First read is on us.

Subscribe today to keep up with the latest travel industry news.

Interview: Trivago Building Big Team in Shift Toward Direct-Hotel Relationships


Skift Take

Oh, it's downright trendy. Trivago's new tilt toward building direct ties to hotels takes place as TripAdvisor is signing up chain after chain for its book-on TripAdvisor Instant Booking product, Google has debuted a similar initiative, Booking.com has created its BookingSuite hotel division, and Expedia has debuted a mobile app for hotels to manage rates and access analytics.

Search for a hotel in New York City on travel-comparison site Trivago.com and the booking links you’ll see are overwhelmingly to online travel agencies, from Expedia and Priceline.com to Booking.com and lesser-known sites.

In fact, in a search for an October 18 stay, you have to scroll down to the 11th listing, well below the “fold,” for a blue-highlighted link to an official hotel website, in this case to the Holiday Inn 6th Ave. – Chelsea in New York City.

In an exclusive interview [see Q&A below] with Skift, Johannes Thomas, Trivago managing director and head of hotel relations, says the company has shifted strategy over the last year toward emphasizing direct relationships with hotels in part because they are the best source of “exceptional” content about their properties.

Asked whether Google’s and TripAdvisor’s moves to accept hotel bookings on their own sites is an opportunity or a challenge for Trivago, Thomas says, “I think it is both. I think it is a big task and that is why we are building up a big team to build relationships with hotels and to take time for education [about the value of metasearch].”

Dusseldorf, Germany-based Trivago has more than 700 employees and its website currently lists 103 job openings.

Independent Hotels are the Target

To be sure, Thomas emphasizes that relationships with online travel agencies “will remain a priority,” and the hotel “focus for quite awhile already has been has been mostly on chains.”

With the plethora of independent hotels, the previous tilt toward chains meant “we only get one half of the package and we need to strengthen our bonds with the rest of the industry,” Thomas says. “The focus was the OTAs, as you have seen, and we want to shift that and add on top of the hotel chains.”

“What are really the sources where we get the best content?” Thomas asks. “As we clearly see, the hotel is the most valuable source of information. He [or she, i.e. the hotel manager] knows best what its strengths are. He knows the inside of his hotel and that’s why we are changing the direction. We are investing a lot now in building strong relations with the hotel.”

Booking Sites Getting Intimate With Hotels

Trivago’s new tilt toward building direct ties to hotels in order to access their content and rates takes place as TripAdvisor is signing up chain after chain for its book-on TripAdvisor Instant Booking product, Google has debuted a similar initiative, Booking.com has created its BookingSuite hotel division, and Expedia has debuted a mobile app for hotels to manage rates and access analytics.

Part of that investment can be seen today as Trivago announced an update to its Hotel Manager platform, which comes in free and fee-based versions and enables hoteliers to update their listings on Trivago and access analytics about their rates and competitors. Up-to-date listings, including images and amenity information, enables properties to escalate their rank on the site, the company states.

Just this week, Travel Tech, the U.S.-based trade association representing online travel agencies and global distribution systems, released a survey touting “U.S. Consumers’ Growing Reliance and Trust in Online Travel Agencies.”

Trivago, which was acquired by online travel agency Expedia in 2013 and often emphasizes its independence, believes that hotel sites are the most-trusted, according to Thomas. As a hotel metasearch site, Trivago relies on partnerships with both online travel agencies and hotels as advertisers, but now wants to tilt a bit more in the hotel direction.

When Trivago has a direct relationship with a hotel, as mentioned in the Holiday Inn example above, it highlights in blue the link to the official hotel website. “On the one side this gives an advantage to the chain and, on the other hand, to the travelers,” Thomas says. “It’s the most-trusted channel for travelers …”

Mystery Shoppers Instead of Collecting User Reviews

On the trust issue, Trivago has bucked the trend and removed its own users’ hotel reviews because, Thomas says, it wasn’t a core competency. Instead, Trivago aggregates user reviews from other sites and has a unique Mystery Shopper program, where hotels pay in the range of 20 to 80 euros to have consumers visit the property and rate some 250 amenities and metrics about the hotel.

The hotels, Thomas says, don’t know the reviewer or when he or she visits. Trivago uses the detailed surveys to influence a property’s rankings and shares the results with the hotel for benchmarking purposes. Asked about it, Thomas says the hotels really don’t get tipped off when a mystery shopper shows up.

