Shares of Tripadvisor Inc. (NASDAQ: TRIP) have been up 3.3% in afternoon hours on Friday. The inventory has gained 37% for the reason that starting of this 12 months. The corporate reported earnings outcomes for the fourth quarter of 2020 a day earlier, posting a 65% year-over-year decline in income and a lack of $0.41 per share. Regardless of these challenges, Tripadvisor stays optimistic about 2021 primarily resulting from three causes:
The COVID-19 pandemic impacted the journey trade considerably throughout 2020 and Tripadvisor too felt its results. The corporate noticed revenues drop 62% and 67% in its Resorts, Media & Platform and Experiences & Eating segments respectively throughout the fourth quarter.
Going into the autumn and early winter, month-to-month income restoration slowed resulting from a resurgence within the pandemic in locations like Europe. Revenues in November and December have been right down to round one-third of the degrees seen a 12 months in the past.
Though revenues in January have been down in comparison with December, it has seen a sequential enchancment in February with a extra pronounced enhance than earlier years. Primarily based on present tendencies, Tripadvisor expects the primary quarter of 2021 to be just like the fourth quarter of 2020 however the firm believes leisure journey can enhance materially within the second half of the 12 months as vaccines are rolled out and demand improves.
Pent-up journey demand
Tripadvisor is hopeful that pent-up demand for journey will proceed to develop within the coming months permitting for a change within the current state of affairs later within the 12 months. The corporate noticed a comparatively excessive degree of shopper curiosity in journey throughout the fourth quarter. In December, month-to-month distinctive customers have been round 59% of the comparable interval in 2019. This was higher than the 33% degree seen in April.
Tripadvisor mentioned its shopper surveys indicated that 57% of worldwide customers have frolicked planning for future journeys throughout the pandemic and 74% will spend extra time selecting a vacation spot this 12 months. Though the vast majority of near-term bookings are for home journey, almost one-quarter of respondents mentioned they plan to take three or extra worldwide journeys in 2021. Prospects planning resort stays of greater than 90 days have grown approx. 50% since December 2020 which signifies a rising curiosity in planning holidays in 2021.
Price discount and liquidity
The corporate’s personal efforts to cut back its prices and enhance its liquidity place provides it confidence going into this 12 months. Tripadvisor has been centered on decreasing its bills for the reason that begin of the pandemic and through 2020, the corporate achieved greater than $200 million in workforce-related and discretionary mounted price financial savings in comparison with 2019. Tripadvisor expects the vast majority of the mounted price financial savings of 2020 to proceed in 2021.
In December, Tripadvisor amended its revolving credit score facility. The corporate ended 2020 with $418 million of money and money equivalents, which was up from final 12 months’s degree, and almost $500 million in obtainable borrowing capability underneath its revolving credit score facility.