CEO Spotlight - Johannes Thomas of Trivago

Johannes Thomas, Trivago

Johannes Thomas started as an intern at Trivago in 2011 and progressed to become managing director and chief revenue officer until 2020 when he left to form investment fund CoIQ. He rejoined the metasearch business in 2023 as MD and CEO.

Trivago is ramping up its brand marketing investment to drive long-term growth and believes price comparison is more relevant than ever amid increasing price disparity.

What brought you back to Trivago?

One of the founders called me and outlined the opportunity of coming back together with a very experienced team. And we met with the team, Jasmine (Ezz) and Andrej (Lehnert) that joined as [chief marketing officer] and [chief product officer] that had been here for a long time as well. Then we put our heads [together] and we looked at the market. Travel is one of the most exciting [sectors], it's growing fast, with exciting product and then we looked at the value proposition and the opportunity, and I think Trivago is a very exciting company to be with. Helping the company in driving future success is a great opportunity that we didn't want to miss.

You were external to travel for a few years, so what experience do you bring back to the business?

We were active in a different space. We were with former senior people at Trivago, we founded a company in the fintech space, and we launched an investment fund so we gained some experience in the capital market and how investors look at and invest in companies. So we bring some technical skills back but probably most important, it was pretty exciting to experience how much you can do with a team of eight and a small team being very focused, great ideas, executing, taking fast decisions. Trivago was small once, and I think it's natural that some of the entrepreneur passion goes away. So experiencing this again, how agile and fast you can move forward and change things was great and that also inspires you to bring entrepreneur passion back to the company and give people space for failure, empower them, give them ownership to move things forward, which can create a lot of energy and speed of execution, speed of innovation. That's a cultural aspect we want to reignite here.

There was talk in the recent earnings about decreases in revenue that you attributed to factors including bidding dynamics and Google Ads changes. How do you plan to mitigate against these going forward?

As we shared in the earnings, the Google Ads space is a bit volatile right now. We rejoined the format that they are surfacing to the user, the product promotion ads. We're experimenting there to see how big the opportunity is. Apart from that, what we have communicated about substantially increasing our investment in brand marketing is what we want to emphasize moving forward. We have seen in the summer that a lot of initiatives look very encouraging, how we improve our brand marketing and channel mix and how we could see impact from improved ad creatives so this is how we, over the long term, rebuild a strong baseline, which was very hard to maintain over the pandemic because brand marketing was not that effective with fewer people traveling.

There have been various experiments with direct booking, and it was being rolled out in different territories. Can you update us on that?

I think overall what was reconfirmed was that travelers appreciate us comparing direct bookings. We see positive impact on conversion and on user behavior interacting with those rates. That's what we wanted to see, and we have increased coverage and from there on we will evolve it. The direct channel, I think, has been an important channel for us and travelers for a long time.

Do you have high hopes of it as an opportunity?

I think it will be an evolving process. The industry takes time to adopt technology, and it comes down to the whole industry evolving in terms of technology. I don't think it will be something that from a business perspective will be very exciting in the short term.

Your predecessor Axel Hefer said metasearch is in a maturing market, which leads to consolidation and product differentiation. Do you agree? And how is Trivago differentiating itself?

That is a similar question to what we asked ourselves in the first three months, and we wanted to get a better understanding of how strong the meta proposition is. One of the most important indicators for us is how big is price disparity - how big is the price difference on the different platforms? Compared to pre-pandemic levels, the degree of price disparity has actually increased, so we see very substantial savings opportunities for travelers.

We see travelers that are very price conscious, especially with increased hotel prices over the past few years. There's probably a stronger need to compare prices, and that's where we are supporting a traveler need. And having observed higher price disparity makes us convinced the meta proposition is here to stay. That's part of our assessment, and why we believe we should promote this to the outside world - that there are great deals, and it is worth comparing prices.

Do you have a feel for why price disparity has increased?

It's purely an assumption, but it's wholesale coming to the market bringing more available rates and also hotels enabling availability in those channels. We also see hotels sharing reward rates that they offer to members only, and we can display that in different environments to them as well.

So how is Trivago differentiating itself?

I think there is a differentiation that is very strong. In the meta space we're the only huge global player that is focused on hotels, and we message that very clearly, and I think this differentiation is not going away. I would be much more concerned if there is really change in this parity value proposition, and one aspect we want to emphasize is the meta aspect and communicate that, and the other part where we see innovation is "When should I go?" because there are different deals. If you go in the summer, you don't exactly know when, so how do we help travelers nail down their window of traveling. We have a lot of data. We know there are deal opportunities in a certain destination with different hotels. We have launched rate alerts, so you're getting information when prices are dropping from hotels, and those are things we want to innovate on.

