I made a mistake. In my original report I underestimated how fast the core Tripadvisor business would decline, and I should have done much more primary research on Viator’s app against competitors like GetYourGuide, which I now think is the better product. I believe that explains both Viator’s missed growth and GetYourGuide’s share gains.
Q2 was a bad quarter for the thesis. Experiences revenue grew 3%, against 10% last year and 8% in Q1, and Q3 is guided at -2% to +1%. The shares are down 34% since my June report, and I have cut my base case from $26 to about $10.
The TheFork sale is on track, with a definitive agreement signed on 2 August for about $680m net and closing by year-end. Elsewhere the numbers are weak. Viator’s Q2 margin fell to 11.1% from 14.0% as marketing rose to 61% of segment revenue, and Hotels & Other revenue fell 21%.
I’m not comfortable with management’s explanations. The Q2 Experiences margin missed its 12–14% guide without comment, and two recovery forecasts from May have quietly gone. GetYourGuide grew gross bookings 34% in North America in the first half, against 7% for Viator’s segment, through the same weather. I think Viator is losing share.