Breakthrough in the Travel Industry: Tale of Trivago

What makes a startup idea remarkable is its potential to solve a problem and make people's lives easier. The issue does not have to go unaddressed; the question is how effectively it can be addressed. Many company models are based on this notion. With that in mind, allow me to share Trivago's amazing startup story and its business model with you.

About Trivago
How was Trivago started?
Founders & core team
Business model of Trivago
How does Trivago earns Revenue?
What makes Trivago unique?
Competitors of Trivago
Trivago: Challenges and plans
FAQ

About Trivago

Trivago is a multinational technology company based in Germany that specializes in internet-based hotel, lodging, and metasearch services and products. It was Germany's first hotel search engine, and it is now one of the country's fastest-growing businesses, with profits doubling since 2008.

Expedia Inc. holds a majority of the equity in the firm. A hotel search company with the main objective of changing the way people search for and compare hotels online. It also offers hotel advertisers to promote their brand on the Trivago website providing them access to a broader target audience who visits its website.

How was Trivago started?

Earlier, booking a hotel used to be complicated. There used to be frauds and people were not able to get better deals. Looking at this problem gave rise to new startups such as Expedia, Orbitz, etc. that allowed customers to compare prices and get the best deals.

People liked this idea and these startups quickly gained traction. Rolf Schrömgens, Peter Vinnemeier, and Stephan Stubner saw this as an opportunity and they came up with this new hotel aggregation site which they named Trivago.

It was founded in 2005 in Dusseldorf, Germany where its headquarters are. It was first established in a garage. It was like a bootstrapped company with very little external capital and on going away with little steps and small steps forward. They grew very slowly in the beginning but eventually gained momentum.

Trivago has evolved from a €1.4 million seed investment to become one of Europe's most renowned unicorns. Today, they have 3 million hotels and alternative accommodations, search through more than 250 booking sites, active in more than 190 countries on 54 platforms, 33 languages, and more than 100 filters that you can apply to your search.

Founders & core team

Founders:

• Rolf Schrömgens
• Stephan Stubner
• Peter Vinnemeier
• Malte Siewert

Trivago's core team:

• Axel Hefer - Chief Executive Officer (CEO)
• Anja Honnefelder - Chief People Officer (CPO)
• Matthias Tillmann - Chief Financial Officer (CFO)
• James Carter - Chief Product and Technology Officer (CTPO)
• Alexander Forstbach - Chief Data Officer (CDO)

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Business model of Trivago

Customer segments:

Trivago has 2 types of customers. The first type includes partners like hotels, online travel agencies, and media who promote their products on the Trivago website. The second type is guests like travelers who compare offerings and pricing before making a purchase decision to book their desired hotel.

Key partners:

Hotels, online travel agents, and guests are among Trivago most important partners, but so are media and advertising firms, payment processors, and investors and stakeholders.

Key activities:

Based on key resources, Trivago acts as a platform for hotel brands to display their offerings and customers can find what they want. It manages guest and hotel networks, develops its products, and conducts sales and marketing.

Channels:

Trivago main channel is its website, although it communicates with brands through the sales team. It promotes its services through its web-based social networking pages, TV, and web-based advertising.

Value proposition:

Availability:

The Company promotes transparency by allowing users to contribute to the content on its website. They can add content to hotel and cabin brand portrayals, complete missing brand profiles, and change profiles for quality assurance.

Personalization:

The platform encourages personalization by allowing firms to customize their profiles in a variety of ways.

Convenience:

Users can search for a variety of alternatives and narrow down results using hundreds of filters available on the platform.

Brand/positioning:

Because of its success, the site has developed a strong brand. It receives 120 unique visitors every month, indicating that it has a large user base. Trivago is one of Germany's best and fastest-growing startups, with its advantages multiplying since 2008.

Customer relationship:

Trivago is an entirely automated platform, thus users have very little or no engagement with the team. The site's FAQs answer the majority of questions, and email support is available for personal assistance.

Key resources:

Trivago most valuable assets are its website and application through which customers can search for hotels. Its highly trained workers are another crucial resource for maintaining and updating the website. In addition, being a startup, it is reliant on investor funding, which raised $53.8 million in December 2010.

