Trivago sees referral revenue jump more than 60% in March

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Trivago sees referral revenue jump more than 60% in March

Global hotel and accommodation search platform Trivago credits vaccination efforts in markets such as the U.S. and Israel with spurring a jump in trav

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Global hotel and accommodation search platform Trivago credits vaccination efforts in markets such as the U.S. and Israel with spurring a jump in travel activity that gave the site a 60% increase in referral revenue — its primary source of revenue — in March compared to February.

Total referral revenue in the first quarter was $39 million, down from $164million in Q1 2020. 

Trivago’s “developed Europe” segment saw the sharpest decline in referral revenue year-over-year — 83% — while the Americas dropped 66% and “rest of the world” was down 67%. 

In a letter to shareholders regarding the company’s financial results for the first quarter of 2021, the company said, “We also expect travel demand to gradually begin to pick up across our developed Europe segment during the second and third quarter of 2021 when most European countries are expected to make significant progress rolling out the Covid-19 vaccine.”

In Q1 2021 compared to Q1 2020, Trivago saw an increase in referral revenue coming from Booking Holdings’ affiliated brands such as Booking.com, Agoda and Kayak, while revenue from Expedia Group brands such as Expedia, Hotels.com and Vrbo decreased. The company said Bookings Holdings’ share of referral revenue was 56% in the first quarter of 2021 compared to 39% in the same period in 2020, while Expedia Group’s share was 21% in Q1 2021 compared to 33% in the same period of 2020. Expedia Group owns a majority stake in Trivago.

Total revenue in the first quarter of this year was $45.9 million — a 73% drop compared to the first quarter of 2020. Adjusted EBITDA was a loss of $5.7 million in Q1 compared to a loss of $.7 million a year prior. 

In the statement, Trivago said, “We expect travel patterns in the months to come, both in terms of accommodation-type and destination mix, to gradually become similar those prior to the Covid-19 pandemic. We believe intercontinental travel will likely remain muted for some time, and we expect city travel, a type of travel that has historically been one of our strengths, to recover in the second half of 2021 as cities gradually begin to open up for tourism again.”

To capture that increasing demand, Trivago said it is increasing brand marketing activities, particularly in the U.S. For the first quarter of 2021, selling and marketing expenses were 61% of total revenue, compared to 80% in the same period in 2020.

CEO Axel Hefer said the marketing strategy will move beyond the primary channels of TV and performance marketing to use “different channels for different kinds of communication,” all with a goal of increasing engagement. 

Along with new marketing efforts, Hefer said the company will continue to launch new features and products to become “relevant to our users more often throughout they year.” 

Just last week Trivago released a local travel product known as Trivago Weekend to help users discover weekend getaways close to home. The product is available in the U.S. and United Kingdom and will be rolled out to additional markets in the coming months. It’s built on content captured from its acquisition of Germany-based startup Weekend.com in January.

Also last week Trivago launched bookings for tours and activities through a partnership with TUI Group’s Museument brand. The new “Activities” section on Trivago’s website gives access to more than 55,000 excursions, activities and tickets in 140 countries.

Hefer said despite the pain of dealing with the pandemic, the crisis has been a stimulus for this type of product innovation.

“Once you accept there are not customers you need to think about future customers. That is a very, very different way to think about it versus you are in the middle of your business, and you are optimizing everything 24/7, and you don’t have that perspective of thinking about a point of time in the future and a future traveler,” he said. 

But when asked his opinion of subscription products such as Tripadvisor Plus, Hefer said that is not something that interests him, in part because he questions if there can be mass market adoption when the majority of people do not travel regularly but also because it is counter to his philosophy regarding partners.

“The way it is implemented it is basically like starting a competitor to our biggest partners. If you provide unique rates to your users, and you also take care of the booking and the payment processing, etc., you de facto turn into an OTA,” Hefer said.

“Our approach is to really work collaboratively with our big partners, be it Expedia, Booking, Trip.com, the large hotel chains, and use our strength and use their strength and jointly optimize the user experience end-to-end. Which is a very different philosophy vs trying to capture as much of the value add by pushing partners farther out. That is something we really don’t believe in.”

As of March 31, Trivago says it offers access to more than five million hotels and other types of accommodations in more than 190 countries, including more than 3.8 million units of alternative accommodations.

Source: PhocusWire

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