Travel site Trivago pivots in pandemic to cut costs and expand product line
Axel Hefer, CEO of Trivago
It is said that there is no winning without pain and that what does not kill you makes you stronger.
Online travel research firm Trivago appears to have taken that sentiment to heart amid an ongoing pandemic that has put its industry to the test for around 14 months.
First-quarter revenue for the Düsseldorf, Germany-based company – in which Expedia Group has a majority stake – was down 73% from the same period in 2020, and qualified referrals fell 55%.
Despite this, CEO Axel Hefer is optimistic about Trivago’s prospects.
His team made strategic cuts, while mapping ways to grow in a changed travel market.
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“We realized very early on that it wouldn’t just be a few months, but something that would last longer,” Hefer said, adding that the company had restructured in April 2020 and reduced its cost base, which , according to him, stabilized the company and improved its cash flow. sink.
In fact, Trivago reduced its operating loss for the first quarter to 8.9 million euros (about 10.76 million dollars) from 215.3 million a year earlier – a 96% improvement.
“On the cash side, we are in a very good position,” Hefer said. For this reason, he said that Trivago does not need to generate a lot of profit immediately and can instead focus on the strategic projects that he wants to promote.
Trivago has primarily functioned as an online hotel reservation finder that compiles information on rates and other accommodations from sites like Hotels.com and Priceline, as well as hotel chains and travel agencies in online, for comparison purposes of purchases by users.
But the company announced in April a partnership with the Musement division of TUI Group to power a new activity booking feature on its site. The arrangement provides access to 55,000 tours, 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 travel restrictions caused by the pandemic,” according to the company.
As an example, Hefer said customers in England might see travel products in places like Oxford and Bath, rather than heavily visited destinations in London or further afield in Europe, Asia or America. The launch follows Trivago’s acquisition of Weekend.com in January.
“This trend of local travel will continue,” he said. “In the long run, over five to ten years, these things tend to balance out and return to normal, but that will take a while.”
Trivago forecasts a strong summer, but that international trip will follow a faster recovery in the rest of the industry, according to Hefer.
Meanwhile, there’s a chance the company can help create a new market – and capitalize on it – as less-visited destinations adapt to meet new demand.
“This is a great opportunity because, once you actually improve this new offering with additional volume, you might even be able to continuously capture more demand,” Hefer said, highlighting the classic hen dilemma or of the egg faced by small destinations.
“If you don’t have good hotels to stay in and great attractions, you don’t get visitors, but now at least you have a tailwind of a certain volume,” he said. “Destinations that take full advantage of this opportunity can improve their competitiveness.”
Trivago has more innovations in the works. Hefer said he wanted to increase the number of “touch points” with users, engage them more with additional site features, and try new marketing ideas.
“The fundamental direction we are taking is that the only key strategic opportunity for travel agencies is to stay relevant when customers are not traveling,” he said. “We want to be relevant 12 months a year, and for that you need more functionality and a wider set of communication channels.
“The main goal of the pandemic, for us, has been to prepare for a push in this direction.”