Trivago Considers Adding Free Links Like Google Did

Will Trivagoa Germany-based hotel price comparison site, add free hotel and online travel agency links like Google did it in 2021? CEO Axel Hefer hinted that such a scenario could be looming.

In an interview with Skift on Wednesday, Hefer said Trivago would consider adding free links on Trivago to supplement advertisers’ paid links, but he declined to comment on whether such plans were in the works. In theory, he said, the broader comprehensiveness that free links could generate would be particularly useful in Europe, where independent hotels, not chains, dominate.

Free links could attract more travelers using Trivago to purchase offers.

Booking Holdings and Expedia Group, which is Trivago’s majority shareholder, are Trivago’s dominant advertisers. About 81% of Trivago’s second-quarter benchmark revenue came from the Booking Holdings (52%) and Expedia Group (29%) brands.

On so-called metasearch sites such as Google Hotels, Kayak and Trivago, travelers search for hotels and click through an array of links to book their stays with a travel agency or hotel online. Metasearch sites make their money when advertisers bid in auctions to place their links higher or lower in a hotel ad, and they pay the metasearch site when travelers click on those links.

But Google has supplemented these paid links from advertisers with free links from online travel agencies and hotels from 2021 to entice more booking sites and hotels to participate – and appease the antitrust watchdogs and to show that its participating suppliers were not just huge travel companies.

For example, in this screenshot of Google Hotels, the top box labeled “Featured Ads/Options” contains links from four paid advertisers (the hotel’s website and the Booking and Expedia brands), and the links in the bottom box labeled “All options” are unpaid and include links from lesser-known companies such as Bluepillow and BusinessHotels.

In Trivago’s second-quarter earnings call on Wednesday, Hefer called Google’s introduction of free links “really exciting,” adding that when Trivago has free links in Google Hotels, Trivago “really benefits from that traffic.” free. So for us, it’s a net positive from our perspective. »

More competitive environment

Matthias Tillmann, chief financial officer of Trivago, said the company sees a more competitive environment both in Google’s hotel auctions, where companies bid to place their booking links, as well as in Google’s own auction. Trivago, resulting in a higher cost per click for advertisers in both. This means more revenue per click for Google and Trivago, respectively.

Given the relatively high costs, Trivago limited its participation in Google’s auction, Tillmann inferred.

“We have decided to keep our profitability targets and perhaps sacrifice some volume, but focusing on traffic that is directly profitable for us or where we expect positive long-term returns, but we do not ‘ve not bid for traffic where we have a low belief that it would give us a good return over a period of time. “, he said.

Trivago has summer brand campaigns running on TV and online in all of its major geographies, and Hefer said these ad blitzes outperform its paid digital marketing efforts (on platforms like Google).

Trivago is closing its weekend getaway efforts

Officials said Trivago was experiencing strong summer demand, but argued that inflation and the consequent impact on travelers’ disposable income could reduce travel demand later this year and potentially beyond.

Due to this new set of circumstances, Trivago announced that it would cease its efforts to sell weekend getaways and increase its display advertising activities to focus on its core hotel price comparison business.

Trivago acquired in 2021 for 7.4 million euros ($7.6 million at current exchange rates) with the goal of starting to conduct its own travel transactions instead of just referring travelers to d other travel agencies for reservations.

But this business model experiment is over for now.

Trivago is abandoning that effort to focus on its core price comparison offering, which it says will become more valuable to travelers as inflationary pressures push them to seek bargains.

Deficiency Charges Resulted in Net Loss

Trivago recorded an impairment charge of 84.2 million euros ($86.1 million) due to the changing “macroeconomic environment,” the company said, and impairment was the deciding factor. of its net loss of 59.8 million euros ($61.1 million) in the second quarter. Total revenue for the quarter increased 166% to 101.6 million euros ($104.9 million)

Trivago’s adjusted profit (earnings before interest, tax, depreciation and amortization) reached 30.3 million euros ($31.3 million), the highest in Trivago’s history, in the second quarter. That compares to just 4.3 million euros ($4.4 million) in adjusted profits a year earlier, when Europe’s travel recovery was just beginning.

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Trivago Considers Adding Free Links Like Google Did