Trivago’s energetic push to strengthen its ties with hotels also plays into what Thomas refers to as facilitated bookings, the move by numerous metasearch sites, including Kayak, Hipmunk, TripAdvisor and Google, to take hotel bookings on their own websites — online travel agency-like.

The Marketing Model or a Hotel-Commission Slant?

Many of these sites are taking commissions from hotels instead of the traditional metasearch reliance on the cost-per-click model but Thomas believes the CPC model may be more advantageous for hotels in driving direct booking to hotel websites and incentivizing them to optimize their sites for mobile.

Trivago, Thomas reveals, has been working on what he argues is a more-hotel-friendly version of facilitated bookings “for awhile” in a format that is “a good bridge” between metasearch and hotel website bookings.

“Now on our approach, I cannot go into detail but part of our mission is to be an independent source, to be the travelers’ independent source,” Thomas says. “In a moment, where you take an on-site booking, in that moment we believe you lose credibility and trust. At least with some travelers and that is what we are trying to figure out, a way to tackle that. We are working in the direction of finding a way, to find a good bridge there. That is what we’re working on for a bit, not many years, for a bit. I think we are on the way.”

The following is an edited version of the interview with Thomas, who became managing director and head of hotel relations for Trivago in June 2015. The interview covers his thoughts on Trivago’s relationships with hotels, Google’s and TripAdvisor’s moves, and Trivago’s advertising lessons, among other issues.

Skift: So today you are announcing an update to your Hotel Manager platform. What does this do for Trivago?

Johannes Thomas: I think the whole strategic context is interesting. We have always worked with hotels but since about a year ago we changed our strategy there. One of the key elements, we think, in what will determine the success of travel search is to have really exceptional, outstanding content. That doesn’t mean a few pictures, a decent description. We really think about very, very good pictures, room-level pictures. That is the full direction that we are going, to not only know the basics, but really the details about the hotel. How is the bar? How is the bar offering? What spa amenities are there, treatments? Free parking? Free WiFi? Really not just the basic stuff, all the details out there.

In that context, what are the sources? What are really the sources where we get the best content? We clearly see the hotel here as the most valuable source of information. He [or she, i.e. the hotel manager] knows best what its strengths are. He knows the inside of his hotel and that’s why we are changing the direction. We are investing a lot now in building strong relationships with the hotel.”

Skift: What does it mean on Trivago next to a hotel listing when it says “TESTED”?

Thomas: You need at least 20 Mystery Shoppers before the hotel gets the TESTED badge and we basically display the results. You need a certain degree of significance, otherwise the data are not reliable.

Skift: I see that you are aggregating user reviews. Are you taking any reviews directly on your site or are they all collected from other sites?

Thomas: We actually discarded this option completely.

Skift: Which option did you discard?

Thomas: To write reviews. The reason was basically what’s our core competence? Is this our core competence? Managing reviews is not an easy thing and there are good websites out there that do a good job. We didn’t see a sweet spot there to also go into this field. We have the two approaches. One is basically looking at meta reviews, aggregating reviews that are on the Internet, getting the essence out of that and presenting the essence to the traveler. The second is the quality test (Mystery Shopper), which is by far the most powerful and the highest-quality feedback you can get about a hotel. It’s so detailed. It’s very powerful.

Skift: What are you doing about taking hotel bookings right on Trivago? I’ve heard for a couple of years that you’re working on it, you’re testing it. Where do you stand with that?

Thomas: For a couple of years, maybe not. Let’s talk about the challenges and then our approach. First of all there is mobile, second is tackling consolidation. There is market consolidation happening for metasearch price comparison. This obviously is a challenge. What do you do basically with a facilitated booking? We have a few players that optimize the website very well that invest billions in optimizing. Then you have small and medium hotels that obviously don’t have the budget to do so. With the facilitated booking, you level the playing field. You give them the tool to be competitive and to have an equal level of booking conversion rates. This is essential to keep the marketplace competitive and running. The third one is personalization. I think in the world of big data, for a lot of products, there is a lift from understanding the customer better, getting more data. In order to serve them the ideal hotel we need to know what the customer likes, what the customer’s preferences are.

Now on our approach, I cannot go into detail but part of our mission is to be an independent source, to be the travelers’ independent source. In the moment when you take an on-site booking, in that moment we believe you lose credibility and trust. At least with some travelers and that is what we are trying to figure out, a way to tackle that. We are working in the direction of finding a way, to find a good bridge there. That is what we’re working on for a bit, not many years, for a bit. I think we are on the way.

