Trivago says innovation, marketing to raise brand awareness and broadening products and services are key levers for its future growth.
Reporting fourth quarter and full-year results for the year ended December 31, 2021, the company says travel demand could bounce back as early as spring 2022 and that it expects a “less volatile recovery going forward.”
The Germany-based hotel metasearch brand reported total revenue of €89 million for the quarter, up 176% year-on-year.
Net income was just over €15 million compared to a loss of €8.6 million year-on-year, while adjusted EBITDA was €19.6 million compared to a loss of €3.4 million for Q2, 2020.
Income from each qualified referral increased 84% to €1.34.
For the full year, total revenue increased 45% to €361 million year-on-year while net income was €11 million compared with a loss of €245 million year-on-year.
During an investor call Trivago talked about gaining market share through its city break product which could provide it with a "tailwind."
Talking to Phocuswire, Axel Hefer, CEO, Trivago, said: "City travel will come back in spring and it will be a a bit different market by market. In Europe, the big cities that make all the difference - Berlin, London, Paris, Rome, Lisbon - these cities are as attractive as they were before and people have not traveled to cities so expect to see, once sentiment has changed for this year, a much more normal mix in destinations. City trips will gain in share which from our perspective is highly likely and good because our value prop is by far greatest if you have a very broad offering of many different options and many different prices."
Consumer and B2B developments
City travel is one area where the company sees potential for B2C growth following its acquisition of weekend.com a year ago.
"Packaged city air travel was not something we could scale aggressively in the pandemic and in the new normal that is a much better product market fit so that’s something we’re excited about."
From a B2B development perspective, Trivago see opportunity in its pricing intelligence. Hefer says: "There are a broad set of ideas and pilots we are running but the way to think of it is that we have full transparency on prices in global accommodation and the development of prices. We see where demand is, we see where occupancy rates are going up, absolute price levels and changes, pretty much live.
"Thats a very valuable asset that in the past we have only used for ourselves, thats the main asset we are leveraging to come up with new product and value propositions to help our partners run their businesses better. We have a few pilots running already."
With signs of recovery, Trivago is now ramping up its advertizing and marketing spend again with €50 million invested in Q4, of which €42 million was advertizing.
On its advertizing and marketing strategy going forward, Hefer says: "We will be in the new normal very soon, not in a situation that is like pre-pandemic because there is still a certain fraction of the population concerned about health and about traveling. How big that will be and how quickly they will get comfortable to travel again is very difficult to foresee so it won't be that different to what we have done last summer.
"We will try out the full spectrum of marketing activities and we need to stay flexible as we see a response. To really go back to the full normal could take years. We will not prebook campaigns as we used to do for the full year, we will have to stay more flexible particularly on the TV side, online marketing is already very flexible."
The company says Expedia Group brands accounted for 33% of referral revenue in Q4 and 26% for the full year.
For Booking Holdings brands the share of referral revenue was 49% for the quarter and 55% for the year.
Hefer says the company would like to diversify the mix but it's not that simple: "In a perfect world you have thousands of customers that are all of the same size. The prob in accommodation meta is that the OTA market is quite consolidated so we can only deal with what we are finding in the market and there is only so much you can do to deviate from the strength of the different players.
"Booking is extremely strong in Europe and Expedia in North America. That's a fact, you can’t change it. The way to get to a much more diversified customer mix is through alternative products."
In a letter to shareholders, the company says it has tripled partners for its cost-per-acquisition model and launched the first partner for its meta-as-a-service product, which it says “presents an exciting opportunity to expand our business-to-business (B2B) offering.”
The letter also says that while travel demand is expected to come back in the spring, it will not be at 2019 levels with segments such as city trips and business travel still lagging.
Trivago also received €12 million from a COVID-19 subsidy program provided by the German government in the fourth quarter of 2021.