Trivago and Kayak Split Over Travel Metasearch’s Future

Germany-based Trivago is trying to diversify beyond its core hotel comparison-shopping feature to inform locals about things to do in their hometowns, and also to inspire travelers with upcoming concerts and exhibitions in destinations they might visit in a bid to increase overall engagement with the company.

That’s been a startup and leisure travel dilemma for decades: How can companies keep the cash flowing when potential customers might only vacation a couple of times per year?

Trivago recently debuted a local inspiration product in the UK that includes categories such as concerts, kids’ activities, theatre and comedy as it tries to offer products  further up the proverbial booking funnel toward the discovery phase.

When asked about Trivago’s moves, Steve Hafner, the co-founder and CEO of U.S.-headquartered Kayak, a Trivago rival, said his company will keep its concentration instead on travelers ready to book.

“It’s an interesting move to go upper funnel,” Hafner said of Trivago’s moves. “I hope it works for them. But at Kayak, we intend to stay focused on high intent purchasers.”

So while Trivago.com touts romantic getaways in Oklahoma, Kayak.com seems to be more focused on things such as price trend charts, and “the best deals in October.”

Where Should the Focus Be?

Keep the focus on metasearch itself or diversify into new revenue streams? It’s an issue that metasearch players may increasingly face about the future of the sector.

Trivago, which was struggling even before the pandemic, probably needs to diversify more than Kayak. Google Hotels is price-oriented and has the luxury of focusing on metasearch because Google has a ton of other revenue streams. Tripadvisor, though, has experimented with travel inspiration over the past few years, although its focus on it has diminished.

In an interview after Trivago’s second quarter earnings call Friday, CEO Axel Hefer said his company is taking a different approach than Kayak’s to attract users with weekend activities, and information about events to inspire travel so they can even “travel without traveling.”

Reacting to Hafner’s comment, Hefer didn’t seem concerned about Trivago losing its focus on its core metasearch offering.

Hefer said Trivago’s core product has been optimized over the course of 15 years, and although Trivago is still investing in hotel search, he characterized it as “a well-greased machine.”

During the earnings call, Hefer said the company is excited about its new local product, available only in the UK, although revenue from Trivago’s portfolio beyond metasearch isn’t significant at this point.

“So what are the reasons to travel statically to go to a certain place, but then also looking forward, what are time-sensitive reasons to travel, what are certain concepts, exhibitions, etcetera, a certain destination that are very good reasons to travel to a certain place at a certain point in time,” he said.  “And with our local travel product, we want to inspire travel as well as generate the booking. And so that’s why we think it’s a very important feature.”

Hefer argued that a big benefit of Trivago’s local product would be users can use Trivago more often. “It is basically relevant every week,” he said.

In the second quarter, Trivago narrowed its net loss to $3.9 million, from $24 million in the red in the June quarter a year earlier. Revenue jumped 493 percent, based on pent-up demand, to $113.2 million.

Booking Holdings Versus Expedia Group

During the second quarter, Booking Holdings was Trivago’s largest benefactor, contributing 60 percent of Trivago’s referral revenue to market Booking’s products compared with 54 percent a year earlier.

On the other hand, Booking’s rival Expedia Group, which ironically is Trivago’s parent, contributed just 22 percent of Trivago’s referral revenue in the second quarter compared with versus 19 percent a year earlier.

I tweeted about the seeming this dynamic: “If you want to teach a newbie about the travel industry, the fact Booking Holdings is by far Expedia-owned Trivago’s biggest patron would be an apt intro. BKNG views Trivago as an efficient marketing channel and their common European bent must bear on the BKNG-EXPE discrepancy.”

If u want to teach a newbie bout the travel industry, the fact Booking Holdings is by far Expedia-owned Trivago’s biggest patron would be an apt intro. BKNG views Trivago as an efficient marketing channel and their common European bent must bear on the BKNG-EXPE discrepancy.

— Dennis Schaal (@denschaal) July 30, 2021

Leaning Into Video Marketing

In other interesting tidbits from Trivago’s earnings call, officials described how the company has been upping its brand marketing, and that within brand marketing TV is the largest channel, but video is becoming more important.

In the Skift interview, Hefer said Trivago has been emphasizing social media channels such as Facebook and Instagram for video, which enables targeting while television largely doesn’t. Video is slightly further down the booking funnel — meaning it is closer to an actual booking — than TV, he said, but targeting can be pricy.

As travel picked up, Trivago’s selling and marketing expense rose 458 percent to $84.6 million in the second quarter compared with the year-earlier period.

As is the norm, Trivago officials said they would reduce marketing expenditures in the third and fourth quarters after the peak summer travel season.