Skift: What are some of the different options in doing that? There seems to be basically a standard way of doing it that Google is now doing, that TripAdvisor is now doing. What are other possible ways of doing it?

Thomas: I think a core point would be that the user still has the feeling he doesn’t book on Trivago and that we convey that he is not in a Trivago universe. Just to keep this independence, to keep the trust with the traveler. If you can book directly you would always question, “Are they giving me the best deal?”

Also, we want to strengthen hotels and work closer with them, and not just make them competitors. The other side is the CPA (cost per acquisition, or commission) thing. Why would you take a CPA? When you can go to a CPA model you own the booking. The moment when you have facilitated-booking functionality, in that moment you can offer CPA because you own and you can influence the booking conversion. You can optimize it only if the website has good booking conversion, a CPA becomes interesting. If you have a very bad booking engine and have a very bad conversion rate, you will never be competitive basically. You will not be attractive from a financial perspective. From our side, we are thinking about that from a hotel perspective. It might not be the most attractive way to do that because you have lack of incentive to optimize your hotel site, to improve your booking conversion rate and you cannot improve your yields to a degree you could with a CPC model. You’re taking away mechanisms to optimize your distribution.

Skift: Right, so now you don’t do any commissions? It’s all CPC?

Thomas: Yes.

Skift: So the fact that Google and TripAdvisor are beginning to take hotel commissions, what does that mean for you? Is that an opportunity for you or is it a challenge?

Thomas: I think it is both. I think it is a big task and that is why we are building up a big team to build relationships with hotels and to take time for education [about the value of metasearch]. I think it would have been an advantage if there were more players educating on how CPC works, how CPC optimization is beneficial for hotels. We have never said we will never do CPA. We think for the hotel, it can be powerful to really take it as a marketing channel and optimize the channel [through CPC advertising]. Also, I think the potential might be higher to really direct the traffic to their own website, generating a direct booking for the hotel.

Skift: I remember when Expedia CEO Dara Khosrowshahi was talking awhile ago about how Trivago is becoming much more effective for Expedia and reducing their reliance somewhat on TripAdvisor. Are you getting any indication that Expedia or Booking.com are reducing their spend on TripAdvisor?

Thomas:  We are very independent. We aren’t in the loop about what others are doing, what Expedia does.

Skift: Your Trivago actor in the in the U.S. in your TV ads, Tim Williams, was in the Skift office the other day. You run a lot of these TV campaigns around the world. What are some of the lessons you’ve learned about advertising in the various markets? Are there any takeaways that you can share?

Thomas: Being data-driven, I think, is one of our core competencies. We are trying out everything. We put budget everywhere but we really scale those things that work well. As soon as we realize something like TV or SEM (search engine marketing) or display advertising works and it has a good business case, then we scale them up. I think it’s very important to always resist being emotional or do exciting things that might be nice but you cannot measure them.

Skift: TV is tough to measure.

Thomas: We’ve found ways to measure TV very well. We can measure individual spots and so on. We know exactly where to place them, at the right time, which channel, which program and that is what we are measuring very closely.

Skift: Anything you’d like to add?

Thomas: Yeah, I hope really the whole direction is clear with why content is so critical for us. I think people talk about content but rarely understand the power or how important it is to really build a good search product. The hotels are the most valuable source to get the good content. At the end it’s a win-win for the hotels. The hotels will get ranked better because they will build a strong profile. Those that build a strong profile, or build a unique profile, rank five times higher and get five times more traffic basically. On the other hand, when the hotel wins and ranks higher then Trivago wins because we build a better search experience in our core product.

Up Next

Business Travel

The State of Corporate Travel and Expense 2025

A new report explores how for travel and finance managers are targeting enhanced ROI, new opportunities, greater efficiencies, time and money savings, and better experiences for employees with innovative travel and expense management solutions.
Sponsored
Tourism

How Two Little Letters Made Anguilla into a Hidden Caribbean Goldmine

Anguilla is a small island with a big secret. It owns one of the most lucrative pieces of digital real estate in the world: the .ai domain. Now that ChatGPT brought artificial intelligence mainstream, it holds the potential to transform the island's tourism economy – and its future.
Tourism

Remote Year Collapse: What We Know

Remote Year said it was closing, upsetting many customers who had paid for future trips as digital nomads. Two CEOs are pointing fingers at each other. It's the vendors in emerging markets who will likely be hurt most.