Trivago is a startup set up in 2006 as the first price comparison site for hotels in Germany. Today, after only two rounds of financing, where the first one was about €1,4 million, the company is estimated at over $4 billion. Today trivago is one of the fastest growing German companies, and it still has a perspective for further growth.
In the initial stage, Trivago was a price comparison site for hotels, without clearly defined growth direction. After two years already, the company reached profitability. CEO and founder of trivago Rolf Schrömgens, the year 2008 turned out to be a breakthrough in the company’s story when we decided what do we want not to do. Trivago then focused on metadata searching. Since then it sticks to the mission of being the easiest source of information.
Trivago’s business model-
Trivago offers information only on hotels, whereas other metadata search engines in the travel industry provide information on, for instance, flights. Trivago doesn’t provide solutions for business travelers as well. Instead of that, the company focuses on delivering overwhelmingly good experiences for all those looking for accommodations. It has a big goal of becoming the world’s number one in this respect. Today trivago provides access to more than 1,3 million hotels in more than 190 countries.
Trivago generates profits basing on the CPC model. Whenever an individual searching for a hotel, clicks on any offer included in the list, Trivago earns money. It makes the company different from other travel search engines, where each hotelier negotiates his or her commission. It significantly simplifies joining trivago from one site, since the system is transparent. From the other site, it does not generate for trivago costs related to the negotiation process.
Doing what works-
The company’s success as a search engine for hotels has always been dependent on the traffic on the site. The more people look for accommodations there, the more dynamic growth the company shows. In the breakthrough year of 2008 trivago’s founders realized that the firm should be the first contact point to consumers. To achieve this trivago had to build a strong brand and the best way to reach it would be advertising. At that time big competitors on the market, like booking.com were going heavily in digital marketing. Trivago found it too risky and in 2008 decided to try TV advertising. The company started with ads on its home market and did what wasn’t very popular at that time. The team measured changes in traffic on the site after airing the spot. As Rolf Schrömgens said, in effect, the company kept using solutions that worked. Trivago was using profits generated in the German market for investing in building the brand in a new one. The company makes use of this mechanism expanding in other countries.
The costs of advertising represent a high proportion of company’s spending. In 2015, for example, it was 88 percent of total revenue.
In 2012 American Expedia acquired 62 percent stake, and in December 2016 trivago went public on Nasdaq, reaching market valuation at over $4 billion.