Hotel metasearch company Trivago has announced a strategic investment as a new effort to boost conversions on the same day it reported quarterly losses for the second time this year.
Trivago announced Tuesday it has invested in artificial intelligence-driven hotel rate aggregator and white-label booking engine provider Holisto (formerly Splitty) as another step in the duo's partnership that began in 2022.
"The investment and stronger partnership will allow us to offer 'Trivago Book & Go' to all our advertising partners," Trivago CEO Johannes Thomas said in a statement. "Our goal is to provide a more consistent booking experience for our users and help our advertising partners to drive conversions. Holistos' footprint in rate optimization and price accuracy is best in class. Their team is leveraging AI to optimize rate exposure and dynamic pricing, delivering tangible value to travelers. We are impressed by their tech teams and expansion in recent years."
Trivago now has a 30% stake in Holisto, which it purchased for nearly €10 million and has the option to buy the rest of the interest outright in the coming 15 months for up to nearly €55 million.
“I think this is a very strategic investment and pays into our core product,” Thomas said to PhocusWire Wednesday after Trivago's earnings call. “So we outlined that we will do two things. ... One was brand [investment] and the second one was improving our core product. And our core product is metasearch price comparison.”
As Trivago announced its new investment, the company reported total revenue for Q2 amounted to €118.6 million, down 5% from €124.4 million during the same period last year. It also reported a net loss of €4.9 million compared with a net income of €5.8 million during the the second quarter in 2023. Adjusted EBIDTA was reported at a loss of €5.4 million compared with €12.2 million in the same period last year.
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“The second quarter of 2024 demonstrated an improved top line year-over-year trajectory towards growth as the quarterly decline was lower than previous quarters, bringing us closer to our aim of returning to year-over-year top line growth,” Trivago said in its earnings report Tuesday ahead of its earnings call scheduled for Wednesday morning.
The company continued: “We observed revenue growth from our branded traffic channel in all three segments and are pleased with the results from our brand marketing efforts. Revenue growth from branded traffic sources helped partially offset losses driven by performance marketing channels.”
Referral revenue clocked in at €117.2 million for the quarter, down 4% year over year from €122.6 million last year. The company saw referral revenue gains for the quarter in the Americas, which was up 5% year over year to €47.9 million. But those gains were more than offset by losses in "Developed Europe," which came in at €47 million, a decline of 9.7% year over year. Referral revenue in the "Rest of World" category saw less than a 1% decline to €22.4 million.
Advertising spend was up for the quarter nearly 11% year over year to €95.5 million globally. Return on advertising spend was down 16% for the quarter, from €37.8 million last year to €21.7 million for the period between April and June.
Trivago said it continues to face headwinds in its performance marketing channels, a trend that began last year with Google’s advertisement format changing - and one it expects to continue for the remainder of the year. That said, the company expects its branded channel traffic revenue will help to bolster its results.
“We remain optimistic that we can return to year-over-year top line growth during the second half of the year by continuing to be disciplined and result-oriented with our marketing investment decisions,” Trivago said.
Thomas’ focus has evolved since he started at the company last year - and their earnings have reflected that. At the time he started in his role, Trivago had roughly a 14% decline in its top line, he told PhocusWire.
“Our primary focus was on stabilizing the business, and we are in the process of stabilizing the business while staying profitable,” said Thomas. “So with clear guardrails to be disciplined in how we are investing, we have shifted more investment into brand marketing campaigns.”
He’s looking to those results for success.
“We have now the fourth quarter where we [have] improved the trajectory. So we are now at minus five last quarter, so the next quarter, and after the next - what's [at the] end of the year, and the course of this second half of the year - we want to turn positive and then double digit growth in the medium term,” Thomas said. “It's really now improving the trajectory over time.”
When investing in brand marketing, Thomas said a short-term return is likely but over time that return compounds and delivers at a more impressive rate.
Trivago’s second quarter earnings come after the company saw a net loss year over year during the first quarter of 2024, compared with a net profit in the first quarter of 2023.
After the close of last year, the company said it was counting on its marketing spend to bolster its results.