Trivago Might Be Coming Up With Better Quality And Customized Hotel Search Results In The Future

December 28th, 2016 by Trefis Team
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In a recent interview, Trivago’s CEO, Rolf Schrömgens, expressed that the hotel search options on the online travel and metasearch sites might be lagging in some aspect. According to him, the searches provide results that are all related to providing more contents — photos, videos, etc, however, when it comes to customizing the customer’s requirement and matching it with a hotel that is ideal for her, there seems to be a significant dearth. Schrömgens also stated that this lag could be filled with the help of software. This might imply that after its IPO Trivago might be thinking along those lines. Given the fact that metasearch is Trivago’s specialty and unlike a TripAdvisor, which is aggressively pushing its hotel booking platform (thereby trying to evolve from a metasearch website to a hotel booking platform), Trivago has only one thing to focus upon currently and that is to provide a better quality of search results. Hence, when the company’s CEO talks about how understanding the customer requirement and studying the hotel property might be imperative to providing the right match to the customer, it might suggest that Trivago is thinking of developing some functionalities in those areas.

This doesn’t imply that Trivago is downplaying the importance of content. In fact, adding more content to online travel websites does result in a growth in demand. Trivago itself contains 1.3 million hotels in over 190 countries and like its peers, it also believes in adding more inventory on its platform. However, what Schrömgens thinks is that adding more and more photos and videos of properties does not improve the traveler’s search experience or help her find the exact hotel she might be looking for. He thinks that matching a particular traveler’s likes or dislikes along with the kind of trip to the hotel that might be suitable for her, is something that needs to be worked upon. Trivago might be working on the software issues revolving around this criteria and in the future gaining this competitive edge might help it reap benefits. This, is turn, might help Expedia which owns a 62% stake in the company.

We currently expect Expedia’s revenues from the advertising and media segment to grow at a CAGR of ~11% between 2016 to 2023. Trivago is the primary driver to bolster Expedia’s revenues from the advertising and media segment and so far despite its huge advertising and media spends it is growing well. For the first nine months of 2016, Trivago’s revenues grew by 49% year-on-year to ~$653 million. According to industry experts, Trivago’s adjusted EBITDA is expected to rise by 142% from around $64 million in 2016 to around $155 million by 2018.

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