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Trivago is very content with its own brand and despite having $240 million in cash on hand, the hotel-search site isn’t planning on making big acquisitions anytime soon.
That’s the word from Trivago Chief Financial Officer Axel Hefer, who told Skift that the company’s leadership discussed merger and acquisition strategy after Ctrip acquired Skyscanner last year and earlier this year after the Priceline Group entered into an agreement to buy the Momondo Group.
“So from our perspective one of the key reasons for our success is that we are extremely focused,” Hefer said, adding that a large acquisition might dilute the company’s focus. There are other drawbacks as well, he said.
What would you get?
“What would you really get?” he asked rhetorically during an interview at Skift’s offices in New York City last week. “We would get or we would buy a competitor: We would get a brand that we don’t want because we [already] have a brand and we like the brand. You would get a technology that is different and probably not as good and focused as ours has been, and the third one is we would get a second location which we don’t really like.”
Trivago has developers in Amsterdam, the Netherlands; Leipzig, Germany, and Palma de Mallorca, Spain. By “second location,” he was talking about the disadvantages of adding a tech team in some far-flung geography.
“To have a really entrepreneurial environment where you do a lot of tests and then take risks and optimize very quickly, for that, communication, of course, is very crucial,” Hefer said. “So that you have an overview of who’s actually doing what and how to move fast. So as a consequence, it’s very hard to imagine that there is an acquisition that could make sense and could justify such a distraction to then move from our very clear and focused model into a more complex model, and then integrate it or not integrate it.”
Hefer didn’t mention it, but Trivago need look only as far as Expedia to appreciate the complications that come with acquisitions. Expedia stumbled in 2016 when it directed a ton of resources into integrating its 2015 acquisition of Orbitz Worldwide.
Trivago went public last year and although Expedia still controls Trivago, the hotel-metasearch company still operates fairly independently from its parent.
Trivago Has Made Technology Acquisitions
Hefer said Trivago isn’t against doing acquisitions when they would speed things up on the technology front. In fact, in 2015 Trivago acquired a 52.3 percent stake in property management system Base7booking for about $2.3 million.
“So we’ve acquired the technology that we would love to develop ourselves but by acquiring it we can just accelerate our organic growth rather than decelerate because we get distracted,” Hefer said. “So that is very much our thinking there. If we can find technology that is on our roadmap anyway and we can get it much cheaper but faster — I think faster is the key motivation — then we would consider that.”
So that’s the strategy for now: Trivago will do smallish, tack-on technology acquisitions, but don’t look for huge buys of metasearch competitors to spur growth because they would be too complicated.
Besides, with a 68 percent revenue jump in the first quarter of 2017, Trivago’s top line — responding to its bevy of TV advertising — is expanding at a very nice clip anyway.
Note: Check Skift later this week for an in-depth interview with Hefer on the company’s TV strategy, quest to personalize hotel shopping, and road to profitability.