Trivago CEO Hopes Return to Profitability Restores Investor Faith

October 24, 2018

By Amanda Weston

After Trivago's latest earnings report on Wednesday, it can once again claim profitability, a milestone the CEO hopes will restore faith in the travel-booking platform.

"I think for us it was super important to get back to profitability, to really show what this company can achieve and to gain confidence and to show the markets, 'Hey, Trivago can be a profitable company,'" Rolf Schroemgens told Cheddar Wednesday.

"And for us this was important. Establish a solid level of profitability and then start growing from that again."

In 2017, The Priceline Group, now called Booking Holdings ($BKNG), and Expedia ($EXPE) ー which accounted for 80 percent of Trivago's ($TRVG) revenue the year before ー scaled back their advertising on the platform, spooking investors and causing shares to eventually drop from $23 to below $6.

But after four quarters that Schroemgens has called "quite a challenge", the company reported that its adjusted third-quarter earnings for 2018 reached about $30 million. Net income was roughly $11.5 million, compared to a net loss of about $8.7 million in Q3 of 2017.

Schroemgens attributed the turnaround to efficient marketing.

"So, I think we have been always very good at marketing, but also we now, even looking more at efficiency, looking more at profitability ー and so we were able to look at these pockets of marketing spent where we've seen not the best efficiency and improve that significantly," he said.

Other accomplishments for the hotel booking platform include offering more than 1 million alternative accommodation units, among them vacation rentals and private apartments.

Trivago also launched a new app with a focus on the experience for users.

For Trivago, earning customers' loyalty is all about the content.

"We show all the online travel booking sites," Schroemgens said. "So we are not a random site. We are actually an aggregator of all these sites that [are] a way to book a hotel, and you can find all the prices and everything on one site and that's how we differentiate. And if you're looking at our new app for example, I think you can see how we improve the user experience continuously throughout the years."

As for the future, Schroemgens remains optimistic.

"I think that we now have established a more healthy level of profitability, and that is a level that we want to maintain over the next quarters," Schroemgens said.

"And we will see how that plays out."

For full interview click here.