Brand marketing efforts take longer to come through. When do you expect to see the results of your investment?

When we do brand marketing we have a very performance-oriented approach. We are investing in a range of markets, a range of channels and then we narrow down over time and optimize what is really working for us. Brand is a multi-year effort; you don't flick a button and it's back. It's really investing consistently over a long period of time and building a brand baseline that increases people coming directly to you. We see a significant part of our investment returning in year one and then in the years to follow the rest of the investment is returning. So there is a substantial return instantly, but the full return is happening over several years.

What were your goals for the first 100 days in the CEO role?

What was important [was] to build a strong trust base with the team. It helped a lot that we knew still a big part of the team, it helped us to dive deep on the business. You have meetings and very openly talk about challenges, about opportunities, and that was a process where we understood very fast where we need to focus, and then we aligned with the team on the strategic direction, and that's a focus on rebuilding the brand, focusing on building muscle around deals and improving our search and content strength on the platform. That's what we're emphasizing in the second half of the year and beyond.

What do you think are the greatest challenges having looked at the business?

There isn't one thing. There's no silver bullet to shoot and make a big change. We're following a mentality of continuous improvement, and our messaging is if we get 1% better in every part of the organization every day we will see a compound effect over time. That's what we want to see. The challenge is actually to establish a mindset of continuous improvement, taking fast decisions, getting a little bit better every day, so really a cultural ignition and driving constant improvement.

Having been away, what would you say has changed at Trivago or perhaps within the wider industry?

Fundamentally, the industry ticks as it used to. What we can see is technological evolution. You see hotel chains and independent hotels evolving. You see [artificial intelligence] taking a very important place, which is great to see. It's not a surprise that the industry is more advanced in technology.

I think Trivago, in its fundamentals, didn't change. We have done some things differently in brand and how we're operating but nothing fundamental.

How will generative AI impact Trivago and the wider industry?

AI is something that has been in our hearts from a long time ago. I think it was 2016 when we met [computer scientist] Ray Kurzweil, one of the pioneers in AI, and that was, for us, an important moment to understand how important AI is. It also, back then, made us think about how we can leverage it. [Large language models] are new and have great opportunities, but we have used it in how we rank hotels, how we're optimizing marketing, how we make our product more relevant for users, and we'll continue doing that. There are avenues in how you can optimize your ad creators on television through AI, and we continue embracing that wherever we can. In our product we're using it to crystallize content and make it relevant for users.

We launched a ChatGPT app in May, and we're exploring opportunities. I think it's really a learning phase, and I also think it's an open question to say what user experience is better at the end. Is it a chat experience and is that replacing the upper funnel, the exploration part? Or, like we are, down the funnel where you do a comparison and then book, which is much harder for an LLM? I think it's very important that we're ahead of the learning curve, and I see Trivago being at the forefront and learning at a fast pace.

One of the most important indicators for us is how big is price disparity - how big is the price difference on the different platforms? Compared to pre-pandemic levels, the degree of price disparity has actually increased ...

Johannes Thomas

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If you could wave a wand and change one thing at Trivago what would it be?

There are many small things that accumulate, but if I could change one thing it would be getting our marketing activities back to where they were pre-pandemic, and that comes down to how we optimize the relationships we have and the team we have in place. We have a lot of very fundamental things that we're rebuilding in the next couple of months and years.

If you look ahead five years in terms of technology development, how frictionless do you think travel is likely to be?

I think travel as such is quite a chaotic process in people's minds. When you think about the inspiration process, the need emerges, you want to go on a holiday and you bounce it around family, friends and colleagues. It's nothing very rational or process-oriented. I think that's great, and technology can facilitate it and support that decision. It's a fun and enriching process. Then, when you think further down the funnel — how do I ultimately make the decision of where to book and where to stay — having technology there to facilitate that, where we are part of making it frictionless, and our aspiration is to be the most simple hotel search experience, saving you time and money, is a very important aspect. Then you go further down the funnel, the booking process, which is already quite seamless. Then you go to the hotel or the flight, how can that be even smoother. I think there's a lot of infrastructure that can work hand-in-hand better, and I expect it to be an evolution over time.