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To Trivago, stability is the order of the day
Your TV monitor may occasionally show a smiling face from your TV salesman, but nowadays the faces are much stricter among the managers who run the German site for finding hotels. After all, these are disillusioning periods in which there is much self-observation about Trivago's earlier work. CFO Axel Hefer informed investors at an investors' conference in New York a few months ago that the sales prospects for the location of the hotels are "very difficult" and for the first half of 2018 a shallow to adverse increase is foreseen.
In the first half of 2017, Trivago made a number of changes to its back-end system, and its biggest client, the Priceline Group, which generated 47% of Trivago's revenues in the first nine month of the year, significantly reduced its ad spending. The Trivago stock exchange listed company is controlled by Expedia Inc., and the tail spin of the site in the third trimester in the shape of a $8 million drop, as opposed to a $6 million profit the year before, was not good at all.
PiperJaffray still said in a research paper Wednesday that Expedia could profit from Priceline's drawback in Trivago sales in the 4th quartern. Fewer Trivago auctions could lead to lower Expedia client recruitment expenses. "In other words, Expedia may be able to pay more for the same buck if fewer providers compete for meta-search traffic," the PiperJaffray notation states.
PiperJaffray's comment, from analyst Michael Olson and Yung Kim, said PiperJaffray's assessment that Expedia will be reporting in the 4th quartile in comparison to the 3rd "may be slightly too low" due to higher investments in Expedia and its affiliate Hotels.com. Expedia's room bookings rose 16 per cent in the third three months year-on-year.
He said he didn't think the Priceeline Group had tried to harm Trivago because of his Expedia bond. In retrospect, Hefer said that the influence of "an advertiser" - that is, Priceeline - who is in charge of such a high proportion of Trivago's turnover, was greater than we thought on the way up and down.
" Trivago now has more equilibrium, he said. In retrospect, Hefer said, it was clear that Trivago should have unrolled its change of platforms differently. In early 2016, Trivago began to push on-line tourist agencies to urge travelers to take them to the landings pages on their websites for the particular hotel that they were looking for, rather than pages that listed so many.
The Trivago rating was lower for those whose landings did not follow these rules, and this means that their offers were not shown so prominent on Trivago. Trivago's inventory traded at $7. 35 per portion Wednesday afternoons versus $23. 66 on June 26. The Trivago Group is known for its oversized advertising expenditures, especially for television.
By 2016, 87 per cent of the company's sales had been used for market. Criticism of Trivago is that it has overemphasized advertising to the disadvantage of innovative products.