Skift Take

Trivago's expectation that it could benefit from the EU chomping down on Google Travel during 2022 is very much an open question. Beyond the fines levied and outside of travel, Google has managed to maneuver its way around regulatory crackdowns to a large degree.

Trivago thinks European regulatory pressure against its biggest competitors, including Google, could slow them down this year, enabling the metasearch service to gain market share.

Chief financial officer Matthias Tillmann said he expects the European Union’s Digital Markets Act, which would take competition steps to rein in large travel companies that it designates as “gatekeepers,” could be implemented in 2022.

“The DMA is coming likely this year, which might put some pressure on some of our biggest competitors and might slow them down, and we think that’s a benefit for us,” Tillmann said during Trivago’s fourth quarter earnings call with analysts. “And if we deliver on our product road map, then we can reset and gain market share.”

In an interview Wednesday after Trivago’s earnings call, CEO Axel Hefer said that in price comparison services, namely travel metasearch, the “main company affected by the DMA will be Google.”

Google offers a variety of price-comparison services in hotels, vacation rentals, flights, and tours and activities. Competitors have long argued that Google has an unfair advantage in giving a heightened preferences to Google Travel over competitors’ offerings in free search results.

The Trivago officials’ comments came about 10 days after the U.S. government began pushing the European Union to ensure that its antitrust probe not be relegated to U.S.-based companies — Google and Booking Holdings come to mind — and should include non-U.S. companies. Booking.com, the largest hotel booker in Europe, and a big Trivago customer, claims it is not a gatekeeper, and does not wield monopoly or controlling power in the hotel sector.

“Google would be captured for sure, and my read of the situation is that given the intervention of the U.S. government last week that is highly likely that the scope of anything will be wider than more narrow, which would make it highly likely that Booking Holdings would also be captured.”

Spokespeople for Google and Booking Holdings didn’t immediately respond to requests for comments.

In other matters, Trivago officials saw a cause for optimism on several fronts. For one, Tillman said during the earnings call that metasearch, or comparison shopping, has underperformed the travel recovery and will gain momentum as travelers return to city trips in the spring and summer. He said Trivago would invest in marketing as this occurs, and the trend would be a “tailwind” for the Germany-based company.

Hefer argued that metasearch will play a key role during the recovery as travelers shop for accommodations that fit their needs and budgets “without overpaying for services they no longer receive.”

In the Skift interview after the earnings conference call, Hefer cited the labor shortage as a hangover, and mentioned hotel services such as food and beverage, room service, and housekeeping as the types of services that many hotels have been dropping.

The Numbers

In the fourth quarter, Trivago reversed a year-ago loss of euro 8.6 million ($9.8 million) and recorded net income of euro 15.2 million ($17.4 million). Revenue jumped 176 percent to euro 89.1 million ($102 million).

A German government payment to Trivago of euro 12 million ($13.7 million) was a large contributor to the net income jump, and also to increased cash flow. The payment was to compensate Trivago for losses the company notched in the fourth quarter of 2020 and the first half in 2021.

Trivago’s business is still operating well below 2019 levels, but it saw particular strength in Europe and the Americas during the fourth quarter.

“We believe that travel demand could bounce back as early as the spring of 2022 in most of our important markets, although we do not expect that travel will return to 2019 levels and patterns any time soon,” the company said in its earnings announcement. “Some parts of our business, such as business travel and city trips, continue to be substantially below pre-pandemic levels.”

Trivago cited a labor shortage, which could impact service levels, as an aggravating factor in making it more difficult for supply and service levels to rebound to pre-pandemic levels.

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Tags: antitrust, booking holdings, booking.com, competition, earnings, european union, google, hotels, housekeeping, labor, metasearch, room service, trivago

Photo credit: Trivago CEO Axel Hefer (R) speaking with Skift Travel Tech Editor Sean O'Neill at Skift Global Forum in New York City on September 21, 2021. Trivago thinks it could benefit if EU antitrust authorities crack down on Google in 2022. Skift

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