Businessmodel of Trivago

Customer Segments

Trivago has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:  hotel/lodging brands that promote their offerings online and consumers who compare the offerings and their prices to make a purchase decision.

Value Proposition

Trivago offers four primary value propositions: accessibility, customization, convenience, and brand/status.

The company creates accessibility by enabling customers to contribute to its website’s content. Specifically, they are invited to add text to descriptions of hotel and lodging brands, add missing brands/complete incomplete brand profiles, and edit the profiles for quality assurance.

The site enables customization by allowing brands extensive ability to personalize their profiles.

The site offers convenience by enabling visitors to search for and compare brand prices. They can also refine search results through over 100 filters, including price, distance, and facilities.

The site has established a powerful brand due to its success. It bills itself as the “world’s largest hotel search” engine, with information from over 250 booking sites for more than 100 hotel chains representing over one million hotels worldwide (190+ countries). It provides service in 33 languages and covers 55 markets. It is used by over 120 million unique visitors monthly, and its customers have provided over 140 million hotel reviews with over 15 million photos. In 2015 alone, it generated 14.6 million bookings for everything from budget to luxury hotels. Lastly, Trivago is one of the most successful and fastest-growing startups in Germany, with its profits doubling since 2008.

Channels

Trivago’s main channel for consumers is its website, while it reaches out to brands through its direct sales team. The company promotes its offering through its social media pages as well as television and online marketing (display advertising and search engine marketing).

Customer Relationships

Trivago’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of e-mail support.

Key Activities

Trivago’s business model entails maintaining a robust common platform between two parties:  consumers and hotel/lodging brands. The platform includes its website and mobile app.

Key Partners

Trivago maintains the following types of partnerships:

• Affiliate Partners – The company works with third parties that promote its offerings through their platforms (websites, mobile apps, etc.) in order to direct traffic to its website. Commissions are paid per click-out (instances in which customers visit Trivago then connect to a hotel booking site).
• Quality Test Partners – The company invites consumers to evaluate hotel brand quality by signing up as a tester through its website. After booking a reservation and completing a stay, the testers provide a review of the facility’s services and amenities using an online questionnaire. Completed questionnaires result in an incentive payment paid via PayPal or bank transfer. ### Key Resources

Trivago’s main resource is its proprietary software platform, which serves over 120 million monthly visitors.

It depends on its technology employees to maintain and update the platform and its customer service staff to provide support.

Lastly, as a startup it has relied on funding from investors, raising $53.8 million as of December 2010.

Cost Structure

Trivago has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions.

Its biggest cost driver is likely sales/marketing, a fixed cost. Other major drivers are in the areas of transaction expenses and customer support/operations, both fixed costs.

Revenue Streams

Trivago has two revenue streams:

• Listing Revenues – Revenues it generates from fees paid by booking sites for having their services listed on the company’s platform.
• Service Revenues – Revenues it generates from fees paid by hotel brands to manage their presence and visibility on the company’s platform, using the Hotel Manager PRO service.