Good morning,
This weekend, are you planning your next vacation? If you’ve increased your pursuit of leisure trips, no matter how big or small, you’re not alone.
Making post-pandemic travel plans, or what became coined as “revenge travel,” was a high priority for many people as we waited for restrictions to be lifted. But it wasn’t just a phase. Leisure travel is exceeding pre-pandemic levels regardless of sticky inflation, says Matthias Tillmann, CFO of Trivago, a global travel metasearch site for accommodation deals.
Nearly half (46%) of consumers globally say travel is more important to them now compared to pre-pandemic, according to Expedia Group’s recent Traveler Insights Report.
“It's more anecdotal evidence, but what I'm hearing is that travelers are putting more importance on having experiences and are cutting back in other areas [to be able to travel more],” Tillmann tells me.
Trivago (Nasdaq: TRVG), a subsidiary of Expedia, continues to see that hotel prices are up year over year as its KPI of the average booking value is increasing, yet “demand is still robust,” Tillmann says.
How consumers are dealing with high prices depends on the season. This past summer, travelers tried to mitigate high costs by reducing the length of trips, he said. For example, instead of a 10-day holiday, making it nine days to save 10%, Tillmann says. Choosing cheaper hotels and less expensive destinations in Europe like Croatia instead of Spain or France, also came into play, Tillmann says. Going into the winter season, Trivago saw more weekend trips, or trips averaging two to three nights, he says.
Trivago’s customers have always been spontaneous and flexible travelers, Tillmann says. Typically, before the pandemic, customers booked two to four months in advance, but now it’s one to three months in advance in hopes of getting a better deal, he says. For example, if your only vacation criteria is a sunny place with a beach, you might wait and see if you can get a good deal for a destination that isn’t popular but still nice, Tillmann says.
Last year, Trivago's revenue increased by 48% year over year to about $566 million (EUR 535 million), according to its latest earnings report. However, the full-year 2022 revenue was just about 70% of 2019 levels, Tillmann says. "We spend our money much more efficiently," he explains. "And by doing so we have fewer people coming to the website because we don't buy certain visits that were unprofitable before." But Trivago's adjusted EBITDA was 50% above 2019 levels, he says.
Our conversation turned to the topic of tech. “We are currently migrating to a new ERP [enterprise resource planning] system and that is an upgrade for us,” Tillmann says. “We are working on having more solid and efficient end-to-end processes and automation.” When it comes to the use of A.I., “an area we’ve started looking into is fraud detection and anomalies in financial transactions,” he says. Are generative A.I. applications like ChatGPT in Trivago’s future? A possibility is a chatbot where people can ask questions and get them answered, Tillmann says. But no plans are in the works just yet.
I asked him if he’s made his summer travel plans yet. “I recently canceled our summer vacation and instead booked the Easter holiday because we learned that we are expecting a fourth child in the summer,” Tillmann says. “We will spend some time in Europe trying to catch some early sun.” But his family might also take a spontaneous trip in the summer, depending on when the baby arrives, he says.
Have a good weekend.
Sheryl Estrada
sheryl.estrada@fortune.com
