Trivago's boss on how the travel group finds the hotel that fits you perfectly

 
Courtney Goldsmith
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Trivago wants to match customers' holiday experiences with their personalities (Source: Getty)

While Trivago was meeting American investors ahead of its December listing on the Nasdaq stock exchange, chief executive Rolf Schroemgens realised many of the people he met had a very limited understanding of the company.

Despite a boost to the hotel search engine’s profile in 2013 when American travel giant Expedia snapped up 63.5 per cent of the company for €477m (£406m), Axel Hefer, chief financial officer, told City A.M.: “We’ve stayed very much under the radar.”

Aligning itself with Expedia led many to assume Trivago is purely a travel firm, but one San Franciscan investor got it spot on when he asked Schroemgens: “So, basically you built a piece of Silicon Valley in Dusseldorf?”

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The hotel search engine, which was founded in 2005, might be a unique sight in the German city where it was created, but it would seamlessly fit into the streets of the California tech hub. The company’s unique blend of travel and tech is what makes it stand out from some of its peers.

Trivago is a search engine that provides customers with highly personalised hotel options. Unlike Expedia or Hotels.com, Trivago does not sell rooms directly on its site, but it presents a neutral view of the market by showing a customer options that are available from other websites. It claims to compare more than 1m hotels from 250 plus sites and boasts 1.4bn visits annually.

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The company makes much of its money from online travel agencies that pay for each click a customer makes on their hotel offerings.

This search engine positioning means it is not worried about popular newcomers such as Airbnb who could threaten the likes of Expedia. Trivago sees Airbnb as an opportunity to open up a slew of freshly accessible inventory, Schroemgens said.

The business makes most of its revenue outside Europe. Its number one market is the US, followed by the UK, which made up around 12 per cent of the total share in 2015.

When it underwent its initial public offering (IPO) on Nasdaq last December, the company raised $287m (£230m) in the float, priced at $11 per share. The firm’s shares rose as much as 10.7 per cent on their debut, valuing the company at around $2.89bn.

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Trivago pursued a listing on Nasdaq in an effort to be more aligned with its peers in the travel industry. Its parent company Expedia is also listed on Nasdaq, as are competitors Priceline Group and TripAdvisor.

Last week Expedia posted its financial results for the fourth quarter and full year ended 31 December 2016, including Trivago’s latest figures. Trivago made $183m in quarterly revenue, an increase of 65 per cent year-on-year.

Full-year revenue increased to $836m from $548m in 2016, a jump of 53 per cent.

So what’s next? Trivago is working on solving the “problem of personalisation”, Schroemgens said. The market is nowhere close to maturity and is changing every day.

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Booking a hotel through traditional means is a “cumbersome process”, and while Trivago’s current technology isn’t right every time, he prides the company on being “more right than everyone else” when it comes to matching hotels to personalities.

“In the future there must be a service, you can call it artificial intelligence, that really finds out about what you want.” Schroemgens sees Trivago at the forefront of creating this new technology that will reshape the way people book hotels.

“This is something that will exist in the future, and I think we’re in a good position to be that service.”

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Trivago will strive to learn “dramatically more” about its customers, he added. He wants to know how customers think their hotel should look, feel and smell.

The company is quick-moving and though it has grown it has kept its ability to stay agile in the market.

“If you lose this agility to adapt and take decentralised decisions every day you will slow down and eventually lose out,” Schroemgens said.

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