October 2017, Las Vegas (USA)
trivago talks strategy, technology, and why hotel meta rules
With Google moving up the trip-planning funnel and effectively competing directly with some of its biggest advertisers, is metasearch on the way out? With a dedicated focus on hotels, trivago is confident of its future
Hotel metasearch trivago receives 1.4 billion visits each year. “That’s an incredible amount of traffic,” says Daniel Holl, Head of Global Hotel Sales at trivago, who believes more travellers than ever are turning to metasearch when searching for hotels.
Last week Expedia, which owns a 63% stake in trivago, released its second-quarter results and it seems the trajectory for this hotel meta, which went public in 2016, is an upward one. Revenues have risen across all regions, and growth this quarter is up 64%. The company, which Expedia acquired a stake in in 2013, has expanded its product portfolio to compare over 1.4 million hotels in over 190 countries.
In a press statement, the company’s CFO Axel Hefer said he is expecting “annual revenue growth to be around 50% in 2017, with our adjusted EBITDA* margin likely to be up slightly from 2016."
Holl will be speaking at EyeforTravel North America later this year about how to drive direct bookings in a hyper-competitive environment. Ahead of the event, he outlined five things that he has come to know.
1. In this environment, you need to act on data, not intuition
According to Holl, trivago “lives a ‘test and learn’ philosophy driven by entrepreneurial passion. We act on data, not intuition, which has allowed us to have a big and immediate impact.”
“In this industry,” he continues, “you need to be agile in reacting to the ever-changing behaviour of consumers. And what consumers want, is diverse choice and full market transparency, and they want to see all their options in one place.”
trivago’s approach to being agile and data driven when reacting to changes in consumer behaviour is one that embraces trial and error.
“If we aren’t making mistakes then we aren’t trying anything new and, what’s worse, we’re not learning. We apply this philosophy to everything we do across all departments, whether we’re testing a new feature or TV ads. And with our chain partners, we do the same. We’re always keen to try things on a small scale, and this makes us agile in our decision-making and with our partnerships,” he says.
2. The lines between meta and OTA may be blurring, but not for trivago
“If the traveller believes they’ve booked on trivago, instead of on an OTA or directly with the hotel, then we’ve done something wrong,” says Holl.
Speaking about advertising, trivago spends more than any other online travel company on TV marketing — more than three times more than TripAdvisor on US TV advertisements. But by throwing hundreds of millions of dollars at campaigns like the ‘trivago guy’ and ‘trivago girl’ ads, Holl says the company has gone out of its way to explain hotel metasearch and its advantages — transparency of the hotel market, more hotels to choose from, more availability, better prices, and so on.
Although trivago provides the technology that enables hoteliers to compete for bookings, Holl is clear that “our core responsibility in the traveller’s booking journey is the search stage.” For this reason trivago does not foresee a ‘book on trivago’ option being integrated into the search experience, as “this would only foster confusion for our users”.
While the marketing line is to put the traveller first, trivago must also look after its advertising partners. “For the same reason, our booking funnel provides a strong branding to our advertisers. This sets clear traveller expectations: ‘trivago-hosted but partner-branded,’” says Holl.
Holl is referring to trivago Express Booking — which, when launched, was likened to TripAdvisor Instant Booking or Book on Google, but is in fact positioned close to the hotel’s direct channel. “This is a platform that improves booking conversions for advertisers, so they become more competitive in our CPC auction marketplace,” stresses Holl. “Small and medium-sized OTAs and hotel chains are at a natural disadvantage compared to big OTAs because they have neither the resources nor the data required to build an optimised booking funnel across all devices. To level the playing field on these parameters, we make use of our product engineering competence and big data to build a booking funnel optimised for trivago traffic that helps advertisers turn more ‘lookers into bookers.’”
3. Having a clear product focus and value proposition means Google and other competitors are less of a direct threat
Across the industry, there is growing concern that the search giant’s move up the trip-planning funnel is a threat, because if a consumer decides to book on Google or TripAdvisor (where you can now book for that matter), then presumably this is diverting traffic away from others like trivago. For Holl, trivago’s unique selling point is aclear product focus: hotel search. “No flights, no car rentals, no confusion for the users. It’s all about hotel price comparison. We’re the only global tech company focusing solely on the vertical of hotel search.”
This is a big advantage for trivago on two levels, explains Holl, because it makes them:
i. Fast internally, because there are no conflicts of interest
ii. Fully dedicated when it comes to developing products that are empowering hoteliers to compete online and travellers to find their ideal hotel
4. Hotels that invest more time in securing direct bookings have a competitive edge
trivago aims to be the first entry point for travellers searching for their ideal hotel by making all online bookable rates visible. Holl argues that the direct website rates from hotels are particularly valuable, because the traveller can decide whether to book direct or indirect. “There are a big segment of travellers who prefer to book direct if the rate is attractive and the booking journey seamless. So we welcome those hotels and chains that are investing more time and effort into getting direct bookings. The need is already there, so we have fewer discussions about why direct bookings are important and more about how to actually get them,” he says.
We welcome those hotels and chains that are investing more time and effort into getting direct bookings
5. First and foremost, technology should enhance the guest experience; it should also simplify the hotelier’s life
Independent hotels in particular often face challenges in adopting technology and succeeding on direct marketing channels.
So, the essential question, says Holl, is this: “How can technology simplify the hotelier’s life while enhancing the guest experience they offer and increasing their revenue?”
“After all, the goal of hotel technology is not to monopolise the hotelier’s time and focus, but to empower them to be competitive in the market while keeping their focus on their guests. Marketing a hotel is already extremely complicated, and it’s only becoming more so, with activities such as setting CPCs for different markets, monitoring and allocating budgets, initiating and suspending campaigns, and so on,” he says.
Other questions trivago is attempting to answer with technology are:
i. How do you make it possible for the hotelier to successfully market their hotel without having studied marketing for years and with very little time and money at their disposal?
ii. How can you help them simplify and streamline their day-to-day activities?
“That’s what we want to achieve with the technology we provide: marketing made easy,” says Holl. “We’re working on developing the most accessible and effective tools. And by ‘accessible,’ I don’t just mean that it’s affordable, though that is of course important: I also mean that it is tailored and intuitive and requires minimal time and effort to operate.”
Like many online travel firms, trivago offers data services to hotels. Booking.com, for example, has BookingSuite, and trivago has developed a solution called trivago Hotel Manager: a product that makes it easy for a hotel to perform better online. According to Holl, the platform allows hotels to take control of their online hotel profile. “Over 300,000 hoteliers around the world are using it to build unique hotel profiles that stand out in trivago search results. And we see that those hotels receive five times more clicks on their profiles than others. So there’s a direct business impact,” he says.
Highlighting again the importance of data in the industry, trivago recently announced its new Rates Insights tool, which, as stated on the the trivago Hotel Manager Blog, “grants hoteliers access to an unbiased and comprehensive set of data on market demand and competitor prices […] with a new version of this feature, trivago has made over 5 billion room rates visible to hoteliers around the world.”