Trivago Business Model: How Did Trivago Start & How Does It Work?
Am I the only one who gets the picture of Abhinav Kumar in my mind whenever I think about Trivago? Trivago is all about the amazing things he comes up with in that advertisement. Trivago is basically a meta-search engine for hotels that connects the user to a number of travel agencies such as MakeMyTrip, Booking.com, Yatra, and more.
If you are a traveler then you must be knowing that Trivago makes it very simple for you to compare the cost and book a particular hotel. With Trivago, it can be booked at the cheap most price. How does it work? When you reach the landing page, it takes some inputs from you like destination, check-in check-out dates, and type of room. Once filled, it takes you to the listing of hotels where only those OTAs showed that offer the cheapest cost.
According to Trivago, “Net income in the first quarter of 2019 was €7.8 million, up by €29.6 million, compared to a net loss of €21.8 million in the first quarter of 2018.” According to the most recent statistics, the net worth of Trivago in the year 2023 now is 0.52 Billion.
Why and How Did Trivago Start?
90% of people now prefer booking hotels in advance but it was not many years ago when people used to roam in the city and look for hotels. If it used to be a city of their frequent visit then it was pretty much fine but talking about a new city, there were certainly a number of issues. You did not know about the staff, service, rooms, etc. With the inception of websites like Expedia, Booking.com, and Orbitz, it became easy for people to make informed decisions about hotels including taxis, flights, and many things related to their journey.
These sites definitely came up as bliss for the people as they could know every single thing about the hotels before they book or check in. The number of users went on increasing from hundreds to thousands to millions. Looking at the success, Malte Siewert, Rolf Schrömgens, and Peter Vhotelemeier in the year 2005 started a hotel aggregation site and named it Trivago.
Trivago started in Germany and started growing into different markets. From big online travel agents to small ones, they took all of them under one umbrella. It accomplices over 150 OTAs to serve the ongoing requirements of the visitors. With its consistent efforts and great user experience, it now gets traffic of 4.3 million in May 2022.
Trivago Business Model
Customers are fragmented as Partners and Guests of which partners are categorized as Hotels, Online travel agents, and Media whereas Guests include Travelers.
If you wondering how the company collaborates with both kinds of customers then it is based on online reviews for both parties. If customers get good reviews of a hotel on Trivago then they choose the hotel. And hotels take a step to increase their business and as much as the potential audience they can reach with a good platform.
There are four value propositions on which the model is based-
Accessibility has been given to the customers who are free to contribute towards the website’s content like adding descriptions, brand profiles, and more.
It has been offered to hotel brands that can customize their profiles for brand individuality.
The platform offers convenience to users who can look for a lot of options and can also narrow down results with the application of hundreds of filters.
Trivago calls itself the “World’s largest search engine” taking together 250 booking sites and over 100 hotel chains amounting to nearly 1 million hotels in 190+ countries. It gets 120 unique visits in a month which indicates that it is getting immense popularity among users. It has set itself as a brand that is one of the topmost choices for travelers.
The main channel for users is Trivago’s website where it approaches brands through its sales team. The company is involved in heavy advertising on social media platforms and television.
Trivago is completely automated in nature and hence there is very limited or no interaction between users with the team. The FAQs on the site answer most of the questions while personal assistance can be received by means of email support.
There are two types of partners. One is an Affiliate kind of partnership according to which the company has links with third parties on whose platform it is promoted. The commission is paid as per the clicks. Apart from this, there are quality test partners which are based on an amazing concept. There are some hotel quality testers who book hotels from Trivago, complete their stay and provide feedback to the company by means of a questionnaire. Then, there is an incentive payment released through Paypal.
Trivago bridges the gap between hotel brands and travelers. The platform has a website and mobile application.
Trivago’s key resources are its skilled employees and informational database. Along with this, as a startup, there is a dependency on financing from investors raising $53.8 million in December 2010.
The biggest cost driver is sales/marketing whereas others include transaction expenses, operations, and customer support.
There are two means by which it earns-
A. Listing revenue: It is the listing fee the company gets from the Online travel agencies.
B. Service revenue: It is the cost paid by hotel brands to get their visibility maintained on the portal.
With Trivago, it has become possible to book an ideal hotel at the cheapest cost. Almost all the hotels can be found on Trivago. The account of the hotel needs to be activated on two or more OTAs and the website identifies the hotel. There are a number of advantages of using Trivago for hotels too including exposure provided to them like nowhere else, rate connect through which you can drive direct bookings by advertising your official website rates on your hotel profile.
Trivago offers you, exclusive analytics through which you can understand your market and target audience deeply for better conversion. It helps you generate great exposure along with offering you insights into the success rate so that you can accordingly plan your next action.
Do not forget to mention in the comment box which features of Trivago you like the most being traveler or hotel owner.
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