The seemingly intractable dilemma that has killed many travel companies over the years is that people tend to take merely one or two vacations per year, leaving booking sites figuratively standing idle while awaiting the next round of trip planning.
During a Skift interview via Zoom Tuesday after Trivago’s first quarter earnings call, CEO Axel Hefer said the company views the coronavirus crisis as an opportunity, and will pivot more up-funnel and toward “inspiration,” meaning presenting trip ideas to consumers who may not know where they want to travel to or precisely when.
The theory is that travelers will get on the road more frequently, and to closer destinations they can get to without flying during the coronavirus recovery era.
During the earnings call earlier Tuesday, Hefer said one use case in Germany, for example, is road trips from metropolitan areas to coastal regions or mountains. Another scenario is travelers taking a trip closer to town, and when travel returns to a semblance of normalcy perhaps people will still focus on closer destinations, and shy away from complicated long-haul trips.
Other Coronavirus Concessions
In other adaptations to the coronavirus-driven travel collapse, Trivago is seeing heightened interest in display advertising to drive demand to particular hotels, and sponsored listings to enable messaging about new cleanliness procedures, for example. Trivago has rolled out these new offerings, along with new options, particularly for smaller advertisers, to use commission-based bidding versus cost-per-click advertising to reduce the risk of cancellations.
In terms of Trivago’s own marketing, it intends to put more focus on brand advertising, such as its relatively well-known TV commercials, rather than search engine marketing on platforms such as Google.
Hefer declined to detail the balance between Trivago’s brand and search engine marketing spend before the coronavirus pandemic, but said in 2016 the company indicated that its traffic was generated 50-50 from both types of advertising.
Hefer said in the interview that Trivago has enough liquidity to get through 2021 under almost any scenario.
“The big picture is that we see this as an opportunity. The opportunity is everything is reset so that everybody starts at zero and our strength assures that we are strong and very flexible, and we can move very quickly. We are intending to use that to our advantage by really adapting to really the weekly changing future — or our expectation of the future — and faster than our competition and really take benefit from the situation.”
Hefer added that the crisis is “obviously a big challenge,” but argued that Trivago can use it to its advantage.
A Wave of Consolidation
Asked whether Trivago might be sold or be a buyer during what is expected to be a wave of consolidation coming out of the coronavirus pandemic, Hefer said:
“It is difficult to predict exactly what consolidation will look like. But when you look at what’s happened so far, there are players who have left the industry so you can clearly see that not everybody is in a very solid financial position. Irrespective of the depth and severity of this crisis for the travel industry, in any crisis there is consolidation so that has to be our base case and our starting assumption.”
Hefer said to predict how much consolidation will take place “and who will consolidate whom, I think is impossible.”