Eric Grosse: Sure. Thanks, Mike. Look, we’re – I think we’ve been very clear that we’re tremendously excited about our Capital One partnership, mainly because our respective strengths are so well suited for one another. I mean what we’re very good at is finding and managing a pretty world-class portfolio of high-end residences, and giving our members a pretty first-class experience, when they travel with us. And Capital One, amongst other things, is a pretty world-class demand aggregator. And they’re really focused on becoming, a very major player in travel. So that dynamic, I think, creates a win-win situation for both of us, which is why Capital One was so excited about our partnership, and why they invested in us last fall.
And so, what we’re doing right now, is working very hard on all the technical integration work, between ourselves and Capital One, and their technology partner Hopper. And we really expect to be operational in the first phase of our partnership in the second half of this year. In terms of forecast, it’s always difficult to predict what a large new partnership will bring. And so in the near term, I’d say we’ve been always probably a little bit more cautious in how that how that, partnership will perform, and grow out of the blocks. But when you take a look at Capital One’s size, commitment to travel and breadth. And then, you look at it relative to our size, I think it’s pretty clear definitely over the medium to longer term, this can be a game changer for us.
Mike Grondahl: Sure. It looks like they may get discovered, too, which would maybe even make them bigger?
Eric Grosse: Good Point.
Mike Grondahl: Do you think it’s June, or July before you have a better feel? Is it September? Like when do you think you’ll get, I don’t know, a better sense of what it looks like roughly, when during the year?
Eric Grosse: Well, I would say that – I mean, Q3 is when we’re launching it. So, we’ll have sort of initial data points then – going into the fourth quarter, which typically tends to be a stronger seasonal period for us, we should have a better idea. So, I think it’s fair to say that, our confidence will increase, over the course of the year.
Mike Grondahl: Got it. Got it. Okay. Hi, thank you.
Eric Grosse: Sure, thanks.
Operator: Thank you. One moment for our next question. Our next question comes from Shweta Khajuria with Evercore ISI. Your line is now open.
Unidentified Analyst: Hi. This is [Luke] on for Shweta. Just two questions, if I could. Could you just go over any low-hanging fruit on the operating expense side, where you can drive efficiencies? And then how should we think about the seasonality, of your revenue and EBITDA, throughout ’24? Could you just help us kind of think, about how to model that? Thanks.
Eric Grosse: Sure. With respect to expense efficiency, this is one where I want to give credit to the team on what we’ve done. Over the course of the last six to nine months, we have done a lot of work to basically streamline our business, to make us more operationally efficient so that we can be successful and get to profitability on a wider range of outcomes. So that really starts, with our portfolio, our real estate portfolio. Robert’s led a tremendous effort to right-size that part of our business. And also, as a result of shipping demand, really towards our risk property, we’ll be able to – we’re able to make meaningful improvements on our COGS line as well. And when you combine that with the OpEx improvements, we’ve made just in terms of becoming more operationally efficient, both in terms of personnel as well as process.
You’re looking at a year-over-year swing in excess of $50 million. So that is really important to us, being able to say that, we have a shot, and we have line of sight, to get to breakeven. Maybe I’ll hand it over to Robert, to handle – to answer your question around seasonality.
Robert Kaiden: Yes. And maybe, Luke, thanks. Just to contextualize just a bit more on some of the things that Eric talked about. When it comes to our overall costs, and we think about 2024, like we’ve been talking about in these last few calls, there are things that we’ve done already, and that’s much of the savings that we’ll have in 2024, are things that are done and dusted. So for instance, we’ve talked a lot about our portfolio optimization, which will have savings – year-over-year savings of approximately $30 million. Those are agreements that we terminated in 2023, where there was just a period of time that needed to pass before we were fully out of those leases. A lot of those were six months and some of them were 12 months.
So, we’re starting to see, really in Q1, the impact of the ones that we’re rolling off in six months coming off the books. And then there’ll be – that will be our biggest quarterly decline in terms of the number of leases, or the dollar of leases. And then we’ll see an additional gradual decline, throughout the rest of the year. When it comes to the operating expenses, we’ve taken a lot of actions already. So as you know, we had a reduction in force first in January of last year and then in July of last year. And we’ll get the full year benefit of that second reduction in force when we move into 2024. Moreover, as we were going through our planning cycle back in the fall. There was a lot of other things, we looked at in operating expenses, how could we be more efficient in our software spend.
Lots of little areas that in total piled up and amounted to the savings that we’re talking about. You’ll see this is part of like a three-year trend. We went from $100 million and – approximately $155 million in 2022, to approximately $135 million in 2023 and now we’re coming down to $115 million to $125 million. So I think we’ve kind of optimized on what we can do from an operating expense savings perspective. As it relates to your question on seasonality on revenue and EBITDA, we’ve had somewhat fairly consistent seasonality over time, and it really starts with the revenue, because most of our costs are fairly straight line across the year. And so as our revenue goes, for a particular quarter, so goes our EBITDA as well. When I look at our revenue, you break it down into two pieces, the subscription revenue and then there’s travel revenue.
