Spending

Trivago CEO says travel spending is holding up despite inflation – Interview

By Will Feuer

According to Axel Hefer, managing director of Trivago NV, people are sticking to their summer travel plans even if inflation is soaring.

Mr Hefer said the travel booking platform had yet to see any signs of weakening demand until early July. “Early birders are booking as usual,” Mr. Hefer said. “If you’re really looking forward to spending your summer, you’ve already booked.”

He sees some signs of caution beyond that. Inflation could make travelers balk at booking last-minute trips as they consider their budget. And fall travel demand could weaken as travelers fear their plans will be disrupted by a possible resurgence in Covid-19 cases.

Inflation in the United States is hovering around its highest level in four decades, with consumer prices in April rising 8.3% overall from a year earlier. As the prices of everything from food to fuel rise, consumers are seeing their discretionary budgets for things like entertainment and travel sapped, and businesses are scrambling to adapt.

Trivago, which primarily appeals to low-to-middle-income consumers, offers price comparison tools that can help travelers manage their budget. Mr. Hefer said consumers in all income brackets were prioritizing summer travel and cutting spending elsewhere. “There’s a significant amount of travel that’s just necessary because otherwise you would go crazy, or your kids would go crazy, or both,” he said.

Americans plan to travel more, with 60% saying they expect to take more vacations this year than during the pandemic, according to a Morning Consult survey commissioned by the American Hotel & Lodging Association. Inflation is currently a concern for 90% of survey respondents, while 78% said Covid-19 infection rates are a consideration.

Travelers are returning to some destinations that have been hit hard by the pandemic, with visits to urban destinations like New York, Las Vegas, London and Paris, among others, in the cards, Mr. Hefer said. “People now have confidence that they will have the classic city experience with food and drink, entertainment and clubs and everything that different people look for when they travel.”

At the same time, transcontinental travel is struggling and Russia’s war in Ukraine has hurt travel demand to much of eastern Europe, including Germany, Mr Hefer said. Trivago saw a drop in travel demand across Europe at the start of the war, but Western Europe has since normalized, he said.

Trivago said earlier this month that with almost all of the Covid-19 restrictions it is going on the offensive to make the most of this summer season. The company said it is planning a big marketing campaign to highlight its price comparison tools.

Trivago is already seeing its sales rebound. Its first-quarter revenue was €101.6 million ($109.5 million), up 166% from a year earlier. It recorded a loss, mainly related to litigation in Australia.

Shares have yet to recover. US certificates of deposit linked to Trivago recently traded at $1.74, down about 20% this year.


Write to Will Feuer at [email protected]