Trivago is seeing marketplace volatility again in Europe after a brief increase in consumer volume in the summer.
Reporting
third quarter 2020 results the hotel metasearch company says
increases over that period were driven by nearby trips to nature spots in “developed
Europe.”
Despite the current
declining volumes, Trivago believes there will be recovery in the
second half of 2021 as testing improves and there is progress on a
vaccination.
Speaking to analysts, Axel Hefer, the company's CEO, says the confidence of improvement in 2021 comes from "people's need" to travel, better treatments for the virus and the availability of cheaper, faster tests.
He adds that Trivago's product mix, which doesn't require travelers to get on a plane, will also help.
The company is launching a local travel discovery product in core markets focused on destinations within driving distance.
The local travel product, already available on the app, will be available on other platforms in the coming months.
Hefer says:
"It's spot on in terms of customer need for next year. We have a full pipeline of features to deploy over the next couple of months when volumes will increase again."
Trivago reported a 76% decrease in revenue of €61 million in Q3, made an operating loss of €1.4 million and a net loss of €2.3 million.
Revenue for the nine months ending September 30 was down €467 million year-over-year.
Referral revenue, earned when users click on ads in search results, declined €15 million in the Americans, €32.5 million in Europe and €11 million in the rest of the world over the three-month period.
The company says referral revenue was impacted by declines in both qualified referrals and revenue per qualified referral.
Total qualified referrals declined by 49% to 82.5 million in Q3 compared to the same period in 2019.
In
the third quarter of 2020, Consolidated revenue per qualified referral decreased 54% to €700,000
and the company says that although most of its advertisers are investing in marketing
on the platform, they remain cautious.
Return on advertising spend was 190% for the quarter compared to 123%
year-over-year, with the increase attributed to the reduction in brand
marketing activity and higher ROAS targets in Trivago’s performance
marketing channels.
Advertising spend decreased €72 million in the Americans, €57 million in Europe and €42 million in the rest of the world.
Going forward, Trivago says it is "preparing for a continuation of soft demand."
In a letter to shareholders the company says: "Our main focus for the third quarter of 2020 was to continue to prepare for 2021 while preserving our cash-position, generate learnings, and develop features and products that we believe will enable us to compete better. We believe that our focus on local travel will be a key advantage going forward."
Costs and expenses for Q3 totaled €62 million versus €248 million year-over-year. The costs include €600,000 related to restructuring announced in the first half of 2020.