Travel search site Trivago pivots amid pandemic to cut costs while expanding its horizons
Axel Hefer, CEO of Trivago
It’s been said there’s no gain without pain and that what doesn’t kill you makes you stronger.
Online travel search firm Trivago seems to have taken the sentiment to heart amid an ongoing pandemic that’s put its industry through the wringer for some 14 months.
First-quarter revenue at the Dusseldorf, Germany-based company – which Expedia Group holds a majority stake in – was down 73% compared to the same period in 2020 and qualified referrals plunged 55%.
Despite that, CEO Axel Hefer is upbeat about Trivago’s prospects.
His team made strategic cuts, while mapping out ways to expand in an altered travel marketplace.
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“We realized very early that this wouldn’t be just a few months, but something that would last longer,” said Hefer, adding that firm restructured in April 2020 and reduced its cost base, which he said stabilized the firm and and improved cash flow.
Indeed, Trivago shrank its first-quarter operating loss to 8.9 million euro (about $ 10.76 million) from 215.3 million a year before – a 96% improvement.
“On the cash side, we are in a very good position,” Hefer said. Because of that, he said Trivago doesn’t need to generate a lot of profit immediately and can instead concentrate on the strategic projects it wants to push.
Trivago has functioned primarily as an online hotel booking search tool that compiles rate and other accommodations information from sites like Hotels.com and Priceline, as well as hotels chains and online travel agencies, for comparison shopping by users.
Trivago launched Trivago Weekend in the US and UK in April.
But the company announced in April a partnership with TUI Group’s Musement division to power a new activities booking feature on its site. The arrangement offers access to 55,000 excursions, activities and attractions to users in the US, UK, Russia and 11 European countries.
The company then followed up with Trivago Weekend in the US and UK The new product offers accommodations and experience content close to users’ homes, “in direct response to the travel restrictions caused by the pandemic,” according to the company.
As an example, Hefer said customers in England might be shown travel product in places like Oxford and Bath, rather than much-visited London or farther-flung destinations in Europe, Asia or America. The launch follows Trivago’s acquisition of Weekend.com in January.
“This local travel trend will linger,” he said. “In the long term, over five to 10 years, these things tend to even out and go back to normal, but it will take quite some time.”
The one key strategic opportunity for travel companies is to stay relevant at the time when customers are not traveling.
Trivago is anticipating a strong summer, but that international travel will trail a quicker recovery in the rest of the industry, according to Hefer.
Meanwhile, there’s a chance the firm can help build a new market – and profit from it – as less-visited destinations adapt to meet new demand.
“It’s a big opportunity because once you actually improve that new offering with additional volume, you might even be able to permanently capture more demand,” Hefer said, pointing to the classic chicken-or-the-egg dilemma facing smaller destinations.
“If you don’t have great hotels to stay in, and great attractions, you don’t get the visitors, but now at least you are getting a tailwind of some volume,” he said. “The destinations that use that opportunity well can improve their competitiveness.”
Trivago has more innovations in the pipeline. Hefer said he wants to increase the number of “touch points” with users, engage them more through additional site features and try out new marketing ideas.
“The basic direction we are taking is that the one key strategic opportunity for travel companies is to stay relevant at the time when customers are not traveling,” he said. “We want to be relevant 12 months a year and, for that, you need more features and a broader set of communication channels.
“The key focus in the pandemic, for us, has been to prepare for a push in that direction.”