What is Trivago?
Trivago, or Trivago N.V., is a German technology company. It specializes in internet-related services and products. Currently, it operates in the hotel, lodging and metasearch markets. On top of that, it is a public company listed on Nasdaq as TRVG. The company’s major stockholder is Expedia Group, a United States travel company. Expedia Group, like Trivago, operates in the same markets.
Trivago operates in over 190 countries worldwide. The company provides services for users seeking to travel to other countries. Currently, its products include metasearch for hotel prices and Trivago Hotel Manager. In 2019, Trivago reported revenues of $941 million, although it decreased from its last period’s figures. In 2020 and 2021, the company’s revenues further dropped due to the impact of COVID-19 on the industry.
Trivago started its operations in 2005 under Rolf Schrömgens, Stephan Stubner, Peter Vinnemeier, and Malte Siewert. They launched the company in Düsseldorf, Germany. It is also where its current headquarters are. Before starting the company, the first three founders were well-known entrepreneurs in the startup world. In 1999, they launched Amiro.de, a platform to help users compare prices for various items.
After that, they merged the company with ciao.de, another similar platform. However, the founders left the company. Schrömgens started focusing on his formal education. However, he did not achieve any results from it. Later, he moved back to Düsseldorf and started learning to program. He also started various software projects with his friends Stubner and Vinnemeier. During this time, they cooperated on several projects.
One of these projects was Trivago, a hotel booking site. They launched the company to provide services to many users. They also faced competition from some big names in the industry, like Hotels.com and Booking. However, they saw those companies as inspiration or role models. A year after the company launched, Siewert joined the team. Due to his financial expertise, Trivago gained a lot from various transactions.
At the time, Trivago’s primary market was Germany. Due to its local expertise, the company gained high praise from its users. The company had over 2 million monthly users within two years of its launch. At the time, Trivago didn’t focus on raising capital. Instead, it used its existing resources to provide quality service. In 2012, however, Expedia Group acquired 61.6% of the company’s shares for $632 million. This capital provided a significant boost to the company.
Today, Trivago provides services worldwide. The contributing factor behind this success is Expedia Group’s guidance. Under its control, Trivago has experienced significant boosts in market share and expansion. Similarly, the company went public in 2016 and continued increasing its users. The company has made a name for itself from its services and through other activities. Today, it is one of the most well-known names in the industry.
How does Trivago work?
Trivago operates an accumulator platform that lists various hotels. Currently, it has listings from over 100 websites across the internet. The company provides a search engine through which users can search for hotels. It scrapes content from other websites and lists it on its page. In that aspect, it is similar to some other accumulator websites, for example, Zillow or Indeed.
Users can get started with Trivago through its website. Alternatively, the company also provides apps for the iOS and Android platforms. Users can download those apps and begin comparing the prices for several hotels in their preferred locations. Once users choose their method of using the platform, they can get started. Usually, they can enter their destination or hotel name. Similarly, they must provide details about their travels.
Once users provide the required information, they can get recommendations from the platform. Apart from that, Trivago also provides car rental and flight booking facilities. For each of these, Trivago shows prices from the related recommendations. However, these recommendations only enlist the different options that users have. Once users choose their preferred item, they get redirected to a booking site. This site links to Trivago’s website.
Trivago currently has over 300 booking sites. Users can find the right prices for their preferred destinations on those sites. Similarly, they can complete a reservation for their hotels. Trivago also aggregates hotel ratings and images. These features can help users make the right decision regarding their choices. On top of that, it provides comparisons between pricing for each of those options.
What is Trivago’s business model?
Trivago operates under an e-commerce business model. The company uses the internet to provide its services through its platform. Similarly, this platform offers a C2C business model opportunity to the company. Consequently, Trivago connects two parties. Within this model, it is similar to many digital platforms. However, none of these models accurately describe how Trivago operates.
Trivago operates under an accumulator business model. Through this model, the company collects data for various suppliers. These suppliers include hotels, car rentals, flights, etc. Once it accumulates that data, the company processes it to suit its needs. For example, it categorizes it under location, prices, services, etc. The processed information becomes the base for the company’s underlying services. It is the primary business model for Trivago.
Trivago also operates an advertiser business model. Under this model, the company earns money by charging customers for enlisting their products. This model is similar to other competitors, such as Booking and Hotels.com. These earnings form the base for the company’s primary revenues source. However, these earnings do not come from the platform’s users. Instead, they generate from the hotels and services listed on it.
Lastly, Trivago also uses a subscription business model. Under this model, Trivago offers a plan which allows the company to charge a monthly fee. The subscription business model has become prevalent in many industries. Trivago has also capitalized on its popularity. However, it does not contribute to the company’s revenues significantly. Nonetheless, this business model still helps Trivago make money.
How does Trivago make money?
Trivago makes money from two sources, as mentioned above. The first comes from commissions or revenue-based revenues. On the other hand, it also has a subscription plan for users. However, the former provides the highest earnings for the company. The company also makes money from related-party transactions.
In 2018, Trivago reported revenues of €914.816 million. However, its revenues have declined due to the ongoing COVID19 pandemic. The company reported revenues of €838.917 million in 2019. In 2020, these revenues dropped significantly to €248.921 million only. Overall, the primary sources of money for Trivago include referral and subscription revenue.
Referral revenue
Trivago uses a commission-based structure to charge hotels and other suppliers. Within this model, Trivago employs a “Cost Per Click” (CPC) mechanism. Every time Trivago provides a hotel in a search result and a user clicks it, Trivago makes money. For these revenues, the primary market includes the US, the UK and Germany. In 2020, this segment created revenues of €238.365 million and accounted for over 95% of the total sales.
Subscription revenue
Trivago also makes money from its subscription plan offered to its members. With this plan, users can get premium features. This plan comes as the Business Studio PRO, which allows hoteliers to use the company’s services. Trivago also provides a basic edition of this studio. However, the premium features cost more. In 2020, the company generated €7.657 million from this segment. However, it only accounted for 3% of the total sales.
Conclusion
Trivago has become a household name in the hospitality industry. Through its platform, users can book hotels, rental cars, flights, etc. The company operates an accumulator business model. Therefore, it does not provide a product of its own. Trivago makes money from two sources, referrals and subscriptions. Due to the ongoing COVID19 pandemic, the company’s sales have suffered from both of these sources.
