Trivago, a global hotel search platform, is seeing marketplace volatility again in Europe after a brief increase in consumer volume in the summer.
Reporting third quarter 2020 results, the hotel metasearch company says increases over that period were driven by nearby trips to nature spots in “developed Europe.”
Despite the current declining volumes, Trivago believes there will be recovery in the second half of 2021 as testing improves and there is progress on a vaccination.
Axel Hefer, the company’s CEO, says the confidence of improvement in 2021 comes from “people’s need” to travel, better treatments for the virus and the availability of cheaper, faster tests.
He adds that Trivago’s product mix, which doesn’t require travelers to get on a plane, will also help.
The company is launching a local travel discovery product in core markets focused on destinations within driving distance.
The local travel product, already on the app, will be available on other platforms in the coming months.
“It’s spot on in terms of customer need for next year. We have a full pipeline of features to deploy over the next couple of months when volumes will increase again.”
Trivago reports a 76% decrease in revenue of €61 million in Q3, an operating loss of €1.4 million and a net loss of €2.3 million.
Revenue for the nine months ending September 30 is down €467 million year-over-year.
Referral revenue, earned when users click on ads in search results, declined €15 million in the Americans; €32.5 million in Europe and €11 million in the rest of the world over the three-month period.
In the third quarter of 2020, Consolidated revenue per qualified referral decreased 54% to €700,000. The company says that although most of its advertisers are investing in marketing on the platform, they remain cautious.
Return on advertising spend was 190% for the quarter compared to 123% year-over-year. It has an increase attributed to the reduction in brand marketing activity.
Advertising spend decreased €72 million in the Americans; €57 million in Europe and €42 million in the rest of the world.
Going forward, Trivago says it is “preparing for a continuation of soft demand.”
In a letter to shareholders the company says: “Our main focus for the third quarter of 2020 was to continue to prepare for 2021 while preserving our cash-position, generate learnings, and develop features and products that we believe will enable us to compete better. We believe that our focus on local travel will be a key advantage going forward.”
Costs and expenses for Q3 totaled €62 million versus €248 million year-over-year. The costs include €600,000 related to restructuring announced in the first half of 2020.