Trivago said its artificial intelligence-driven brand marketing campaigns launched in late 2023 are beginning to pay off.
Reporting results for the first quarter of 2024, the travel metasearch platform said its branded traffic channel volumes grew year over year in its "Developed Europe" and "Rest of World" segments.
The successes came amid a 9% dip year over year in total revenue for Q1 to €101 million while referral revenue decreased 8% to €100 million versus the same period in 2023.
Expedia Group brands accounted for 37% of Trivago’s referral revenue, while Booking Holdings’ brands accounted for 39%, down from 43% in Q1 2023.
Trivago reported a net loss for the quarter of €8.4 million compared with net profit of €9.9 million for Q1 2023. Adjusted EBITDA was reported as a loss of €9.2 million, down from EBITDA of €18.6 million in Q1 2023.
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Total advertising spend increased €19 million to €84 million in the quarter, attributed to higher brand marketing investment. Return on advertising spend dropped 49 percentage points to 119% for the quarter.
The company said it is relying less on performance marketing channels with branded channel traffic volumes continuing to gain share. It added that Google advertising changes have made it less attractive for Trivago, but it will continue to invest “opportunistically.”
During a call with analysts, Johannes Thomas, CEO of Trivago, laid out the company's priorities including leaning into its brand strength, investing in the user experience, finding great deals for consumers and simplifying bidding for partners.
The metasearch platform recently added AI-driven hotel insights which provide users with context about a property and is live in 25 markets. Thomas described the functionality as providing value for users through "really relevant content."
Trivago is also testing natural language search enabling users to enter a broad query and Thomas said the feature was doing well but there are still weaknesses with less relevant hotels sometimes appearing in search results. He added that the challenge is also in how to integrate it into the user experience.
Speaking to PhocusWire, Thomas who is now a year into the CEO role, said he has been surprised during his tenure in the role so far about the amount of hotel deals on the market,
"Rate disparity has gone up. I think returning to the company that was one of my biggest questions. The assumption we had 10 years ago was that the value of deals would go away over time because there was a strong push for rate parity. The reality we're facing today is that hotels follow a more differentiated marketing strategy where they have different prices and try to cater for different customer segments.
He added that the changes from Google with new advertising formats had also been unexpected and were a headwind for Trivago.
The company’s strategy is to continue to invest profits into its marketing strategy to bring revenue growth. It is expecting adjusted EBITDA to break even for full-year 2024.
See below for a discussion on metasearch in travel at The Phocuswright Conference with Trivago CEO Johannes Thomas:
The Innovation Dilemma with Skyscanner and trivago - The Phocuswright Conference 2023