• Expedia goes alternative as Trivago wilts 

Expedia Group hailed an increase in room nights booked in the first quarter, pointing to the continued integration of HomeAway properties.

The results came as Trivago, in which Expedia Group has a controlling stake, cut its forecast for the next quarter as advertisers looked to pull back in their use of the metasearch site.

Trivago president & CEO Rolf Schrömgens told analysts that the group felt that, since its last call its “larger advertisers may have increased their profitability on our platform even further, the development would have a direct negative impact on our commercialisation”.

For the first quarter, the group saw qualified referrals rise by 7% to EUR189.5m, but revenues per qualified referral fall by 9%. The CEO said that the positive impact of the group’s traffic quality initiatives “was unfortunately overcompensated by lower commercialisation and the exchange rate effects”.

The company forecast negative adjusted Ebitda ranging between a EUR25m loss and a EUR50m loss for the full year. It cut its revenue guidance from 5% to 10% growth for the full year, to flat, after reporting a 3% drop in revenue for the first quarter, to EUR259.4m.

Looking away from the larger advertisers, Schrömgens said that offering a direct route to market for the global hotel operators was “a really big opportunity, but it’s a long-term opportunity. There will be a change coming…but the majority of the effect will not happen in the next couple of months”.

The company considered the role of alternative accommodation, also described by Schrömgens as “a very big opportunity”. He added: “What is also very important is to be disciplined and not make radical changes to the overall mix on our platform. So we are exactly on track and in terms of testing and gradually increasing the visibility of alternative accommodation.”

At Expedia Group, president & CEO Mark Okerstrom looked to the growth of alternative accommodation, as the company integrated HomeAway’s product into its core brand.

The company reported 15% growth in total lodging stayed room nights in the quarter, led by 16% growth at its global brands, Brand Expedia, Hotels.com, Expedia Partner Solutions and Egencia. HomeAway reported room night growth at 36% year-over-year and 46% growth in gross bookings.

HomeAway revenue increased 26%, while transactional revenue grew 70% and subscription revenue declined 29%.

Over the quarter the company accelerated the pace of new property additions for its global lodging portfolio, directly adding 50,000 properties in addition to making another 25,000 HomeAway properties available to the core OTA brands. The group said that it was on track to add more than 180,000 new properties to its core global lodging portfolio for the full year, while continuing to integrate additional HomeAway properties.

The group reported that HomeAway’s online and reported gross bookings to USD10bn on a trailing-12-month basis. Okerstrom described this as “a nice milestone as the team continues to make great strides in transitioning to a true e-commerce business. It’s still early days and we have lots of work to do, but we continue to see a tremendous opportunity ahead in the USD120bn alternative-accommodation space”.

Commenting on Airbnb’s decision to trial removing consumer charges, Okerstrom said: “HomeAway has been in the great position of having a combination of all monetisation models for a while. We think it’s important to have that flexibility. I think that all of the alternative accommodations players out there are likely to have some combination in the near term.

“As the overlap between properties amongst the players gets larger and I think that will happen over time, I expect that the monetisation will shift a little bit more to supplier pays and away from traveller pays based on what we’ve seen in other industries, but right now that’s just an expectation.”

The company reiterated its guidance for consolidated adjusted Ebitda growth of 6% to 11%.

HA Perspective [by Katherine Doggrell]: Meta search was the great white hope of the online travel market, after all, who could possibly deny the logic of giving the consumer all that choice in one place? But the consumer, it transpires, is a fickle beast which looks all over the place – after all, the leisure traveller, the most fickle of all the fickle beasts, has almost infinite time to spend over holiday booking, that most thrilling of tasks. And the hotel operators have been eager to remind the consumer of their direct discounts.

For the likes of Trivago – and, we are likely to see, TripAdvisor, later in the month – the message to shareholders is that it’s a long-term play. For Trivago, well its might be able to lean on hotels coming to them, but not right now. And they might look at alternative accommodation, but not right now. One wonders if not right now, then when, as the point of them – and, as they note –  profitability is waning and, as one analyst said to us, one wonders whether they are going to prove a flash in the pan after all.

The likes of Expedia Group and Booking Holdings are spending money somewhere, if they are not spending it with Trivago. The pair spent over USD10bn on marketing in 2017 and both have talked about the need to spend on direct marketing, including TV advertising, they also both continue to spend on Google, which gives them a direct route to the same searching consumer as the metasearch sites.

One other option, sneaking up on the inside, is Airbnb. Expedia Group and Booking Holdings are both eagerly embracing alternative accommodations. Meanwhile, Airbnb is getting into hotels, at a lower distribution cost. Will they all meet in the middle? And who will win the clash if they do?

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