Cost structure:

Technology setup and running costs, personnel pay, sales, and marketing divisions all contribute to the overall cost structure.

How does Trivago earns Revenue?

We know Trivago doesn’t offer tangible products or has no tie-ups with other hotels. So you might be wondering how it makes money. Here’s how.

Listings:

Trivago charges commissions to online travel agencies for promoting their services and hotel rooms on the Trivago website.

Services:

Trivago earns revenue by managing the listings i.e. the presence and visibility of hotel brands on their platform. For this, they have a feature known as Hotel Manager PRO wherein hotel brands need to pay the subscription fees.

Cost Per Click:

Trivago links itself to other websites like Oyo and Make my trip. When people visit the Trivago website and want to book their desired hotel, they get redirected to the hotel’s website.

Trivago is promoting the hotel’s products and services and driving a sale for them. They are referring it to customers and in turn charge commission for doing the same. This is known as affiliate marketing or Cost Per Click (CPC) wherein they get paid whenever customers click on a link of that hotel's website and their entire revenue model is based on this.

A customer is referred to the website of the advertiser when the user clicks on the deals present in the search results. Trivago charges money for every referral. This model is known as the Cost-Per-Click (CPC) model.

What makes Trivago unique?

Compared to other hotel search engines, Trivago’ USP is its product focus: hotel search. It doesn’t offer other features like car rentals or booking flights just the hotel price comparison making it less confusing for customers. It benefits Trivago as well such as:

• They have no conflict of interest.
• Can focus on developing their products.
• Be committed to helping hoteliers compete and travelers locate their desired hotel.

Competitors of Trivago

The top three competitors of Trivago are:

Tripadvisor:

Trivago's main competition is Tripadvisor. It is a publicly-traded firm based in Needham. The company was founded in Massachusetts in the year 2000 and works in the travel agency business. It employs 1745 people more than Trivago. Tripadvisor has revenue of $366.5 million dollars higher than Trivago. It has raised a total of $3712.8 million, which is higher than Trivago.

Booking.com:

Booking.com is another major competitor of Trivago. It was created in 1996 and has its headquarters in Amsterdam. It's in the field of web-based software. It brings in $6798 million dollars more than Trivago. It employs 19,466 people more than Trivago.

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Trivago: Challenges and plans

The impact of the coronavirus outbreak on the travel sector has been catastrophic. Countries are still fighting the dreadful pandemic, but communities and economies are slowly rebuilding and recovering.

The recovery process for the travel industry will be complicated but let's see how Trivago faced these challenges and how it will reposition itself for the post-pandemic era.

In the fourth quarter of 2020, Trivago's earnings and revenue plummeted. It lost €12.3 million in adjusted EBITDA, compared to a profit of $70 million in 2019.

Despite this considerable decline, Trivago saw this as an opportunity to innovate and bring back the old and think about the new customers as well. Instead of promoting the most popular destinations, they started promoting the hidden gems i.e. smaller cities that are not on the top of your list.

The destinations from where you start keeping it shorter or local trip. This is their new product launch i.e. new local trip offerings which are more inspirational compared to their core product which requires you to know where you want to go.

This recent diversification beyond traditional metasearch and new launches will help them target a broader audience and not just the ones looking for hotels at low prices. They are working on the second big release and will be coming up with new product launches.

Final Thoughts

Being one of the world's most burgeoning hotel search engines, it has made it possible for us to find the best hotel at the best price. The company is focused on reorganizing and streamlining its business in light of the current volatile tourism industry. I must say, Trivago nailed the market demand and came up with a fantastic startup concept that was not just our desire but also the urgent need of the hour.

This was all about Trivago and its business model.

FAQ

Who is the founder of Trivago?

Rolf Schrömgens, Malte Siewert, Peter Vinnemeier, and Stephan Stubner are the founders of Trivago.

Is Trivago an Indian company?

No, Trivago is an German multinational company that specializes in internet-related services and products in the hotel, lodging and metasearch fields.

Who are the competitors of Trivago?

Trivago competitors include Booking.com, Tripadvisor, KAYAK and Expedia Group.