Despite a 7% increase in qualified referrals, hotel metasearch platform
Trivago recorded a drop in total revenue in the first quarter of 2018 - though relatively
slight at 3% - compared to the same period a year earlier.
Net loss for the first quarter of 2018 was €21.8 million, compared to
net income of €7.7 million in the first quarter of 2017. Adjusted EBITDA was a
loss of €21.9 million in the latest quarter compared to positive adjusted
EBITDA of €19.3 million in Q1 2017.
In a call with analysts following the release of the first-quarter
results, chief financial officer Axel Hefer pointed to a strong Euro and a drop
in commercialization across all segments as reasons for the reduced
profitability.
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“We managed to grow the usage on our platforms, enabling us to almost
match a very strong Q1 17 in terms of revenues,” Hefer says.
“We achieved this despite strong headwinds from currency movements in the
Americas and rest of the world and a drop in commercialization as our
advertisers appeared to have increased their profitability targets for their
spend on our marketplace compared to the first quarter of 2017."
Overall revenue per qualified referral was down 9%, with drops of 1 and 2%, respectively, for the Americas and Europe and an increase of 3% for the rest of the world.
Booking Holdings and Expedia Group now each account for 38% of Trivago’s
advertising revenue, with 24% attributed to other sources. That’s an increase
for Booking Holdings from 33% in the first quarter of 2017 and a slight drop - down from 39% - for Expedia Group.
Operationally, the company says it has made significant investments in content,
personnel and technology, including the development of a new back-end system that
has been tested in the first quarter.
“Our tech team worked hard to rebuild the infrastructure of our search to
make real matching between user needs and hotel profiles possible, and to build
a basis for continuous improvement of personalization through machine learning,”
says CEO and founder Rolf Schrömgens.
And as the company has been successful in increasing its brand awareness. Schrömgens says new advertising creative will focus more on “advancing the
users’ understanding of our product features.”
When asked about Trivago’s position regarding adding more short-term
rental supply to the platform, Hefer says they see this as a big opportunity but
want to proceed slowly.
“We are exactly on track in terms of testing
and gradually increasing the visibility of alternative accommodations,” Hefer
says.
“At the right point in time we will obviously
onboard more and more advertisers, but we think it is important that you don’t
rush into it but that you gradually make the changes on the platform that you
need to make in terms of marketing, in terms of marketplace algorithms. Because
there is a significant difference in terms of inventory between alternative accommodations
and hotel inventory.”
Analysts also asked if Trivago may look to diversify its revenue sources by
capitalizing on the growing trend of hotels to court direct bookings.
“We see this as a big opportunity, but it’s a long-term opportunity,”
says Schrömgens.
“We shifted a lot of resources that we have in our hotel relations team
from our pro product where we get a monthly revenue to onboarding hotels
directly into our price comparison. That was a significant change … but the base
is still quite low. The effect you will see on the marketplace - there will be
an effect this year - but the majority of those effects will kick in over the next
couple of years.”
As of the end of the first quarter of 2018, Trivago has 55 localized platforms connected to more than two million hotels and alternative accommodations in more than 190 countries.