Trivago has launched Trivago Hotel Relations, a subsidiary which it said would “foster strong direct relationships with independent hotels”.
The move came as concerns continued to grow that the role of the metasearch engines was waning in the sector.
Johannes Thomas, managing director & chief revenue officer, Trivago, said: “With this step we are accelerating our ability to scale an exceptionally skilled international salesforce and build stronger ties with hoteliers. It enables us to work even closer with hoteliers and better support them in making their direct marketing successful.
“We’ve seen significant success in our hotel direct business over the past two years. At the same time, we learned that scaling a sales organisation requires a different culture, operating mode, and set of talents compared to a technology organisation. We believe that being a dedicated company provides it with the necessary freedom to determine its own identity.”
The company said that Trivago Hotel Relations would be responsible for Trivago’s relationships with over 310,000 hoteliers around the world, with plans to expand its team in 2018.
The launch follows similar moves by the online travel agents to provide support to hotels, which, with Expedia, Inc’s investment in Alice last month took it beyond distribution and into guest services.
Trivago has also moved into the other area currently drawing the sector’s attention – AI – with the purchase of Tripl, a machine learning travel start-up from Hamburg. The product gives tailored travel recommendations by identifying trends in users’ social media activities and comparing them with the actions of similar users.
Rolf Schrömgens, founder & CEO, Trivago, said: “We believe our competitive advantage is the speed of our learning. We have always focused on machine-learning, and the area of semantic analysis. Tripl’s personalisation technology is unique and individual in its app.”
Last month Trivago saw its shares fall by 27% after announcing that full-year revenue growth would be 10 percentage points lower than previously forecast. The metasearch group blamed marketing spend rising at a faster rate than revenue, as the company aid it would focus on a long-term view of the business and “continue to innovate”.
JP Morgan’s Doug Anmuth downgraded the group, commenting that the planned turnaround would take time as the company worked out bid process adjustments from large advertisers and revealed its new attribution model, while Morgan Stanley’s Brian Nowak warned of multiple headwinds and fears that the OTAs had started spending less on Trivago, which gives the company less money to grow.
Martin Jordan, head of innovation at Equator, told Hotel Analyst: “Increasingly, we are seeing hoteliers focus their effort on an ever smaller pool of OTAs, predominantly those of Priceline and Expedia. Secondly, we’re seeing them get a handle on their channel pricing and book-direct strategies. This increasingly means that hotel prices don’t vary to the degree Trivago make out in their ads, but also that the best price may not even be anywhere on Trivago at all, but on the hotelier’s own site. With all of that to consider, Inception seems blissfully simple in comparison.”
HA Perspective [by Katherine Doggrell]: Trivago is making all the right noises, but, with the ship taking on water, are they waving or drowning?
Charlie Osmond, chief tease, Triptease, told us: “Hotel Relations shows Trivago are serious about building relationships with independent hotels. OTAs still dominate on meta, so if this gets more indies to engage with metasearch – and display their rates further up the booking funnel – that can only be a good thing.
“What’s more interesting is what the move suggests about Trivago’s commitment to hotels. Of all the major metas, they’re the ones talking loudest about driving direct bookings. Given they also recently forced OTAs to curtail bait and switch behaviour, we’re cheering from the sidelines and certainly hoping they manage to help improve independent hotels’ visibility on meta.
“However, there are a couple of things that Trivago haven’t mentioned (but we hear hotels asking about all the time): 1. comparing rates that are non-comparable. An OTA rate with a USD50 cancellation fee looks, on Trivago, the same as a hotel’s cancellable rate. Terms and conditions ought to be brought to the fore to make comparison fair for the booker. 2. Large OTAs bidding with multiple brands to force a hotel’s direct link off the sort order. Research shows that, with equal prices, guests prefer direct. Independent hotels may be more encouraged to participate on meta if they knew the direct rate would be displayed at the top of any comparison where they’re not beaten on price.”
Additional comment [by Andrew Sangster]: And so the direct debate ratchets up a notch. It sounds great for hotels to have their direct rates put above OTAs on meta if conditions such as cancellation fees are taken into account. But what about the fact that hardly any hotel brand.com booking sites are as easy to use as OTAs? And what about the OTA reward schemes which effectively offer a 10% discount?
Meta companies want hoteliers to dive into this field because they face a duopoly with just Priceline and Expedia (at least in the West) as the big buyers. Google has similar motivations.
But hoteliers need to be cautious about how much they commit to in this fray. In the end, as we repeatedly say at Hotel Analyst, this is about being an effective retailer and hotels are trying to keep up with much bigger companies that have much better resources.
This is not a counsel of despair, advising hotels not to bother with retailing but rather to recognise explicitly the costs of each channel and invest appropriately. Leverage the great retailers – as any product company does with say Amazon – but retain other distribution channels to product your brand and market position.