"Trivago NV is a company based in the Netherlands that operates an online hotel search platform. The platform allows users to search for, compare and book hotels. It gathers information from various third parties' platforms and provides information about the hotel, pictures, ratings, reviews and filters, such as price, location and extra options. The Company offers access to approximately 1.3 million hotels in over 190 countries via more than 50 localized websites and applications in various languages. The Company also offers marketing tools and services to hotels and hotel chains, as well as to online travel agencies and advertisers, among others. Its principal executive offices are located in Germany."
We have all seen commercials where the Trivago guy tells us how he can help us find a good hotel deal. And that is a great idea; we all want super low rates on hotels and that is why Airbnb has been such a winner. Priceline is the online aggregator of great deals for hotels, air flights, so its a nice concept.
Except, the problem with Trivago is that it aggregates data from aggregators. For example, hotels.com aggregates the best hotel deals from around the world. Trivago then sends you to hotels.com to book a room. In other words, Trivago is an unnecessary layer between the hotel and booking site. And it generates hits through aggressive advertising.
Over 2016, Trivago spent $730 million on advertising! And it generated a total of $754 million of revenues. I don't see how this is a great business model and why this company should be valued at $2.9 billion!
Granted they are growing rapidly. And I think the bullish thesis is that - at some point - brand awareness kicks in and Trivago becomes the Google of Hotels. The only problem is that Google is the Google of Hotels! And if not Google, then certainly hotels.com or bookings.com.
I think there are too many problems with Trivago's business model for it to be a long term success. The ROICs for this business are going to be low, and margins are going to be even lower. I thin Trivago is expensive!
We have all seen commercials where the Trivago guy tells us how he can help us find a good hotel deal. And that is a great idea; we all want super low rates on hotels and that is why Airbnb has been such a winner. Priceline is the online aggregator of great deals for hotels, air flights, so its a nice concept.
Except, the problem with Trivago is that it aggregates data from aggregators. For example, hotels.com aggregates the best hotel deals from around the world. Trivago then sends you to hotels.com to book a room. In other words, Trivago is an unnecessary layer between the hotel and booking site. And it generates hits through aggressive advertising.
Over 2016, Trivago spent $730 million on advertising! And it generated a total of $754 million of revenues. I don't see how this is a great business model and why this company should be valued at $2.9 billion!
Granted they are growing rapidly. And I think the bullish thesis is that - at some point - brand awareness kicks in and Trivago becomes the Google of Hotels. The only problem is that Google is the Google of Hotels! And if not Google, then certainly hotels.com or bookings.com.
I think there are too many problems with Trivago's business model for it to be a long term success. The ROICs for this business are going to be low, and margins are going to be even lower. I thin Trivago is expensive!
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