Trivago profits rise amid revamp of advertising spend
Hotel booking site Trivago has posted a sharp increase in profitability in its first-quarter results amid a revamp of its marketing strategy.
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The figures
Trivago posted net profit of €7.8m (£6.7m) in the three months to the end of March, compared to a net loss of €21.8m last year.
Total revenue dropped 20 per cent to €208.8m.
Adjusted earnings before interest, tax, depreciation and amortisation were €20.9m, compared to a loss of €21.9m the previous year.
Why it’s interesting
Trivago’s first-quarter results mark a significant turnaround in the business, which posted heavy losses over the same period last year.
The hotel search engine has embarked on a plan to transform its marketing strategy in a bid to improve the quality of traffic referred to its partner sites.
Trivago said the new strategy had improved the firm’s return on advertising spend. However, the reduced reach prompted a decline in referral revenue.
The travel site focuses half of its budget on TV advertising, as it looks to convert viewers to online holiday booking.
Chief executive Rolf Schroemgens told City PM the company is looking to establish a “solid profit base” before focusing on growth.
Schroemgens said Trivago will ramp up its advertising spend in the third quarter, and aims to return to revenue growth then.
The firm is continuing to receive most of its traffic from mobile websites and apps, pulling in more than 60 per cent of its revenues from these formats.
The profit was a slight decrease on the €10m posted in the last quarter of 2018, but the firm traditionally experiences a drop-off in trading after the Christmas period.
Trivago said it expects full-year earnings to be between €50m and €75m.
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What Trivago said
Chief financial officer Axel Hefer said: “We are pleased that we were able to further increase our profitability and to carry the positive momentum into the new year.
“We believe this positions us well to achieve our goal of profitable growth in the second half of the year.”