points, we call them. We’re increasingly integrating, as I said, with payment capabilities on the app with gift cards. And so we’re creating that flywheel of making online booking a habit, which we’re successful at, and we think there’s a long runway there in Europe.

Dan Wasiolek

Great. Thanks, guys.

Operator

Thank you. Our next question comes from the line of Brian Fitzgerald from Wells Fargo. Your question please.

Brian Fitzgerald

Thanks, guys. A couple on Viator. We wanted to parse apart the improved experience you called out in the letter. You mentioned supplier trust and quality standards. You also said booking and payment flexibility, access to customer service. Are those things more a function of just a larger base of suppliers? Is it culling off less performance supply? Is it new tools and innovation? Maybe it’s a bit of all three of those? And then as you contemplate the Viator IPO or other alternatives, it might be premature to ask, but wondering how you would plan to maintain the operational synergies you have between Viator and the Experiences business on Trip’s POS?

Ernst Teunissen

Excellent questions. The push over the last year has been much less on adding more supply. We have a very significant supply. We had a big job in the pandemic, to reorient that supply that we have towards the use case that was much more relevant in the pandemic, which was the U.S. domestic use, which was one area.

Other areas that we’ve been really focused on, how can we help these suppliers, operators we call them? How can we help these operators profile themselves better on TripAdvisor? And in particular, how can we make – on TripAdvisor and on Viator, how can we make on Viator the experiences that we believe have the highest quality? And the highest quality is they’re exciting. They convey clearly what the experience is and why it’s an exciting experience. It has a very clear description of the experience.

We have privileged those and helped our suppliers to improve those products. And that’s been a huge help in conversion because it will not surprise you that products that are of a high standard on our site have much better conversion rates than products that are not. So a big focus on how do we help operators improve their content, but particularly how do we privilege the content on our site that is really high quality has been a big push.

I talked about the Accelerate program, which we piloted throughout last year and are currently implementing with great success, which is helping operators to play with the levers that they have at their disposal, take rate that they give us, for instance, to better profile themselves on Viator and help sell. That’s been, in our trials, a huge success, and operators are very excited about that. And we are rolling that out in 2022 with upside there. So those have been some of the important focus area. I mentioned the app, which is an important focus area as well. So really, the focus on a huge runway, we think, in how do we better present the use case in Experiences.

Other big focus area for us is how do we retain as many of the users so they come back and book again. Booking on the same trip is a huge opportunity that we’ve been focused on. So someone’s already booked an experience and we know they’re traveling to a certain destination. How can we communicate with them so they have a repeat purchase even on that same trip? But then beyond that, how do we make people come back? And how do we communicate with our users in a way that stimulates that? That’s another important area of improvement.

In terms of the operational synergies between sort of Viator and sort of core TripAdvisor, we are currently set up with different intact teams that operate Viator and the Viator business, which includes having TripAdvisor as a merchant – a customer, as an affiliate customer and the TripAdvisor team, which is integrated with the total TripAdvisor user experience. And so we already have a separation of teams to a significant extent. And both businesses have a different go-to-market strategy for the Experiences business. And so we’ve already internally carved out these businesses to separate businesses.

Brian Fitzgerald

Got it. Thanks, Ernst. Appreciate it.

Operator

Thank you. Our next question comes from the line of Kevin Kopelman from Cowen. Your question please.

Kevin Kopelman

Great. Thanks a lot. Could you give us any more color on the consolidated revenue and recovery in February? Has that – if you compare that to February 2019, have you gotten back to those kind of minus 30% type levels that we saw in October? Thanks.

Ernst Teunissen

I don’t want to put a finer point on it than we have already done. We’ve given you some indication of where we expect the quarter to net out. But let me leave it with, there has been a market improvement in February in the business from January, January across the board, in our hotel auction. In our Dining business, you can see from the graphs that we produced, the Dining business was already impacted in the fourth quarter by Delta and Omicron. Dining has proved to be maybe the most elastic of all our businesses to any news or actual COVID cases.

And in 2020 – in the summer of 2020, when the COVID cases dipped so far, our restaurant business roared back very quickly. And we’ve also seen on the reverse that with COVID cases rising, as they were strongly in Europe in the back half of the fourth quarter and in January, in particular, we’ve seen the Dining business have an elastic impact. And we see that elasticity right now in February as well. We see the market – the consumption come back very strongly again.

So I want to leave it at significant difference between January, which was significantly impacted across the board and now in February coming back. And that has resulted in the forward-looking statement that we made about the quarter.

Kevin Kopelman

Okay. Thanks, Ernst.

Operator

Thank you. This does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Stephen Kaufer for any further remarks.

Steve Kaufer

All right. Well, thank you, everyone, and thank you to our teams around the world who are working tirelessly to help our fellow with travelers, our hospitality partners and everyone to navigate and find the bright spots through these still uncertain periods.

As Ernst just mentioned, we’ve seen some nice signs in February, but that’s relatively recent. We expect things to be coming back over the course of the year and to reiterate, a nice recovery over the course of 2022. We remain optimistic about the industry, the resilience we’ve seen so far and the booms that we expect over the course of the year.

We thank you very much, and wish you a good day.

Operator

Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.