Axel Hefer, CEO of Trivago
It has been said that there is no gain without pain and that what doesn’t kill you makes you stronger.
The online travel search company Trivago appears to have taken the feeling to heart amid an ongoing pandemic that has put its industry at risk for around 14 months.
Revenue for the Düsseldorf-based company, which is majority-owned by the Expedia group, declined 73% in the first quarter compared to the same period last year, and qualified referrals were down 55%.
Nevertheless, CEO Axel Hefer is optimistic about Trivago’s prospects.
His team made strategic cuts while highlighting opportunities to expand in a changing travel market.
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“We realized very early on that this would not be just a few months, but something that would take longer,” said Hefer, adding that the company was restructured and its cost base lowered in April 2020, which stabilized the company and the cash flow improved.
In fact, Trivago cut its operating loss in the first quarter from € 215.3 million a year ago to € 8.9 million (approximately $ 10.76 million) – an improvement of 96%.
“We are in a very good position on the cash side,” said Hefer. For this reason, Trivago does not have to generate a lot of profit immediately and can instead concentrate on the strategic projects that it wants to advance.
Trivago acted primarily as an online hotel booking search tool, gathering price and other accommodation information from websites such as Hotels.com and Priceline, as well as hotel chains and online travel agents, to compare purchases made by users.
Trivago started the Trivago Weekend in the USA and Great Britain in April.
However, in April the company announced a partnership with TUI Group’s Musement division to bring a new activity booking feature to its website. The arrangement gives users in the US, UK, Russia and 11 European countries access to 55,000 excursions, activities and attractions.
The company then followed suit with Trivago Weekend in the USA and Great Britain. The new product offers accommodations and experience content close to users’ homes “in direct response to travel restrictions imposed by the pandemic,” the company said.
As an example, Hefer said that customers in England may be shown travel products in places like Oxford and Bath rather than much-visited London or more distant destinations in Europe, Asia or America. It will start after Trivago took over Weekend.com in January.
“This local travel trend will continue,” he said. “In the long run, over five to ten years, these things tend to balance each other out and get back to normal, but it will take time.”
The most important strategic opportunity for tour operators is to stay relevant at a time when customers are not traveling.
Trivago expects a very strong summer, but according to Hefer, international travel will recover faster in the rest of the industry.
In the meantime, there is a chance the company can help and benefit from building a new market as less visited destinations adapt to new demand.
“It’s a great opportunity because if you actually improve this new offering with additional volume, you may even be able to capture more demand over the long term,” Hefer said, pointing to the classic chicken-or-egg dilemma facing smaller goals .
“If you don’t have great hotels and attractions, you don’t get any visitors, but now you’re at least getting some volume tailwind,” he said. “The goals that take advantage of this opportunity can improve their competitiveness.”
Trivago has more innovations in the pipeline. Hefer said he wanted to increase the number of “touchpoints” with users, get them more involved with additional website features, and try out new marketing ideas.
“The fundamental direction we are taking is that the most important strategic opportunity for travel companies is to stay relevant at a time when customers are not traveling,” he said. “We want to be relevant 12 months of the year, and for that you need more features and a wider range of communication channels.
“The main focus of the pandemic was for us to prepare for a push in this direction.”