Google vs Trivago: Battle for hotel bookings heralds new price hikes | Companies

Trivago, a metasearch engine created in Germany in 2005 and later acquired by US giant Expedia in 2012, has been one of the major players in the Spanish online hotel booking market, becoming one of the systems most used by users to compare prices and close deals. booking a hotel room later through an online travel agency or on the hotel’s own website.

That is, until Google got into the hotel lodging business. “The arrival of Google has played a decisive role in losing market share and changing the way online travel agencies charge to increase revenues and become relevant again in terms of online presence and positioning,” highlight business sources consulted by this newspaper.

A recent study by hotel reservations consultancy Mirai on the occasion of the implementation of the Digital Markets Act (DMA) provided relevant data in this regard. Until the new standard comes into effect, which includes Google as one of the gatekeepers and forces it to be responsible and not abuse its dominant position, Google Hotels had a market share of 11.2% of the direct hotel booking market in the EU, compared to Trivago’s 1.3%. After the launch, Google’s share fell to 9.3%, while Trivago’s share rose to 1.7%.

Trivago will try to compensate for this disadvantage with a radical change in its business model. The comparator, which is mainly used by medium and small travel agencies, already sends out a letter to all its clients to which it has access. Five daysannouncing that as of October 22 next year they are going to change their terms and that the only way to gain visibility on their platform will be through a fixed-price acquisition model, which will mean a significant increase in costs. In the letter, Trivago acknowledges that as adoption of fixed acquisition costs increases, the algorithm performs better. “Therefore, the commission-per-click system created during the pandemic is no longer considered a competitive scheme. To keep it in client campaigns, a new minimum cost per acquisition will go into effect on October 22.”

For each customer you refer and for the number of clicks you make during the transaction, Trivago charges a variable commission, which is set based on the bids made to set the price for that hotel room: the higher the demand, the higher the number of bids and higher price. And vice versa. Apart from this system, there is also a fixed cost acquisition model that will be introduced from October 22, the use of which is still almost negligible since the final commission that needs to be paid is much more expensive compared to the variable cost.

The same sources claim that the first consequence of Trivago’s new commercial strategy will be an increase in hotel prices. “They are forcing all online travel agencies to switch to a new system that no one is using now because of the undue profits they were asking for. If there are no changes, we will have to pass on this increase in costs to the end consumer so as not to lose money, especially small and medium-sized ones,” the affected Internet agency emphasizes, which highlights the imbalance in the submission of applications. this increase comes from travel agencies rather than hotels. Five days Tried repeatedly to get the Trivago version without success.

The new price increases, which come in the context of continued rate hikes over the past two years, have already begun to erode national demand. An overnight stay in a double room in Spain last summer cost an average of €161 a day, according to Costar, reaching a new all-time high. While international demand remained strong in July, the first month of the high season, August saw a very significant decline in national tourism, with Andalusia the worst-hit region, losing 250,000 national travelers between June and August.

The second argument justifying Trivago’s change concerns the updated rules cookie approved by the European Commission, which obliges all platforms to clearly and reliably offer information about these files and the consequences of consenting to their installation. cookie These are small text files that websites place on customers’ devices and contain information about browsing preferences or purchase history. “There will be a lot of users who won’t accept them, and this will cause Trivago to lose an important piece of information about its customers and force it to increase its marketing spend to attract them again.”